What is impact and why it is beneficial for business

A business focused solely on making a profit at any cost, as a development model, has long since become a thing of the past. Today’s successful business must have an idea, a mission, which, ideally, is aimed at improving the life of society. Olga Lakustova, director of the Fund for Support and Development of Environmental and Other Socially Significant Projects “Our Foundation”, told about what impact is, how it differs from charity and why it is beneficial for business.

Impact is positive changes in a person’s life, in the public sphere, obtained as a result of entrepreneurial activity. Companies that work for the benefit of society are called impact companies. Their main difference from social business projects is that the changes created by impact companies are aimed at the long term, and not at creating some one-time benefits.

At the same time, the impact cannot be regarded as charity, it is an investment that involves a return of funds, and not only a return, but also a profit. At the same time, the company is doing something useful for society, but still expects to make a profit from it.

The essence of the impact for business is simple and clear. The task is not only to make an attractive product, but to make the customer who buys your product happier. So that he experiences positive associations, positive emotions, etc. Then the probability of getting a loyal customer will increase several times. In addition, the principle of word of mouth will work – the client will share his emotions with friends and acquaintances, and with a high probability they will also join the ranks of your loyal customers. As a result, you will get an increase in sales.

Take the well-known Ikea as an example. It can be safely called an impact company. The ideology of Ikea is concern for customers, for the environment. “We are optimists and are constantly looking for new ways to make the world around us even better,” declares the Swedish giant, defining its mission. At one time, Ikea really turned the Russian market upside down and very quickly managed to conquer it not only thanks to relatively cheap and non-trivial products, but also thanks to service, quality standards, and their attitude towards customers. She was one of the first in the Russian market to start a dialogue with consumers and offer not only furniture and accessories, but also a lifestyle, which included environmental standards. As a result, when the company announced that it was leaving the Russian market, there was a real stir around it. People have been waiting all night before July 5 for the start of the sale, they continue to wait days and nights for the opportunity to place an order in electronic queues on the site. They order goods at self-delivery points that are inconvenient for themselves, they are ready to overpay with intermediaries who can get goods from Ikea, etc. And all this despite the fact that the company does not give any discounts on products, moreover, even loyalty cards do not work. This suggests that the Swedish giant, thanks in part to its ideology, has managed to form an absolutely loyal sales market. This is how impact ideally works.

Impact is not charity, but these two concepts may well exist in combination, increasing the value of impact investments. A simple example. The administration of the nature protection zone visited by tourists wants to receive additional extrabudgetary funding. Instead of one-time grants from charitable foundations, we came up with the idea to build and equip a honey museum there. Nothing supernatural is required – money is needed for construction, certification of products from local suppliers and marketing. For business, an investment in the creation of such a museum can become a purely charitable story, or it can become an impact project. Having invested in the construction of a museum, in the certification and promotion of local products, an entrepreneur in return can receive preferential terms for the purchase of local products, which are also produced on the territory of the reserve, because bees know no boundaries. Or get the opportunity to offer visitors to the reserve their products – fortunately, domestic tourism has increased many times this year, and there is no shortage of visitors.

Undoubtedly, the sanctions imposed against Russia had a great impact on Russian business. For a while he really was in a stupor. But now the situation is starting to change. It cannot be unequivocally said that what is happening now is bad. These are new opportunities. Entrepreneurs themselves began to understand this, and they actively began to develop new niches. As practice shows, today’s business is interested in working with the cause, not with the consequences, so impact projects right now can take their rightful place in the business community. Today, it is possible to launch positive changes in society not only through charitable projects. In addition, the creation of sustainable development systems has a positive effect on the investor’s ESG rating.

Photo from the site nationalprojects.rf

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