Contact Us
66 Avenue des Champs-Élysées, Paris 75008
01 34 90 86 58

Ronald Cohen: “Let’s measure impact like we measure profits”

© Roy Bar,

A promoter of environmental, social and governance (ESG) criteria within companies, Ronald Cohen provides new insights in his latest book, “Impact,” to integrate philanthropic principles into the heart of corporate business models.

Founder of Apax Partners, which he led for over three decades, Ronald Cohen was one of the pioneers of venture capital. Over the past twenty years, he has become one of the most active promoters of ESG criteria. He is notably the chairman of the Global Steering Group for Impact Investment and of the Impact-Weighted Accounts Initiative (IWAI) of the Harvard Business School.

You founded and managed Apax Partners for 33 years. When did you first become aware of the limits of capitalism?

In the late 1990s, I began to see that what I had hoped to achieve with Apax was no longer possible. It had become more difficult to give individuals from modest backgrounds equal opportunities to create businesses and wealth. The gap between entrepreneurs who had massive fortunes and those who did not have similar means or sufficient levels of education was widening. So in 1998, I told my partner that I was going to gradually withdraw from Apax and devote myself fully to social issues.

Your initiatives in social impact have influenced many programs since then…

In 2000, I was contacted by the British Treasury, which encouraged me to develop my initiatives, with the creation of the Social Investment Task Force. The challenge was to succeed in tackling the issue of poverty with a more entrepreneurial eye, to analyze how the State and philanthropy were leaving so many people behind. This led me to think about how best to direct investments to those who want to improve human lives.

We introduced social impact contracts (SICs), which for the first-time rewarded investors based on social outcomes.

And so we introduced Social Impact Contracts (SICs), which for the first time rewarded investors based on social outcomes, in this case the rehabilitation of the Peterborough prisoners. We have gradually moved from risk-return to risk-return-impact. This new order has begun to impact economies, with increasing demands for transparency to measure corporate impact as easily as profits. Since 2014, the creation of the Global Steering Group, which is now present in 33 countries, has begun to impose this risk-return-impact revolution.

The business world has changed a lot in recent years, but is the notion of impact now well integrated?

I wrote this book because it seems to me that this is the ideal time to advance this notion. Times have changed. There are still too few people who don’t understand what it means. When they hear the word impact, many professionals immediately think it’s going to cost them money, when they’re primarily supposed to be making money.


So far, the Impact-Weighted Accounts Initiative (IWAI) has already published environmental impact figures for 1,800 companies. Several thousand more will follow this month.

The task now is to broaden this horizon. Our children no longer want to work for companies that do harm, or buy their products. Portfolio managers know that they must look beyond profits to impact. Huge leaps have been made in technology, in artificial intelligence, in machine learning, in augmented reality, in life sciences, that allow for an unprecedented degree of global impact. “Nothing stops an idea whose time has come,” as Victor Hugo wrote.

Your findings are quite bleak for direct philanthropy. In your book, you indicate that only 144 philanthropic organizations have exceeded $50 million in revenues over a 25-year period, compared to 25,000 corporations. You also hardly use the words taxes or taxation…

In the old model, it was very difficult to raise $15 million with donations alone. Talking about investments, and return on investment, with social impact bonds can change the scale. If you’re helping 5,000 people in poverty, you know that you can, with this new model, help 15,000.

As for taxation, I actually believe that it is as necessary as redistribution. But unlike Thomas Piketty, I don’t think you can solve all social problems this way. For taxation, I actually believe that it is as necessary as redistribution. But unlike Thomas Piketty, I don’t think you can solve all social problems this way. No matter how much you tax the richest people, you will not be able to achieve the same capacity for change offered by the transformation of companies.

What would be the ideal tool that could be transposed to all large companies? You mentioned an environmental cost/turnover ratio…

That’s precisely what the future holds. A future in which it will be possible to measure the total impact of a company in relation to its profits or sales. This index will not only anticipate a company’s ability to attract consumers, but also to retain its shareholders. Over a long period of time, the companies that best control their impact are those that make the most profit. It is possible to measure the environmental cost, but also to add other criteria, such as diversity, the difference in salaries between men and women, in other words a set of elements which, in the event of imbalances, can have a social cost.

The trick is to be able to measure the impact, which is much more complex than calculating sales and expenses. Is this really possible?

The Harvard Business School has launched the Impact-Weighted Accounts Initiative (IWAI), in conjunction with the Global Steering Group on Impact Investment (GSG) and the Impact Management Project (IMP). To date, we have published environmental impact figures for 1,800 companies. This month, we also hope to publish the environmental impact of several thousand companies.

Many indices or tools already exist, such as the IWAI or the B Labs. Should we standardize them?

These different groups merge and complement each other. They have all created a piece of a big puzzle. The creation of IWAI has finally allowed us to see the picture of this big puzzle and to define a priority: to measure the impact of a company as we measure its profits, in order to compare each company. The idea is not just to define number 3 in environmental impact or number 7 in human impact. We need to empower people to decide on the basis of an index.

Investors now expect a level of standardization of standards that allows for reliable comparisons between companies.

IFRS (International Financial Reporting Standards), which is the benchmark for European listed companies, has started to define new standards. The SEC (Securities and Exchange Commission) in the United States has taken a similar step. We are past the stage where investors are asking for more information. They are now waiting for a level of standardization that allows for reliable comparisons between companies. We can draw a parallel with the 1930s, when there were no accounting standards for profits. By 2023, we will have regulations on transparency of social and environmental impact. We are at a turning point, which can be described as the new Bretton Woods. It is a new frontier for capitalism and society.

Is it really desirable to put numbers on the “Good”?

I don’t think we should put numbers on everything at all. As Albert Einstein said, “everything that cannot be counted counts, and everything that counts cannot be counted. “

But I think all the things that affect us today, like climate change, diversity, economic and social equality, are in the hands of corporations, not governments. And investors use them as indicators of future success. So they adapt their decisions according to this data and give priority to companies that want to improve things.


Author avatar