Beyond bringing value to shareholders, modern business is being asked to show commitment to improving society
A lot has been said about purpose in recent years, and about how businesses can take the lead in solving the world’s problems, rather than relying on government. However, purpose is not just about corporate ‘do-gooding’. It actually makes good business sense.
Unilever, Novo Nordisk, Patagonia and Royal Philips are pioneering this approach. They are acting today to create a better world for employees, communities and the environment – and reaping the rewards. They are setting a benchmark for others to match.
Purpose is about companies asking why they exist. These days it is insufficient to say: ‘Our purpose is to enhance shareholder value.’
Businesses are being asked to demonstrate a clear contribution to society, now and in the future. According to Edelman’s Trust Barometer, 56% of people believe that companies focused purely on profit are bound to fail.
In this vein, Larry Fink, chief executive of BlackRock, the world’s largest investment company, recently wrote to over 1,000 CEOs.
In the letter, he stated that his company still looks to invest in businesses with strong financials, but that they also want to see a positive contribution to society. ‘Having a purpose is about long-term survivability as well as long-term profitability,’ he added at the recent World Economic Forum in Davos.
These days we are seeing a lot of political tension, activism and social upheaval. People are raising their voices on issues such as inequality, injustice and climate change like never before. By joining in with these movements, corporate brands can have a say in the social, environmental and ethical changes that may be essential for our survival.
But there are more practical motivations too.
Purpose helps businesses attract and retain staff and build long-term partnerships with customers and investors. It also breaks down silos and enables firms to positively engage with diverse audiences – consumers, customers, employees and investors.
It also unites inter-departmental functions and teams – across brand, marketing, HR, sustainability and corporate affairs – behind a single story, building synergies and collaboration inside and out.