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Profit and loss assessment as key driver for sustained business success

Where traditionally the impact of a company was solely measured in terms of the profit generated for its shareholders and its share price on the stock market, today, stakeholders demand increasingly more insight into a business’s societal contribution in a broader sense. Therefore, an increasing amount of companies seem to ask themselves the question: How can we -as a company- solve societal development challenges and reduce the risks in our value chains?

The first step is to assess what risks you are facing and what your impact is on the society at large. This is not a question that you can answer overnight, but leading companies like AkzoNobel started to search for a methodology that would enable them to provide an answer to this essential question.

During 2015 and 2016 we supported AkzoNobel with their profit and loss pilot project and in September 2016 the newly developed profit & loss methodology was launched. After that, the methodology was used to evaluate the impact of AkzoNobel on the society in three dimensions: economic, environmental and social. The profit and loss assessment takes into account not only the own company’s costs and profit, but also the value creation (profits) and negative effects (losses) that take place in other links of the value chain, collectively called externalities. A summary of the results is presented in their annual report.

Results Profit and Loss assessment

Results of the three-dimensional Proit & Loss assessment (source: Annual report Akzonobel 2016)

As stated in the report, AkzoNobel aims to make increasing use of economic, environmental and social impact assessment, as well as profit and loss accounting. Main reason: This will allow them to make better management decisions, including allocation of human and financial resources. In other words, it provides insight in where the greatest impact is created per euro invested.

Strategy Profit and loss assessment

Conceptual table with some illustrative examples of how AkzoNobel creates value or reduces risks in each of the three dimensions (source: Annual report Akzonobel 2016)

Open source methodology

Can I do this for my company as well? The methodology we used is open source and repeatable, so you can do this all by yourself. Feel free to explore the methodologies and download them here. But you can also contact us as we are happy to explain more.

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Profit and loss assessment

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