This article was written by Pavan Sukhdev, CEO Gist Advisory.
“Coronavirus has raised the curtain on our faulty economic model and the gaps it leaves behind. We have learnt many lessons and amongst these, one deep lesson is that it’s time to measure what matters. We’re measuring success wrongly at both the national and company level. GDP is a flawed indicator of national performance. And corporate performance is more than just financial gains for shareholders. We need to take into account significant natural capital, human capital and social capital gains or losses for all stakeholders, to build a green and equitable economy of permanence. Diving back into the ‘business as usual’ mode will mean wasting trillions of dollars of taxpayers’ money on what brought us here: subsidies for fossil fuels, intensive agriculture, unsustainable ocean fisheries and reckless destruction of nature. Result? Unstable economy, recession, healthcare costs, societal and economic crises, along with climate breakdown.
The Need To Measure
Corporations produce two-thirds of the world output and employment; in the US, they account for 74-75% of GDP and jobs. But apart from profits, most aren’t measuring any major positive or negative impacts: on nature, on societies, or on their employees. As the world wakes up to a new reality after COVID-19, they will need to answer questions, from investors and customers, about their path to a sustainable tomorrow. But if it doesn’t reflect on the profit and loss statement, where can they start?
GIST Impact has the answer. This World Environment Day, GIST introduces a revolutionary platform for corporations to measure their impact on natural, social, human and produced/financial capitals.
GDP is a poor yardstick for national economic performance: it doesn’t measure large impacts on nature, communities and human health, knowledge and skills. Pavan Sukhdev, Founder and CEO, GIST Impact, highlighted in his book, Corporation 2020, that the Profit and loss account is a poor yardstick for corporate performance. It does not measure a company’s real impacts on employees, society or the planet. With that idea in mind, he conceptualised a platform that will inform corporations, in US$, how they’re contributing to their employees health and well-being; how they’re adding value to communities around them; how they’re positively (or negatively) impacting the planet with their activities. Thus, I360X was born.
Built for large corporations, I360X is an online “Software-as-a-service” platform that assesses Natural Capital (physical and biological resources on earth); Human Capital (knowledge, skills, competencies and health and well-being of individuals); Social Capital (productive value of social connections); and Financial Capital (all manufactured capital, such as buildings, factories, machinery, physical infrastructure, trademarks, patents and other embedded intellectual capital, as well as all financial capital.
The platform uses sophisticated algorithms and global databases to measure these externalities. The result is the comprehensive Integrated Profit and Loss (IP&L) report that integrates value added or lost across all four capitals and helps a company become ‘future-fit’.
What sets this platform apart is that it has clear benefits: I360X helps corporations make sustainable decisions, positively impacting Nature, Society and Humans, as well as the bottom line. I360X helps you benchmark your impact against peers in your industry and region. But I360X is also an effective assistance for investors who can identify companies that are not only performing financially, but also in environmental and social terms.
The Coronavirus pandemic has reminded us that today’s externalities are tomorrow’s costs and the day after tomorrow’s losses. If we carry on ‘business as usual’ investing in fossil fuels, exhausting the limited supply of natural resources, and destroying ecosystems and biodiversity, we will invite more crises: not just health costs, but also natural calamities. It’s time to build back better: invest in alternative technology; support those who depend on nature for their livelihoods; prioritise re-investment in human and planetary health, recognizing the two are connected, and not just target more private profits at the expense of public costs!
We need to rebuild our planet on the right foot, starting first by fixing our lens for corporate performance, and this platform offers a strong start in that direction.”
Find out more about I360X here.