Nowadays, the words “impact” and “sustainability” have become very relevant in our society. However, it is important to define precisely what these terms mean, as there are different interpretations in the social and business spheres.
In this post, we will discuss the difference between an impact organisation and a sustainable organisation, following the definitions of respected institutions such as the Global Impact Investing Network, Impact Frontiers and the Impact Manager Project. We will also look at how both forms of organisations contribute to building a better future.
Impact organisation vs. sustainable organisation
An impact organisation is one that is characterised by a clear intention to address a social or environmental challenge. All its products and services are closely linked to the resolution of this challenge. Therefore, its purpose goes beyond profit and satisfying market demand; it seeks to generate positive change in society and the environment.
On the other hand, a sustainable organisation is one that manages both its positive and negative impacts generated by its operations. Although its main objective is not to solve a social or environmental challenge with its products or services, it is concerned with identifying the impacts it generates and seeks to increase the positive ones and reduce or eliminate the negative ones.
Example of an impact organisation vs. a sustainable organisation
We can better understand the difference between these two forms of organisations through the following example:
Let us imagine a company that sells ice cream and employs people at risk of social exclusion.
- If this company’s main objective is to improve the quality of life of these people and actively seeks to find ways for them to access employment, including adapting its product offer in case of need, we would be talking about an impact organisation.
- On the other hand, if the company also employs people at risk of social exclusion, but its primary objective is to make a profit and satisfy market demand by selling ice cream, without a specific focus on improving the social situation of its employees, it would be a sustainable organisation.
It is important to note that both forms of organisations have the capacity to contribute to creating a better future, although their approaches are different:
The impact organisation actively seeks to solve a social or environmental challenge, generating a significant and sustainable positive impact on society.
The sustainable organisation, although its main objective is to make economic profit, can also adopt responsible practices in its value chain, such as the use of local raw materials, green practices and gender equity, which also contributes to building a more sustainable future.
Below is an explanatory video in which Pedro Olazabal analyses and explains these concepts through the aforementioned example.
In short, the difference between impact and sustainability lies in the core focus of the organisation. An impact organisation seeks to solve a social or environmental challenge with its products and services, while a sustainable organisation manages its impacts, but its primary goal is economic success.
It is critical for both companies and individuals to understand these differences in order to make informed decisions consistent with their values and objectives. Both approaches have an important role to play in building a more just, sustainable and equitable future for all.
At Zubi Group, we follow the path of impact and sustainability to make a meaningful contribution to a better world.
