“The reality is that we are not being honest as a society.” Such were the words of Nana Baffour –Chairman, CEO and Chief Culture Officer of Qintess– when asked about the dynamics of positive social change and profit-driven enterprise.
“There’s going to be some loss from the purely capitalist perspective,” he said in an interview with NSAM. “The idea that you can be doing this stuff [social impact initiatives] and still be growing 20% a year and generating all this profit, that’s just not honest.”
Chatter about social impact seems to be entering a renewed cycle of buzz in the post-COVID world, defined by words such as “policrisis” and “permacrisis”. Global investors are growing interested in enterprises with a social dimension or environmental conscience, rewarding those which go the extra mile.
Publicly, there’s no shortage of investors and CEOs –especially in tech– rallying in favor of using corporate power to enact positive social and environmental change the world over. Yet, very few are willing to accept the choice put forth by Nana: change the world for the better, even if it yields lower growth numbers, or even losses.
“The idea that you can be doing this stuff [social impact initiatives] and still be growing 20% a year and generating all this profit, that’s just not honest”—Nana Baffour, Chairman and CEO at Qintess
A recent PwC survey shows that, in spite of their public stances on the issue of ESG-related outcomes, most global investors won’t accept those initiatives if they result in smaller profits. Per the survey, 81% of investors said they would allow losses of 1% at the most to advance ESG objectives. Of that group, about half were “especially unyielding”, rejecting all initiatives that could result in any decline in returns, no matter how small.
For CEOs, the topic is growing into a minefield. While investors are increasingly favoring socially-oriented companies, with some outright pushing for ESG compliance, corporate leadership has to face the reality of not having their support to go all the way. When surveyed by KPMG, CEOs identified “other pressing business/economic matters” (17%) and a lack of budget (15%) as the main hurdles for the achievement of ESG objectives.
The reality is that the will to produce positive social impact –whether globally or at a local scale– has yet to fully crystallize in the consciences of corporate leaders, even when a chain of crises has made it clear that the world is in urgent need of social, economic and environmental change.
With the threat of a recession looming larger and larger over the world economy, corporate leadership will have even stronger incentives to move away from initiatives that are truly impactful, especially if they require a sacrifice that would be evident in their financial spreadsheets.
“Every time there’s talk of economic pressure, the first thing that gets deprioritized is impact. And this is a fact. The talk of a recession is concerning,” Nana commented.
More Than Tech Jobs
For Nana Baffour, social impact is a serious business. Qintess has made ESG compliance a crucial part of its identity as a firm. Nana himself will be speaking about the topic at the upcoming CrossConnect Forum in London.
From his point of view, while business has done a good job focusing much of its efforts on the environmental component of ESG, that also speaks to its unwillingness to throw its weight against issues in which positive impact can be felt more immediately, though with a probable financial cost.
“Part of the reason why a lot of people are frustrated with the impact on climate is because the change and this impact is glacial, no pun intended. The social aspect of it, that’s day to day,” he explained.
Social impact, in Nana’s view, is more immediately visible. It might take a while for a company to measure the true consequences of greener processes, and those measurements might not be as precise. KPMG’s CEO survey shows that 14% of corporate leaders see the effective measurement of ESG outcomes as a main challenge for the implementation of social impact initiatives.
“We spend a lot of energy on that [environmental impact] because it is like a mirage. The resolution is so far away that we can all talk about it and feel good about it, but we don’t have to do much about it in the short term,” he added. “Whereas what we should and can do something about, which is the social side, is a bit more uncomfortable, so people don’t deal with it as much.”
Social change is more easily measured and perceived. Increases in material wealth can be tracked, as well as job creation, educational scores and economic performance of a community.
Tech companies are particularly well positioned to enact positive change, he pointed out. The IT sector has for decades been one of the fastest growing and most profitable in the global economy, becoming a job-generating machine in territories that can provide enough talented prospects to feed its engines. For regions which struggle economically and where wealth inequality keeps expanding, the tech industry has the chance of becoming a force for good.
But tech can do better than job creation, an activity that remains comfortably within the logic of growth and profit. For Nana, tech companies can also use their knowledge to create products and provide services that improve solutions to basic needs, such as education and healthcare.
“The other thing that is real and impactful is the type of solutions, especially when you talk about government services, healthcare and education. I think technology is doing more and more to help. We are seeing a huge proliferation of technology, especially in the education space,” he stated.
While there’s more and more being done by tech companies in this sense, there are major obstacles to surmount. The main one at the moment, in Nana’s view, is what he described as a “distortion” in the allocation of capital. There’s lots of money to throw around, but it keeps falling away from the hands that can do the most good with it.
“The allocation of capital, the way capital goes where it needs to go, is actually very inefficient and distorted,” he pointed out. “It doesn’t necessarily goes where it needs to go, but it goes to places where people are better at relationships, at storytelling.”
Tearing Down the Kabuki Theater
Even when Nana Baffour speaks openly and with confidence against what he termed the “kabuki theater” of businesses approach to social impact today, it is evident that the situation weighs heavy on his mind.
Qintess’ CEO is nuanced enough to recognize the progress that’s being made thanks to ESG and initiatives that strive for social impact. Nevertheless, he also acknowledges that he, along a small group, are swimming against strong currents. Change is coming, but not fast enough; trapped in a cycle of starts and stops.
“We’ve been told that we can keep growing forever. [Change] is not coming fast enough. Our society, the way it is wired, is against it,” he stated.
For now, Nana’s strongest hopes lie with the young. He, like others, has noticed that today’s youth seems to be more socially and environmentally engaged than prior generations. It’s a thought that warms his heart, but which also gives him pause.
“I’m just worried that the system will eat these kids.They’re going to have the same unfortunate opinions the system has,” he warned.
Reservations and all, Nana is still convinced about the power of corporate leadership to impact communities positively. There’s no shortage of examples in the Americas alone. And if Nana achieves his objective, those will multiply.