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August 28, 2024
Impact Unicorns: towards a global valuation of the value created by companies
Faced with growing ecological and social challenges, and the need to rethink the criteria that define corporate success, Mouvement Impact France, The Boston Consulting Group (BCG) and ESSEC Business School have been working together for 3 years to define a common vision of what constitutes a successful company. The third part of this study, published last week at the Universités d'été de l'économie de demain, proposes an innovative approach inspired by international standards to converge towards a global valuation of company performance.
With the advent of CSRD, all companies are asking themselves the question of how to integrate ecological and social impacts into the value they create. Through their work over the past three years, Mouvement Impact France, BCG and ESSEC Business School have made this issue concrete, with the emergence of the notion of "Unicorns with Impact".
While unicorns are traditionally defined solely by their financial value (in excess of €1 billion), an initial study carried out in 2022 identified the concept of "Impact Unicorns", defined not solely by financial criteria but by an overall valuation, including the measurement of costs avoided for society.
The second part of this study, published in March 2023, proposed replacing the criterion of financial valuation with that of social and environmental value, measured by the direct costs avoided for society thanks to the activity of these startups, expressed in euros (costs saved by avoiding the emission of tons of CO2 or by getting an unemployed person back to work, etc.).
While measuring direct costs avoided is an interesting first step, it does not capture the full value generated by companies. This new study has therefore extended this approach to include indirect costs and overall societal value. This more comprehensive methodology provides a better understanding of the total impact of companies on society and the environment.
For example, Café Joyeux, which employs disabled people, doesn't just reduce welfare payments. Its activity also creates value by changing the way disability is viewed, and by offering financial and social autonomy to its employees, which has a positive effect on society as a whole.
Thenew methodology proposed to evaluate the companies on the panel is based on a monetary analysis integrating the direct and indirect effects of companies. This approach, inspired by Social Return on Investment (SROI, or Social Value), translates social and environmental impact into financial terms, making these benefits more tangible and comparable.
To illustrate this approach, case studies have been carried out on four impact startups, such as Phenix, May Santé, Quai Liberté and Simplon. These companies demonstrate how a comprehensive assessment of the value created, including disease prevention, improved quality of life, and reduced inequality, can revolutionize the way we evaluate business performance.
This method, inspired by new international approaches, revolutionizes the way in which corporate performance is measured. For the impact companies evaluated during the study, avoided costs and total value created correspond on average to 130% of their sales. Although none has yet reached the threshold of 50 million euros in annual avoided costs (the threshold identified for becoming an impact unicorn), the measurement of their impact, including both direct and indirect costs, positions these companies at the forefront of global performance, a trend that is set to become the norm in the coming years. With the right support, these companies could become tomorrow's unicorns, playing a key role in the transition to a more sustainable and inclusive economy.
The study highlights the importance of measuring and valuing not only a company's economic performance, but also its social and environmental contribution. This new approach encourages a more holistic assessment of companies, in which their ability to solve societal problems is recognized alongside their economic performance.
With the growing demand for transition funding, the widespread measurement of avoided costs and value created is also a fundamental challenge for public authorities. It represents an opportunity to imagine a renewed partnership with companies, making it possible to achieve social and environmental savings in the short, medium and long term.
Recommendations from Mouvement Impact France :
"This study sheds new light on the real economic efficiency of impact companies. Far from being compromised by the quest for impact, their overall performance is, on the contrary, considerably strengthened. The ability to integrate all costs, including real natural and human costs, into the valuation of companies represents a crucial challenge in supporting the entire economic fabric towards robust models, combining performance and sustainability." details Caroline NeyronGeneral Manager of Mouvement
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