Financial benefits and sustainability–Why going this way?

Posted on March 23, 2012

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It’s about time to start creating relevant content here.

 

The propose of this blog is to share, with whoever is interested in, what I find out on my (somehow utopic) search of ways to contribute to the world.

 

Part of what I’m doing now is to study how to make companies more profitable and what economic incentives they (and people in general) respond and seek. With that, I hope we should be able to fit CSR to the bottom line of business decisions. In fact, the objective is to make the ‘CSR’ word as redundant as possible, as it should just be part of what a business is.

 

As I do believe capitalism is the fairest system human beings are capable of living with, I also believe that we should put our efforts on understanding the consequences of our actions… we need to learn to correctly measure the impact of what we do, and be accountable for it… be responsible for what we do! That’s the link in business practices and responsibility. Somehow measuring results should show the benefits of being responsible and taking charge for your role in society.

 

There’s obviously a cultural shift associated as well: we’re learning that collective wellness most of the times is a lot more valuable that the individual wellness* (from the individual perspective). But rather than discussing it in different philosophical and political ways, why not to think of an old and well know incentive companies (and us as individuals as well) respond really well to (and many times, the only incentive that matters): Money… the pure cash benefit!

 

With that said, there’s a second cultural shift too, specially for my generation and the youngest: Money ain’t bad or shameful. Wanting to have money ain’t the evil of our times. The evil is the limitation of opportunities, the inequality of them for individuals. Of course the lack of opportunities is caused many times by the ambition of perusing more financial returns… and that’s exactly the point! People and companies doing that are just taking bad business/management decisions! (back to culture shift 1). The pay check in the end of the day is far from being the only (and also the main) financial benefit you’d have… serious companies know that since long time, and we, as individuals are learning it too.

 

Sustainability has to do with that. Financial analysis has to do with that. The combination of them is a way to show companies how to make right decisions not just to make sure profitability is assured, but also how to guarantee business sustainability. For a  company to be sustainable, it necessarily has to make sense for the society. If in any way, it harms consumers, environment, raw materials, employees, etc. it is also harming it’s profit chain and its sustainability along the time.

 

But well, how do I proof my point? How do we measure sustainable thinking/action in the bottom line?

 

The answer… I don’t know! But that’s the question to be answered! For those working in consulting as well, know that’s already very good! By knowing the key question, it is possible to structure a framework to solve the problem!

 

Summing it all up, the question I want to be able to answer in the next few years is: What’s the Business Case for being a responsible company?

 

More poetically and with a society focus, the question could be translated into something like: How can we convince companies that by taking the right business decisions we improve life quality in our planet?

 

Here is the typical issue tree for financial benefit:

Value Tree Level 1

My objective is to open it up and share it here for discussions and getting to conclusions. First branch will be the Working Capital.

 

That’s it for now!

 

A bientô,

 

Leo

 

* Before a socialism argumentation, I want to clear up the concept used. Individualistic incentive is still the only thing that matters in fact. As a example, a wealth person might realize that being a bit less wealth but with a community around her not lacking as many opportunities as before, money will be a lot more valuable and better used. The pure view of investment and benefit. Not telling to think collectively. Personally, I don’t believe the majority of humans are able to live by this principle.

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