Where we advocate for change.
Creating the conditions to reward impact
For Europe to build resilient markets and strengthen its competitive position, we need to rethink the rules that define success and the incentives that shape business behaviour, so that impact becomes profitable. With True Profits, we advocate for change in various domains, aiming to create the conditions for impact to be rewarded in the market.
Rethinking fiscal policy to reward impact
Fiscal policy shapes corporate behaviour by determining what is rewarded and what is penalised. Yet today, tax systems and pricing structures often fail to reflect the social and environmental consequences of economic activity. This allows cost externalisation and distorts competition towards the lowest price, rather than the highest positive impact.
Through targeted reforms, we can reshape fiscal incentives so that they are better aligned with long-term value creation. This shifts competition towards innovation and societal responsibility, strengthening economic resilience and competitiveness.
We need fiscal policy to send the right signals, so that impact becomes a competitive advantage rather than a cost.
What we advocate for:
True Profits Tax
Corporate tax rates should be differentiated based on impact. A True Profit Tax, based on CSRD disclosures, can align taxation with real value creation by differentiating profit tax rates according to companies’ net positive or negative impact, thereby also transforming standalone disclosure into a fiscal incentive that maximises positive impact. This turns disclosure into a direct fiscal incentive to maximise positive impact.
Systematic pricing of environmental and social costs
Prices should reflect real costs to society.
- Specific impact levies, such as on material extraction, pollution, or ecosystem degradation, can directly internalise environmental and social costs into market prices and raise the cost of harmful activities, thereby also encouraging product and process innovation towards positive impact.
- Impact border tariffs on key externalities, similar to the Carbon Border Adjustment Mechanism (CBAM) but expanding beyond carbon to cover biodiversity loss, material use and pollution. This creates a fairer competition, incentivising businesses to achieve the highest positive impact, while also preventing the outsourcing of harmful production to less regulated markets (impact leakage).
This way, companies that invest in cleaner products, circular processes and responsible supply chains gain a structural advantage.
Rethinking capital allocation to scale impact
Capital allocation shapes corporate behaviour by signalling which business models can scale and at what cost. When impactful activities face the same financing conditions as polluting activities, capital markets fail to penalise harm while also failing to reward those creating long-term societal value.
Making impact a condition for capital allocation restores these market signals. It enables impactful business models to scale more easily and compete on fairer terms, while steering corporate behaviour towards innovation, responsibility and long-term value creation.
We need capital allocation to determine which business models scale, and which do not, based on their contribution to society and nature.
What we advocate for:
Impact-aligned monetary and supervisory policy
The European Bank should reshape its incentives and investments:
- Building on the climate factor introduced last year, the ECB can further adjust its collateral framework and asset purchases. It should exclude harmful assets and activities and prioritise sustainable investments, moving markets towards competition on sustainability and long-term contribution.
- Through impact-adjusted interest rates, the ECB can steer lending towards positive impact. Banks receive more favourable funding conditions in proportion to verified impact-aligned lending, with benefits passed on to companies through lower borrowing costs. In turn, portfolios across the economy finally align with sustainability and societal resilience.
This makes positive impact a determinant of how capital is allocated and priced.
Putting social impact on equal footing
Sustainable finance remains heavily skewed towards environmental metrics.
- We need to accelerate the development of an EU-wide language for social impact that allows social KPIs (such as fair wages, equality and community benefits) to be assessed, compared and priced alongside environmental metrics. Embedding social performance into financial products and incentives would help correct the current imbalance in sustainable finance, where social outcomes often remain underrepresented, and ensure that capital allocation also supports a just transition alongside climate goals.
This strengthens the social dimension of sustainability policy alongside environmental objectives.
Recognising impact in accounting
Accounting plays a central role in shaping how markets interpret performance. What is recognised in financial statements becomes the basis for investment decisions, management incentives and corporate strategy. When environmental and social impacts remain largely invisible, real value creation cannot stand out to markets.
By updating accounting rules and innovating to recognise material impacts and long-term dependencies, financial statements can send clearer signals about what truly drives value. This helps align corporate behaviour, investment decisions and market outcomes with long-term societal and economic goals.
We need financial statements to tell the full story of value creation.
What we advocate for:
Integrating impact into financial statements
Material environmental and social impacts should be visible where decisions are made.
- We need to develop how to activate impact on balance sheets, so that climate, nature and social investments are recognised as value-creating on financial statements, and not as expenses affecting capital access and business value. This way, balance sheets and other accounts finally make transparent the social and environmental impact of organisations, enabling the most impactful and resilient to stand out, to boards, regulators, and investors.