Impact is much more than a buzzword. It is a cornerstone of future sustainability and prosperity.
We all want to create impact - and in Deloitte we aim to create impact that matters. To us that means creating an impact that matters for our clients, colleagues and society at large.
Yet, my claim is that too often we say the word but refrain from going into discussions about what it specifically means. My objective is not a discussion of definitions, rather I hope to be able to convince you that impact is of the most defining elements of society today.
Why? Because we are moving into what I - inspired by Sir Ronald Cohen’s great book “Impact” – call the Impact Revolution. We have for long been governed by a neoliberal paradigm and found ourselves in a tech revolution driven by venture capital and tech entrepreneurs. Just take a glance at the list of the world’s most valuable companies and you will find Apple, Microsoft, Alphabet, Amazon, and Facebook among others. The financial crisis and rising global environmental pressures nevertheless opened our eyes to the need for a more sustainable development as well as a more holistic view on what value really is. It is not just about profit. It is economic, social, and environmental, i.e. everything captured by the SDG framework.
We are thus in the beginning of the Impact Revolution, where businesses start realizing that they have an obligation to all stakeholders, and not simply shareholders, and they understand that value and impact is so much more than financial numbers and a single bottom line. It is highly driven by impact investing, and instead of tech entrepreneurs we see more and more impact entrepreneurs.
The important consequence if this becomes a new global paradigm is, that we are now expanding the concept of value. This is in contrast to how we used to talk about economic impact and would consider simply risk and return when making investments. That was the past!
Now impact is economic, social, and environmental. We must continue to consider risk, return, and impact when evaluating investments. Can it be done? And if so, how do we do it?
How do we measure impact?
Yes, it can be done! We economists are constantly improving our impact assessment skills and can attach a monetary value to social and environmental impacts alongside economic impact. This way of understanding and assessing impact allows businesses to optimize decision-making processes in a holistic perspective to the benefit of their own business and society at once. They will get proof that a good sustainability strategy is a good business strategy.
One might say that such calculations are way to imprecise. However, please consider this: To claim that companies only have an economic impact on society is absurd. Of course, businesses impact society in thousands of other ways – and they have always done so by the way. So to not even try to measure other types of impact is even more misleading than doing it. Consider then how we view risk. We calculate the risk of a project, investments etc. all the time and take this calculation for a fact knowing that it is in fact not. So, why should we not do the same with impact? In the words of Keynes: “it is better to be roughly right than precisely wrong”.
Now the most critical challenge is to establish a common framework for assessing impact and to develop a robust and thriving ecosystem. So, let me sum up by returning to Sir Ronald Cohen: “Impact is the invisible heart of markets that guides their invisible hand”.
Forfatter spotlight
Majbritt Skov
Spørg mig om: Samfundsøkonomi, økonomisk modellering og ESG i et kommercielt perspektiv Majbritt er partner i Deloitte og leder af Deloitte Economics. Hun har mere end 15 års erfaring med udarbejdelse af mikro- og makroøkonomiske analyser for både den private og offentlige sektor. Majbritt er en efterspurgt økonomisk rådgiver i strategiske beslutningsprocesser om optimering og effektivisering. Majbritt er ekspert i at beregne organisationers impact og kan sætte kroner og ører på bæredygtighed. Ydermere bistår hun virksomheder og investorer med at værdisætte ESG-relaterede risici og muligheder i både et kommercielt og samfundsøkonomisk perspektiv - blandt andet i relation til M&A. Besøg Majbritts blog her Ask me about: Socio-economic impact, economic modelling and ESG Majbritt is a partner in Deloitte and Head of Deloitte Economics. She has more than 15 years of experience with conducting micro and microeconomic analyses for both private and public sector clients. Majbritt is an experienced economic advisor in strategic decision-making processes focusing on optimization and effectivization. She is an expert in the valuation of non-market goods and supports companies and investors in assessing their impact and the value of sustainability and ESG-related risks and opportunities from both a commercial and societal perspective - in relation to M&A amongst others. Visit Majbritt's blog here