Clear information on the impact that companies have on society and the environment should be seen as a human right, says impact investment pioneer Sir Ronald Cohen.

Speaking virtually on Friday at Tomorrow Summit in Copenhagen, Denmark, Cohen said that in the next five years he expects to see governments requiring companies to publish robust, comparable data on their impact, as part of their regular accounts.

Thanks to technology and big data, Cohen said, it is already possible to count the impact of a business – how it helps or harms its environment and community – in dollars or euro.

For instance, a lack of diversity among employees or a lack of advancement for employees from minority backgrounds, can be quantified by looking at the demographics of the communities a company hires from, to show the extent to which certain groups are missing out.

Cohen chairs Harvard Business School’s Impact-Weighted Accounts initiative, which gathers data on the environmental and social impact of 3,000 companies. Four hundred and fifty of them, he says, “create more damage in a single year than they create in profit”.

But operating this way in 2021 comes at a cost, as the younger generation increasingly choose not to buy from – or work for – companies that they see doing harm. “We can already see in this data a correlation between higher levels of pollution and lower stock market valuations,” Cohen said. The trillions of dollars invested for environmental and social impact “has already tilted the scales in favour of companies that seek to do good and to do well at the same time”.

Cohen made his name in the world of venture capital, before leaving to do “more important things”. He is now the chair of impact investor Bridges Fund Management and nonprofit Social Finance.

Cohen calls the ongoing shift in companies’ and investors’ priorities “the impact revolution”, and believes it will “change the business model of every business”.

“I believe we are within three and at most five years of governments mandating the publication of impact-weighted accounts,” said Cohen, pointing to progress from regulators, accounting bodies and governments in improving transparency. “All of us have to push, as a human right, for impact disclosure on a mandatory basis. We have to ask our governments for it. We have to ask companies to begin to measure their impact, we must demand it of the investment funds in which we invest. Together with the force of consumers and of talent and of some enlightened company leaders… we will get there sooner rather than later. This is the time to make our voices heard.”

5 Media is a partner of Tomorrow Festival

Main photo: Roy Bar