Impact, mission, taxonomy, SFDR (Sustainable Finance Disclosure Rules)… After CSR and ESG, new words enter the lexicon of business leaders. It must be said that we have changed the paradigm. Our societies have reached such a level of urgency in the face of global warming and widening social and territorial inequality that traditional approaches based on identifying and reducing negative externalities, while important, may no longer be sufficient. Entrepreneurs and their shareholders now face the following challenge: how to place sustainability at the core of the company so that it becomes a real driver of environmental and social progress?
Triple disruption at work
All the vectors of change are moving: firstly, regulatory changes affecting companies or investment funds change the conditions of operation and the cost or even access to financing. Then there is the expectation of employees who “vote with their feet”. Finally, the voice of customers who face the same demands and may suddenly change their buying behavior.
However, the final consumer is basically always a citizen who is a “consumer actor”. Even BtoB companies are now BtoBtoC and must provide answers to these societal expectations to sustain their activities. The good news is that impact and sustainability are primarily the subject of innovation at the heart of the company. And it’s exciting!
Innovation as a driver of change
Engaging in an impact approach is a positive initiative that provides answers to the expectations of employees, customers and society. And the answers come through innovation. Innovation in products, services, processes, distribution… there are many forms of continuing to do one’s profession, but in a different way.
As in any innovation process, the key is to create a large portfolio of ideas and projects. Employees, customers, and citizens are full of them. Each proposal will inevitably pass through the sieve of medium-term viability and an operational plan of action for its prioritization, implementation and funding. The company may have to postpone the hydrogen technology project for economic reasons in favor of the biofuel project, which is initially more affordable. Dynamic project portfolio management is important.
Conditions for success: business utility, long-term and leadership
Both SMEs and ETIs are not in the market to make “hits”. Often these are family or inheritance matters that are planned for the long term. So it’s not about inventing another company or coming up with a new slogan, it’s about innovating based on who we are and our strengths. And ultimately return corporate utility.
Because this is the very principle of entrepreneurship — to satisfy unsatisfied needs. It is by returning this utility to the center of strategy and taking into account new societal demands that innovations will reach their public. Entrepreneurial leadership is essential to clarifying this vision.
Time is an important element. Some customers are not yet ready to pay more. As with any innovation process, you need to be prepared, stay ahead of the curve, manage “time to market” and be flexible to be able to position yourself as demand changes. There is no doubt that acceleration – whether voluntary or under pressure from the stock market or NGOs – is already happening among their BtoB clients on these societal issues. Then the long-term perspective is a value that pays off.
“Greenwashing”, “shock washer”… How to distinguish grains from chaff? Only time will tell. Of course, there can be “quick wins” and it’s important to implement them to motivate teams. But deep innovation and transformation initiatives are serious investments and necessarily take time.
Positive financing should support all sectors
European legislation has created a reading table to better define the profile of funds compared to the “impact” approach. According to the Sustainable Finance Disclosure Regulations (SFDR), we find ‘Article 6’, ‘Article 8’ and ‘Article 9’ type funds. The first do what they have always done. Article 9 funds support activities that directly contribute to the development of a sustainable economy (renewable energy, health care, education), in light of the environmental and social taxonomy, which allows them to be directed to these sectors.
Those belonging to the “Article 8” type continue to invest according to their own investment space and undertake to reduce or eliminate the negative effects of the activities financed, according to the environmental and social characteristics. Therefore, they play an important role in the transformation of the economy. Time and resources to finance investments in social innovation of SMEs and ETIs depend on them. The implementation of positive finances depends on them.
Fanny Lettier and Francois Rivolier, co-founders of Geneo Capital Entrepreneur
Expert opinions are published under the full responsibility of their authors and in no way involve the editors of L’Usine Nouvelle.
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