Beyond Compliance 2024

Beyond Compliance: Embedding Impact through Innovative Finance28Under any of the above scenarios, companies can participate in collaborative processes and leverage them to test approaches in a way that maximizes collective learning while minimizing risks. By partnering, companies can co-develop and fund large-scale pre-competitive initiatives that address critical shared social and environmental challenges and risks. Industry coalitions and partnerships are gaining momentum, as companies work together to set and disseminate new norms, standards and best practices for their industries. In these processes, OBF approaches can be used as an organizing principle to clarify goals and align incentives, and as a tool to unlock or accelerate specific outcomes in multistakeholder processes. Issues such as human rights in supply chains, circularity in product development, access to healthcare for employees or scarce skills development in the broader market are among the most likely to be addressed in the coming years through mechanisms like those outlined above. These are areas in which joint solutions can address issues faster and more cost-effectively than companies acting on their own. Innovative finance solutions like OBF provide a framework that supports cross-sectoral cooperation and aligns priorities. Scaling innovative finance as an integral part of corporate strategy As companies gain experience with OBF, they can move towards integrating the approach into broader corporate decision-making processes and developing market-building efforts across industries and sectors. This would, over time, result in the integration of an OBF approach across business functions such as supply chain management, sustainability risk management and governance. Stages of institutionalization of OBF within an organization TABLE 3 Initial stage: Piloting and experimentationIntermediate stage: Building capacity and scalingAdvanced stage: Integration and institutionalizationMature stage: Sustained impact and continuous learning Key focus Test OBF models, collect evidence, develop clear narrative and build internal knowledgeIncrease awareness, build demand and support wider adoption of OBF practicesAchieve a systematic, high-quality OBF practice with OBF embedded into core business strategies and internal processesMaintain maturity through continuous improvement and advocacy for OBF as a standard mechanism in core corporate business Activity Participate in a pre-existing project or design pilotReplicate pilot to drive cost effectiveness and sustainabilityAdoption across different business functions and teamsImpact is integrated into corporate decision-making Team Small core team from existing functions, and executive sponsorshipFormal engagement of relevant teams such as finance, sustainability and implementing divisionsA dedicated OBF function or OBF shared resources across functionsA community of practice to share knowledge and continue refining the approach Corporate decision-makingNone, this is meant to be a source of learningInforms sustainability strategyAn integral part of the company’s sustainability strategyAn integral part of the company’s overall strategy