Today marks the launch of the True Profits initiative by the Impact Economy Foundation. The initiative redefines profit, from financial profit to True Profit, the profit of a company after accounting for its social and environmental impact. The goal of the initiative is straightforward: to make impact financially rewarding, so that the companies doing the most good also become the most profitable.
Business has the power to drive solutions to humanity’s greatest challenges, from climate change to inequality. But today’s markets are not designed to support that potential. The economic system still rewards short-term financial gains, even when they come at the expense of people and the planet. The root of this problem lies in what we count — and what we ignore.
The Profitability Gap
Currently, impact often does not pay. Companies leading on sustainability face a Profitability Gap: they bear the costs of doing good, while pollution and exploitation remain unpriced. As a result, pioneers in areas like green hydrogen, clean steel, and plastic recycling struggle to compete with conventional business models.
“Markets scale what they reward. Today, cost-cutting and externalisation are rewarded, while contributions to nature, health, climate and fair pay are not.”, says Werner Schouten, Director of the Impact Economy Foundation. “Many companies aspire to lead on climate and biodiversity. The question is: how do we ensure that solving the world’s biggest challenges is the most profitable thing a company can do?“
Closing the Gap with True Profits
To build a truly sustainable economy, we must design out the tension between profit and impact. We must fix the foundations of what we count in the economy. This starts with redefining profit: from financial profit to True Profits.
True Profits represent a company’s financial profits after accounting for its most significant external costs and benefits. By quantifying impacts across nature, society, and human well-being and expressing them in the universal language of currency, True Profits reveal what a company contributes to the world.
From Redefining Profit to Making Impact Profitable
While transparency on True Profits is a first step, rewards for impact are essential. “Past years have been dominated by impact transparency through frameworks like the CSRD and the Green Taxonomy. But reporting alone will not change the world,” Schouten adds. “Now it’s time to move from reporting to rewards. We need to make impact profitable.“
True Profits provide the foundation for a new class of impact incentives that reward companies for their positive contributions to society. This includes putting a price on pollution, valuing nature on the balance sheet, and introducing tax incentives for truly impactful companies. In doing so, we can shift from a race to the bottom on cost to a race to the top on impact.
A new era for profits
The True Profits initiative aims to create an economy where companies no longer compete on the lowest price, but on the highest True Profit. The initiative is a global collaboration uniting companies, investors, and policymakers to align profitability with impact.
It’s time to design an economy where the most impactful companies are also the most profitable ones.
Interested in learning more about True Profits?
Visit https://trueprofits.org/ or contact us at trueprofits@impacteconomyfoundation.org
