Profitability

At Hatched we are getting serious this week.  We are going straight to the big issue, MONEY!

The number 1 question we get ask is does doing good actually make you money?                       To which we respond……of course.                                                                                             To which we typically get someone leaning in and whispering oh come on, really……you can tell me……we know it feels nice but does it really make money?

Let’s just visit a traditional successful business check list:

  • Better stock market performance and financial results
  • Resilient to unstable economic conditions
  • Lower cost of accessing capital
  • Consumer trust, preference and loyalty
  • Growing interest with investors
  • Innovation

There is overwhelming evidence emerging that shows good companies are proven to outperform the competition in the areas listed above.   Some people see doing good as a distraction when it facts its attractive, its serious and its a competitive advantage.

Don’t be fooled by our corporate hippie appearance, we are actually very practical people at Hatched.  We take pride seeing our clients outperform the competition in terms of profits, share price and any other metric you’d like to throw in.  Making money matters, it verifies that your business is sustainable and ultimately enables you to have an even greater impact in the world.  Good businesses are proven to be more resilient, productive and ultimately more profitable.  It is an absolute no brainer. 

In case there is still a sprinkling of doubt in your mind, we are going to take you on a quick tour of the facts:

  • The Good Company Index ranks the Fortune 100 companies in the US based on a number of criteria that they consider makes a company good. The latest report can be found here.  The team at Good Company Index compared the stock market performance of those scoring higher on the Good Company Index with their competitors.  The results showed Good Companies outperformed their competitors by over 40% points.  
  • Similar findings exist if you just take those companies that have been listed as the Great Places to Work, better companies had lower turnover and better financial performance see link
  • A similar pattern was also revealed by a local Australian investment advisory agency who said their internal analysis verifies that those companies that go far beyond compliance have significantly better stock prices and profits (hopefully they'll share the evidence soon!)

Better stock market performance and financial results TICK!

  • A 2013 Cone survey of 10,000 people across 10 countries explored companies with a social and/or environmental benefit
    • 96% of global citizens have a more positive image of that company
    • 94% are more likely to trust that company
    • 93% are more loyal to the company (i.e. continue buying products or services)
    • 91% of global consumers are likely to switch brands to one that supports a good cause, given similar price and quality
    • 92% would buy a product with a social and/or environmental benefit if given the opportunity, and more than two-thirds (67%) have done so in the past 12 months
  •  2016 Edelman Trust Barometer reveals
    • 80% of people agree that a company should take specific actions that both increase profits and improve economic and social conditions in the community it operates
    • 8 in 10 people agree that CEOs should be personally visible in discussing societal issues
    • 50% of people who believe trust is falling in big business say so because it fails to contribute to the greater good

Consumer trust, preference and loyalty TICK! 

  • During the financial crisis, B Corps were 64 percent more likely to survive than traditional businesses  

Resilient to unstable economic conditions TICK!

  • Between 2012 and 2014, global assets of socially responsible investing in the US rose to $21.4 trillion, from $13.3 trillion—an increase of 61 percent, which outpaced the growth in total professionally managed assets

Growing interest with investors TICK!

  • A study by Deutsche Bank revealed:
    • 100% of the academic studies analysed in the report agree that companies with high ratings for CSR and ESG factors have a lower cost of capital in terms of debt (loans and bonds) and equity
    •  89% of the studies we examined show that companies with high ratings for ESG factors exhibit market-based outperformance, while 85% of the studies show these types of company’s exhibit accounting-based outperformance

Lower cost of accessing capital TICK

  •  The 2014 Profits With Purpose report by McKinsey revealed that companies pursing purpose and sustainability opened up new value creation opportunities.  The image below outlines the possibilities (big warning on the green sales and marketing, this can go badly as it needs to be done with authenticity and elegance) 

Innovation TICK!

So there you go.   The last thing we wanted to share is that we’ve had some unexpected conversations of late with CEOs and/or Company Founders who are openly admitting to us that they are no longer waking up in the middle of the night concerned about how much money they are going to make but what legacy they are going to leave and what impact they can have in society.   Business is changing.

Being Good Is Serious Business.

Hatched xox