The Purpose of the Corporation

The Purpose of the Corporation

Sir Ronald Cohen

Father of impact investing

The idea that a corporations only objective is to make money is now behind us. Success in business from now on is defined as making money while improving lives and the planet. Join Sir Ronald Cohen in this video as he delves deeper into the role of the corporation in ensuring this change.

The idea that a corporations only objective is to make money is now behind us. Success in business from now on is defined as making money while improving lives and the planet. Join Sir Ronald Cohen in this video as he delves deeper into the role of the corporation in ensuring this change.

Now free to watch

This video is now available for free. It is also part of a premium, accredited video course. Speak to an expert today to watch more.

The Purpose of the Corporation

10 mins 43 secs

Overview

The idea that a businesses only objective is making money is now behind us. Success in business from now on is defined as making money while improving lives and the planet. In this video, we delve deeper into the role of the corporation in ensuring this change.

Key learning objectives:

  • Explain how the role of companies will have to change to embrace impact

  • Give real world examples of how companies are better delivering impact

  • Answer why companies will have to provide better transparency through accounting

Now free to watch

This video is now available for free. It is also part of a premium, accredited video course. Speak to an expert today to watch more.

Summary

How will the role of companies change in order to better deliver impact? 

  • Initially, the role of the company was to make money. With the arrival of impact and with the measurement of companies impacts, as well as their profits, companies are going to see their role changing.
  • The articles of association that set out the objectives are going to have to change to set out a purpose that is consistent with making money and improving lives and the environment at the same time. This is going to require a rejigging of the definition of directors' duties.
  • If a company creates negative impacts in the process, it will impact its sales. It will affect its sales because it will lose consumers. It will lose talent and it will see investors disengage from it. 

What are some examples of how businesses are better delivering impact?

  • Some have chosen to do it through their employment. I refer to Chobani, which is the now famous yogurt company that has focused on employing immigrants.
  • Addidas - which tries to create shoes, the top ready for recycling so that you don't have to go back and create more polluting plastic, as you continue to expand your sales.
  • Ikea - they are purchasing recycled materials very often to manufacture their products, they're worrying about the pollution that their fleets of trucks are creating in the world

Why will companies have to provide better transparency through accounting?

Companies have to prepare themselves for this transparency, which may come in the next three to five years. An increasing number of companies are beginning to measure their impact so as to put themselves in a better position, when transparency comes. Companies that optimize both profit and impact together with risk, will deliver better growth and better profitability, because they will be the ones that will have an advantage in recruiting talent, in recruiting customers and in recruiting loyal investors.

Now free to watch

This video is now available for free. It is also part of a premium, accredited video course. Speak to an expert today to watch more.

Sir Ronald Cohen

Sir Ronald Cohen

Sir Ronald Cohen is the Chairman of the Global Steering Group for Impact Investment, the Impact-Weighted Accounts Initiative at Harvard Business School and The Portland Trust. At the start of his career, he co-founded the private equity firm Apax Partners. In 2020, he wrote the bestselling book “Impact: Reshaping capitalism to drive real change”. Considered the Father of Social Investment, in 2012 he received the Rockefeller Foundation’s Innovation Award for innovation in social finance.

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