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Business Purpose and Social Change

Mountains covered in snow

The following is an extract from Sustainability to Social Change.

Business historians have studied company statements about their purpose. The first generation of statements were appealing slogans like Disney’s “To make people happy” or General Electric’s “We bring good things to life,” meant chiefly for advertising and company placards. Then companies began to speak directly to their customers. McDonald’s said it this way: “To be our customers’ favourite place and way to eat and drink,” and Wal-Mart put it plainly: “We save people money so they can live better.”

With the move to serving shareholders, messaging on company purpose took on new dimensions. For instance, Limited Brands (who then owned Victoria’s Secret, Pink, and Bath & Body Works) said it was “committed to building a family of the world’s best fashion brands offering captivating customer experiences that drive long-term loyalty and deliver sustained growth for our shareholders.” In turn, Disney’s purpose morphed into business-speak: “To be one of the world’s leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services and consumer products.” Today we hear statements that speak of sustainability and shared value. Dupont proclaims its purpose this way: “To create shareholder and societal value while reducing the environmental footprint along the value chains in which we operate.”

Companies that go further and aspire to lead social change face a future of heightened expectations and more demanding constituencies.  Here is what’s ahead.

People want to work for, invest in, and buy goods and services from a company with a compelling “social purpose”

Good products, profits, and employment practices are “table stakes”—they get you into the good business game but don’t enable you to win against forward-thinking competitors. What do we mean by a social purpose? Listen to one uplifting definition: “A business with a social purpose is a company whose enduring reason for being is to create a better world. It is an engine for good, creating societal benefits by the very act of conducting business. Its growth is a positive force in society.”

Surveys show that large majorities of the world’s public hold businesses fully responsible for ensuring product safety, providing fair wages to employees, not harming the environment, maintaining a responsible supply chain, and the like—all within a company’s operating arena. But large numbers also expect companies to provide long-term financial stability for employees, support communities and charities, help reduce the rich-poor gap, and solve social and environmental problems.

What social purpose connects your business to issues of concern to society? Many companies stress their green credentials and others their charitable giving, commitment to diversity, community development work, and so on. All of this is laudable but it doesn’t necessarily address “why” they are in business or translate into a social value proposition for their brands. Who gets this right? Take Patagonia, whose clothing is made of organic cotton or recycled fibres, sourced only from suppliers that meet its strict environmental and labour codes of conduct, and has taken a lead in the reusable clothing movement. After it pledged 1 per cent of its total revenue to the preservation and restoration of the natural environment, it enlisted other small, environmentally intensive firms like builders, contractors, and construction supply companies, plus big ones like Hyatt International, to make this same pledge. Here’s how Patagonia expresses its social purpose: “Build the best product; cause no unnecessary harm; use business to inspire; and implement solutions to the environmental crisis.”

Your social purpose has to be authentic and embedded in your business

Studies find a daunting “purpose gap” in business today. Plenty of executives say it is important for their company to have a guiding sense of purpose, but most have not incorporated purpose into their strategy, goals, and measurement systems. This gap turns off employees, customers, and social media critics who regularly call out companies for disingenuousness and hypocrisy.

Who “walks their talk”? We have seen how Novo Nordisk has taken its aims to “Defeat Diabetes” into society. To express its core purpose inside, the company formulated its Novo Nordisk Way of Management (NNWoM) that covers corporate values, principles of management, and key commitments, including pledges that its products and services make a “significant difference in improving the way people live and work” and that its “activities, practices and deliverables are perceived to be economically viable, environmentally sound, and socially fair.” Every employee is expected to spend at least one day a year with someone connected to diabetes—a patient, a caretaker, or a healthcare professional—and then to suggest improvements for how the company does business. To ensure performance to the highest standards, employees are involved in documenting and improving the company’s triple bottom line performance. A group of 30 to 40 non-executive “facilitators,” drawn from employee ranks, meets with every work unit and every employee, over a three-year cycle, to ensure that actions and decisions live up to the promise of the NNWoM.

People want to believe and be engaged in your purpose — from tell me to show me to activate me

PR campaigns with uplifting slogans and evocative videos get your message out are but a first step in taking your purpose into the world. People need more to believe in you. B Corps use their certification to show they are committed to being a socially purposeful company. If that is not in your game plan, certification of your practices and products by credible social, environmental, and labour accreditation bodies is a step forward to credibility. Connecting your purpose to clear targets on, say, net-zero emissions or specific diversity and inclusion goals, puts you on record with your intentions. Tying this all into an integrative framework, such as the SDGs and/or the Global Reporting Initiative (GRI), signals seriousness of purpose and enables people to compare and gauge your performance versus others in your industry and geography. And a public accounting of your purposeful activities and results, ideally by an independent third party, provides proof points of your achievements and requires an explanation of gaps. Job done? Not so fast. In a social media world, people also want to talk with you about your social purpose, challenge, criticize and praise you when warranted, and get involved in your doings.