Challenges and opportunities of the triple impact in times of pandemic

Although meeting triple impact objectives -responding to social and environmental demands related to the business, while achieving economic results- is desirable for companies, many fail to implement it and choose to carry out Responsibility actions Entrepreneur without modifying her way of operating.

Why? For María José Murcia, professor at IAE Business School and specialist in Sustainability, the biggest challenges for companies to embrace the triple impact are two.

On the one hand, the "short sheet" of the crisis generated by the pandemic diverts economic resources -due to the large drop in consumption and sales in many sectors- and the attention of management, focused in the short term, while the logic of triple whammy calls for attention and focus on the long term.

"On the other hand, it implies a paradigm shift. Traditionally the triple impact has been seen as something "good" or "desirable", but a cost center, something that "makes more expensive" the solution that as a business is intended to deliver to the market", explains the expert.

For the specialist, there are several business trends that help dispel the myth of the "more expensive" triple impact. "Opportunities will be given by new technologies -they allow the production of goods in a much more efficient way and at the same time, with less environmental impact-; the growth of the circular economy, which implies the adoption of production models leveraged by sharing , rent, reuse, repair, renew and recycle materials and products, creating added value; and the change in consumer values ​​that increasingly values ​​sustainable solutions that take care of social and/or environmental objectives", he explains.

If we add to this that talent is attracted to work in environments that ensure professional development and contribution to a fairer and more inclusive society and a more livable planet, and investors seek opportunities in assets that forge environments and profitability More resilient, triple-impact businesses will be better positioned to attract talent while accessing the capital needed to grow, especially in difficult times.

For Murcia, ethical conviction is also key, in addition to the sense of urgency on the part of the leadership to implement this new paradigm. "It is not something idyllic, nor is it a vision of the world of a large corporation with its own structures and greater availability of financial resources," he says, although he acknowledges that it is not enough to decide, an effort must also be made to communicate the new vision to all organizational levels, align incentives and implement a sustainable strategy.

A CHALLENGING MODEL

For Federico Muxi, partner and managing director of BCG in Argentina, "all processes in a company change if the triple impact logic is adopted. And this is not easy," he acknowledges.

"It's not just a change in leadership mindset, it's a change in the business model, which can't be accomplished in a day," he explains. Instead, taking a CSR measure is something that can be done without changing the firm's value proposition at all.

BCG adopts Total Societal Impact (TSI), a definition that integrates the total benefit to society of all products, services, operations, capabilities and activities carried out by an organization. "Positive contributions to society increase business value. This is not achieved with Social Responsibility actions, but by integrating the demands of society and the relevant environmental ones, into the business model," explains Muxi.

By doing so, firms will be able to mitigate the risk of significant negative events and open up new opportunities, tap into new markets, reduce costs from reduced waste, or create a more reliable supply chain.

"The triple whammy is a huge challenge and for it to happen you need convinced leadership, based on the belief that in the long term it is the best thing for business," says Muxi who, at the same time, admits that not all Firms are going to perform well with this logic.

"As in any business strategy there are winners and losers; there are those who will be able to implement it well and those who will not, but BCG research shows that there is a correlation between companies' focus on the triple impact and their economic performance. Today , betting on this is a critical success factor," he says.

According to BCG's research on 300 companies from different sectors, those with good environmental, social and corporate governance performance achieve higher profitability and higher valuation multiples than firms with weaker performance in those aspects.

"This vision ensures higher profit margins and better valuation multiples for companies that lead and promote these practices," explains the specialist.

The Argentine and pandemic context is complicated, he acknowledges. "It is true that concern for the short term is exacerbated. But what better opportunity than this to make a more inclusive view a reality and, for example, take care of employees and align the business by addressing social demands such as inequality?" Muxi asks.

"There are many opportunities not only in food, but in retail, banking and energy," he lists a few. An example of a new inclusive business would be Mercado Pago, which reached underbanked sectors very well, providing a very good service at a low cost.

"It has a huge social impact that allows access to financial services to populations that did not have it and were excluded. It is important that creative and profitable business models manage to serve segments of the population that were not traditionally served", says Muxi, because this ensures not only social inclusion, but also that the solution is sustainable over time. "That is achieved with innovative businesses," confirms the specialist.