Sustainability: a new business opportunity

ne of the great challenges in any leadership position today, whatever the size of your company, is related to the goal of defining the best balance between your organisation's financial performance and performance versus contributing to the progress of society. Managing this balance is a complex challenge and implies a demanding process of changing organisational paradigms, but it may also give rise to new business opportunities, combining financial return and social or environmental impact.

Impact - trend or market demand?

The transition to sustainability or impact sometimes seems intangible or aspirational, but it is currently a path dictated by market forces. Today, over 65% of consumers prefer products with sustainable standards [2]. More than two-thirds of millennials entering the workforce today intend to work for companies that create positive community impact [3]. And this group of millennials, who will receive a transfer of about $24tn by 2020 [4], has a huge orientation towards including environmental, social and governance factors in their investment decisions [5].

How can a company catalyse this potential?

The path set out by the United Nations through the Sustainable Development Goals can be used as a global guiding reference and starting point for the transformation process of organisations. However, it is up to each company to define and implement its transition process towards sustainability and greater social impact, in addition to its corporate social responsibility strategies. In fact, these strategies are often seen as a cost and not as an investment, capable of generating value and growth opportunities for the company. To better implement these transition processes, it is important to better incorporate these sustainability and impact objectives into the core business of companies. The value chain needs to be redesigned to ensure greater alignment between profit and impact. This possibility of reconciling financial return and social impact has allowed the development of a new investment concept - impact investment - that can help companies in this transition.

What is impact investing (social investment)?

It is the application of capital in activities, organisations or funds with the aim of simultaneously obtaining a financial return and a return of value for society, both of which are monitored and influence the investor's decision making [6].

This is a fast-growing area worldwide (the GIIN states that the global impact investment market exceeded 500 billion in assets in 2018 [7]), with the main emphasis on Anglo-Saxon countries (United Kingdom, United States of America and Canada), but it has also had important growth in Portugal.

Why Portugal?

On the global stage, Portugal is positioned as a privileged country for impact investment as it has the necessary elements for a vibrant ecosystem:

• connectivity to the world through a favourable geostrategic position;
• incentives for attracting startups; 
• openness to innovation;
• a market prone to the incubation of new products;
• availability of talent at a competitive cost compared to the rest of Europe.

The role of the Calouste Gulbenkian Foundation

The promotion of an innovation and social investment agenda has been one of the Calouste Gulbenkian Foundation 's main commitments in its social intervention work. This work is based on a strategy of action that combines:

• knowledge production and market intelligence;
• promoting dialogue at national level through the Portuguese Working Group for Social Investment;
• fostering international partnerships, such as the Global Steering Group for Impact Investing;
• financing of social responses that test and validate this new approach, as is the case of investment in Social Impact Bonds.

A decisive moment in this journey was the creation, in 2013, of the Social Investment Lab, now MAZE - a specialized unit to promote the impact investment agenda. Since then, several initiatives have been undertaken to support the development of impact startups through acceleration programs, dialogue with the public sector to promote access to data on impact potential and, more recently, the creation of an impact investment fund. The truth is that the path taken so far has allowed Portugal to position itself at the forefront of the impact investment agenda, both at the public policy level and in the use of new financial instruments.

All these initiatives have prepared the ground for innovative projects to flourish. Projects that can help companies in this process of paradigm shift towards a more sustainable strategy between profit and impact.

It is precisely to support companies in this transition that the Calouste Gulbenkian Foundation has joined forces with the Nova School of Business & Economics to create the Paradigm Shiftprogramme, as part of the Gulbenkian Chair on Impact Economy.

Paradigm Shift is an executive training programme whose first edition will take place on 17, 18 and 19 June. Around twenty places are planned for this edition, aimed at C-Level profiles (Chairman, CEO, CFO, COO, CMO, Dir. Human Resources, Dir. Sustainability, etc.). The Calouste Gulbenkian Foundation will make seven scholarships available, aimed at organisations with high transformation potential, being specifically targeted at members of social and/or environmental companies, micro-enterprises, start-ups and SMEs

References:

[1] "Al Gore: sustainability is history's biggest investment opportunity" (link here)

[2] The Sustainability Imperative, Nielsen (link here)

[3] Purpose at Work, LinkedIn (link here)

[4] Millennials - the global guardians of capital, UBS (link here)

[5] Sustainable Signals, Morgan Stanley (link here)

[6] Glossary for the Convergent Economy, LIS (link here)

[7] Sizing the Impact Investing Market, GIIN (link here)