Today, companies are thinking about their impact on the environment and on society as a whole. In this regard, there is a new trend in the economy called “impact”, implying a positive change in the world and life due to the activities of the enterprise.
The literal translation of the term “Impact” from English is “impact”. In English, this term is defined as “exerting a strong influence on someone or something.” In a similar sense, this term is included in business: “impact solutions” are solutions that cause positive changes for the environment and society, i.e. they are a kind of tools, technologies that can be both the basis of business and its direction. Any business can become impact-oriented if it meets two conditions: transparency and availability of analytical activities on issues of socio-environmental impact on the life cycle of the organization and the product of the organization. Thus, the criteria of impact projects and impact companies include openness of activity, measurement of social and environmental impact, verification of results, the desire to solve the problem, rather than creating a marketing reason or PR based on it, and increasing education in impact issues.
A company that does not take into account social and climate risks may no longer participate in the so-called “big game”. The economy as a whole is changing, the traditional one is changing course to “green”. Its components include inclusive, circular, low-carbon, creative and ecosystem economies. As for impact decisions in business, they are beginning to be dictated by the global economy.
Creating impact projects in your business is a time—consuming process that needs to be carried out “according to priority”.
It can be concluded in the framework of three stages:
At the same time, it is worth noting that the main mission pursued by the company, developing impact tools, is to create and maintain the main intangible asset of the company – reputation. It is very important to form loyal relationships with all contact groups (society, government, partners, etc.), be competitive in the market and minimize resistance both within the team and in the foreign market. The secondary mission of impact, depending on the context, can be considered the creation of jobs. Here it is possible to consider the goals of sustainable development, for example, the fight against poverty, as defining guidelines. However, it is worthwhile to holistically assess the impact of steps to implement impact solutions on the financial, social, and environmental spheres, since sustainable development throughout the company’s life cycle depends on it.
The trend of doing impact business has spread so much that impact associations have begun to appear in the West. The largest of them is the non-profit organization GIIN (Global Impact Investing Network), which unites the main players of the impact investment market in the world. It is worth noting that the USA and Canada are the most investment-attractive for impact investments (the share is 58%), while Northern, Western and Southern Europe account for 21%. As for the Russian reality, here the impact investment is only 2-3%. The indicators in Eastern Europe and Central Asia do not differ much from the Russian ones.
The reasons for the formation of such a gap include the following:
The impact component is taken into account in the long-term planning of the company’s activities and its investments. Data on climate and social risks force investors to reconsider investment projects, focusing on a high level of sustainability in the long term. Climate and social risks become investment risks. Risks, assets, and investment projects are being reassessed. The investment focus is shifting to transparent, carbon neutral and impact-oriented companies whose goal is sustainable business in the long term. Companies that export their products face European rules, they are tougher than Russian ones. We can say that for developing countries, impact is the path dictated by the Western European and American markets.
If we turn to the question of how to assess the impact of decisions, it is worth mentioning that there is no single measurement methodology, but there are individual ways depending on the focus of projects. For example, there is a life cycle analysis of separately social, separately environmental projects, but this may not be applicable for all projects. There are green standards, ratings, indicators of sustainable development, UN goals, which include more than 200 metrics.
ESG reporting reflects the impact practices of the company and for 3 directions reveals the awareness of the company in doing business. This approach is very welcomed by investors.
In the West, there is such a practice that if a company does not have its own impact mission, then it invests its finances in those projects that are digitized, those whose socio-environmental impact has already been assessed by some methods and tools. From the point of view of understanding impact solutions, digitized projects are transparent projects. Moreover, the oci
Authors: Marina Kupriyanova, Zavaleev Ilya
Additionally:
Calculation and verification of greenhouse gas emissions, climate risks and ESG
Climate risk and greenhouse gas management