When Larry Fink, CEO Blackrock announced in his letter to shareholders, “purpose is the engine of long-term profitability” he made multinational businesses realise that short term, ‘take, make, dispose’ models must be replaced by models that value our resources – like people and earth’s natural resources.
If we want to see business thrive in the long term, we must consider the long term impacts – both on our businesses and the impact that our businesses have. Underpinning this, numerous research papers point to the desire of our stakeholders for fairer business practices. To start, consumers are a third more likely to buy products or services from a purpose-driven company and 50% more likely to switch brands from one they typically buy, according to the Shared Value Initiative. New talent is more likely to look for businesses that do good. Purpose-driven companies had 40% higher levels of workforce retention than their competitors, according to the Deloitte Insights 2020 Global Marketing Trends Report. And businesses are under increasing scrutiny through procurement processes as well as from investors. According to Morningstar, “net flows into sustainable funds this year are on track to triple their 2018 total, driven by ESG (environmental, social and governance) factors as well as the desire to make a social impact.”
So it seems doing good business is good for business. But it’s more than solar panels and using recycled plastic. Consumers and employees especially want to know that the brands they buy from and work for share the same values as they do. They want to know that brands they are invested in care about the same things they do – to such an extent that they’re willing to act on it. They are purpose driven, led by a desire to leave the world in a better place than they found it.
So what does it take to be a purposeful business in practice?
A purpose is a company’s reason for being. It must be baked into strategy, operations and practices that involve everyone from customers, to staff, to people in the supply chain. Most importantly, it goes beyond making money. Your purpose is about the positive impact your organisation can bring to the communities and environments in which it operates.
To get technical, purpose is a verb, not a noun. It’s about how you ‘do’ – how you act and behave, consistently, rather than pretty words you hang on a wall. The behaviours and habits you live every day are what make up your culture. Through a purpose-driven culture, you’re more likely to make business decisions that reflect the organisation you want to be. It’s this sentiment that led Drucker to say, “Culture eats strategy for breakfast”. It’s important to dig deep to assess your own culture, the level of engagement of your people, and whether they feel empowered to bring their best selves to work. Connecting your people’s individual purpose with organisational purpose is the critical link.
Lastly, purpose must be measurable for the business and society – of social and environmental benefits, in addition to profit. You need to ask questions like: What data is important to understanding your total social, environmental, and financial impact? And equally important is: What is not currently being measured that society will hold you accountable for? A range of metrics can be monitored, such as your performance-management systems. For example, Seventh Generation, a maker of cleaning and personal-care products, built sustainability targets into its incentive system for all staff, as part of its goal to become a zero-waste company by 2025 and the Co-op CEO’s pay is linked to climate change targets as part of their 10 point climate plan.
Whilst fulfilling a purpose requires everyone to be on board, it needs strong leadership to encourage rigour in embedding it in your company’s core.
The people behind the scenes
There is no purpose without people. We’ll explore three businesses and what it is about their leaders that makes them so purpose driven.
Tony’s Chocolonely was founded by Dutch journalist, Teun van de Keuken, who became fascinated and concerned by the existence of illegal child labour and modern slavery on cocoa farms in West Africa. This was in spite of the 2001 signing by a number of large international chocolate companies of the Harkin Engel Protocol aimed at eliminating the ‘worst forms of child labour’. After three years of unsuccessful attempts to change the industry through investigative efforts, van de Keuken decided to start producing chocolate bars himself. It is through his determination that the brand has a clear purpose of making all chocolate 100% slave free across the globe, with social activism at its core.
Patagonia’s Yvon Chouinard is a passionate mountaineer and climber with a love for the outdoors. He wanted to have the best kit to climb with, but also to use the proceeds to protect the areas he climbed. Recognising that the financial success of the company provided the opportunity to also achieve personal goals, Chouinard committed the company to being an outstanding place to work, and to be an important resource for environmental activism. He wrote Let My People Go Surfing as a guide for his staff on the importance of doing good and having grand adventures, which has gone on to teach hundreds of businesses these guiding principles. Through his persistence and courage he’s set a standard for how a business can mitigate the ravages of capitalism on earth’s environment.
And then there’s the CEO of Sky, Jeremy Darroch, who after viewing a documentary on ocean plastic pollution was unwavering in his ambition to do something. Sky had been involved in beach cleans but wanted to use their business to do more to effect change. As part of their commitment, Sky eliminated single use plastic across their entire supply chain, launched a £25m innovation fund to find alternatives to single use plastic and partnered with WWF to create more marine reserves. It was the vision of the CEO that made this work. He seized an opportunity – not driven solely by financial gain or other metrics – to make a positive impact on the planet. As a result, Sky now advises the UN and is the founding member of albert, an industry-governed organisation tackling the environmental impact of TV production – now all Sky Sports, Sky Studios and Sky-commissioned UK productions undergo albert sustainable production certification and calculate their carbon emissions.
What we can learn from them
The thread that hangs these businesses together is that their leaders believe and breathe a genuine corporate purpose. They are leaders who believe there is a reason to exist – beyond making a profit – and they use their business to make a positive impact, so they can thrive in the long term. They have instilled their drive into operational culture. Strong leadership enables these businesses to channel purpose into the pores of its processes and people.
Business leaders must ensure that purpose uses the core business to drive societal change – not the other way around. They must focus on identifying and expanding the connections between societal and economic progress. And it must be measurable. But it doesn’t come overnight. Being a purpose-led company requires a deep commitment and continuous work as social norms, consumer and employee expectations, government policies, and other external factors continue to evolve in our global society.
Victoria Page, Founder, VP Comms, Corporate Purpose Leader, Brand Strategy Advisor & Entrepreneur