Published on February 27, 2018

Built to last

By Massimo Getto, Vice President & CFO Viasat Group and Marco Laugero, Controller AFC Viasat Group

In the first pages of a good corporate finance manual, we often find the definition of value creation as a guideline and an objective for companies, organizations, and humans both as individuals and in different groupings in which people work together to achieve their objectives. A company’s main purpose is the lasting satisfaction of the entirety of economic interests of the subjects linked to it. A company’s emphasis on value creation brings into play the concept of cost-effectiveness; that is, the ability to respect over time the multiple and delicate economic balances that characterize company management. The concept of lasting satisfaction is directly linked to the concepts of sustainability, harmonious and forward- looking development, and the ability to link the horizon and the long term with the daily action. The ability to interpenetrate the territory produces a discontinuity with positive external effects for a significant number of stakeholders. In the current economic context, the lasting satisfaction of the stakeholders’ needs necessarily and unequivocally implies social responsibility and sustainability as an ethical position of the entrepreneur or manager. This is a praiseworthy and appropriate additional concern of the company to avoid external negative repercussions or an action of balance in the political arena where the company moves. However, it is also seen as an “institutional component” of innovative entrepreneurial conduct oriented towards the company’s long-term success and survival and which enhances both its economic capital and its social capital. This emerging phenomenon tends to combine economy and society in the enterprise. Social capacity is therefore not just a cost but has now become an essential prerequisite for increasing profits and achieving the Friedman’s goal for management, the maximization of earnings for shareholders. However, this derives from what should be the authentic goal for those who have the honor of leading a company: creating value for the company itself. Creating organizational value that interpenetrates the needs of all stakeholders brings about positive external effects. Value creation for the company must produce value for shareholders only as a derivative. More and more studies show that companies at the top of the list for their attention to sustainability issues are at the same time the best in terms of economic performance and on average better than their competitors. Economic excellence and social capacity must be pursued jointly; they are not an oxymoron. Indeed, the opposite is true as well. Companies that care less for the social capacity aspect had, have and will have a strong decline in image with consequent deterioration of their ability to generate value. The issue of socially capable enterprises is then not adding constraints or defining abstract models but developing strategies, organizations and management and control systems that help the company to benefit from the opportunities of combining economy and society as appropriate to the company’s characteristics. This thesis is further supported by the 17 sustainable development objectives issued by the United Nations (SDGs), which aim at improving the lives of each of us. Proposed in 2015 and ratified by 193 countries, they include fundamental principles such as clean water supply, adequate education standards, health for all and equal rights. However, the role of the business world is also fundamental. The UN has expressly invited companies and financial institutions to contribute to achieving the goals within 15 years. These include not only international giants or the sectors directly responsible for pollution, such as oil companies or plastics producers; good practices really apply to all companies and all citizens. Social responsibility is no longer a niche issue for idealists as in 1970 when Friedman’s article was published. Now, it is a beacon towards which our navigation should be directed in the coming years to allow our companies to create value, grow and attract investments. In corporate communication, the sustainability report will acquire more and more strength and importance, not just for mere legal obligations, but as a primary tool for communication aimed at creating lasting value.

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