Mission-driven companies, also known as “profit-with-purpose corporations”, became over the past years a powerful trend when it comes to innovative business models.
Until recently companies have mainly focused on maximizing Total Shareholder Return (TSR) and profits, quite understandably. Today, under increasing scrutiny from all stakeholders, companies started taking their Total Societal Impact (TSI) into consideration. TSI is a collection of measurements and assessment tools that capture the economic, social, and environmental impact (whether it is positive or negative) of a company’s products, services, operations, core capabilities and activities. Thus, new statutes are emerging in different countries, including the United-States, United-Kingdom, Italy and France. The purpose of these statutes is to add the TSI approach to strategy settings in order for these companies to leverage their core business to contribute to society.
Adopting TSI decreases the risk of negative events and proposes valuable new opportunities while increasing corporate sustainability. Undergoing such a change brings several added values, including the enhancement of the company’s positioning and branding, deepening it relationships with governmental and influential parties, and changing its market approach and opportunities. It also becomes a competitive advantage when it comes to recruiting new talents.
When it comes to the biopharmaceutical, including TSI to a company’s strategy demands strong efforts on some Environmental, Social and Governance (ESG) matters, such as:
- Avoid and fight corruption
- Conduct ethical human clinical trials
- Prevent mistreatment of animals
- Promote employee safety
- Promote transparent lobbying and equal opportunity
The need to reorganize companies’ business model to connect TSR and TSI in favor of the common good is growing, it ensures sustainable growth and continuity of the concerned companies.
Several mission-driven businesses statutes, each one with its own characteristics, are emerging in the United States and in Europe.
The B-Corp Certification, created by B-Lab (2006), is awarded to profit companies which meet rigorous standards of social and environmental performance, accountability and transparency.
The United States were and still are a pioneer in the social entrepreneurship, with more than 6 million companies founded each year and several statutes (“Benefit Corporation” “Social Purpose Corporation” and “Public Benefit Corporation”) which allow to associate business with societal benefits.
In Europe, the first hybrid statutes emerged in 2005 with the “Community Interest Companies” in the UK. Strongly influenced by the American model and the trend of profit-with-purpose corporations, the “Société à Benefit” was created in Italy in 2016 and the “Société à Objet Social Etendu” (SOSE) status appeared in France in 2018.
Each status entails a general or specific common-good mission to reach and need to evaluate its impact with an evaluation report. However, the need of transparency, profit aspects, mode of governance and the mechanisms of opposability remain different for each of them (cf. picture).
Nevertheless, some questions remain open:
- The opposability of these statutes
- Taxation: Do mission-driven businesses have the right to profit from differentiated taxation?
- The quality evaluation criteria and key indicators: which are the most relevant to evaluate companies’ impact?
- Transposition: Is this model applicable to every company size, from start-ups to big / public companies?