In today’s world, it’s no longer enough for corporations to offer a great product and build a successful business. Increasingly, they are being challenged to do more.
Governments, the public, employees, and investors are looking for evidence that corporations and private capital are committed to building a more sustainable and inclusive economy that meets the basic needs of all.
It’s not just a social challenge; it’s an enormous business opportunity. According to one estimate, the initiatives necessary to achieve the 2030 Sustainable Development Goals represent a business opportunity in the neighborhood of $12 trillion.
In response to these trends, BCG is working with its private sector clients to make social impact an integral part of its corporate and business strategies. The goal: to increase a company’s total societal impact (TSI), an objective that we believe is as important to future business success as traditional financial metrics such as total shareholder return (TSR).
TSI goes beyond traditional initiatives for corporate social responsibility, sustainability, or corporate philanthropy to include the sum total of social, economic, and environmental benefits generated by the activity of the corporation. The focus is on mobilizing the full scale of a company’s assets, resources, and people to create business innovations that deliver comprehensive and systemic solutions to the world’s biggest challenges.
An active TSI strategy can actually contribute to a company’s financial success and shareholder returns. In a recent study of nearly 350 companies in four industries, BCG found that those companies that were the top performers according to a subset of social, economic, and environmental indicators had a market valuation premium of between 3% and 19%, depending on the industry, and enjoyed EBITDA margins or gross margins as much as 8 percentage points above the industry average.
The greatest impact comes when global corporations partner with organizations in the social and public sectors in powerful public-private partnerships. BCG is convening such coalitions to create system-wide solutions to some of the world’s biggest problems, including global epidemics, access to clean water, the development of sustainable food systems, and initiatives for urban economic inclusion.