Social Purpose and the Road to Recovery
Social purpose is moving to the centre of business strategy conversations. But what is a ‘social purpose’? How can you secure its benefits for your business?
Mike is President and CEO at Junxion. He has guided strategy development with early-stage ventures, decades-old corporations, not-for-profits and charities, and government agencies. Reach him via [email protected] to start a conversation.
We’ve been doing business upside down.
For far too long, we’ve been prioritizing economic success at the expense of societal well-being. The need for business to support equity, justice, and resilience in society has never been clearer than in the past year, when the words Black Lives Matter reached corporate boardrooms and pandemic-related unemployment and isolation sparked a massive mental health crisis.
We’ve bought the myth that the business price of social purpose is too high. In fact, purpose pays.
Companies that operate with a social purpose outperformed other companies by 134% in the stock market in 2019. This reinforces evidence from 2008, when researchers found B Corps—the leading certification for business as a force for good—were 64% more likely to survive the recession. This financial performance follows consumer sentiment: some 87% of global consumers buy brands that support a cause they care about and some 76% refuse to buy a brand if it doesn’t. And most Canadians (74%) agree that “a company can take specific actions that both increase profits and improve the economic and social conditions in the community where it operates.”
So you see, you really can have your cake and eat it too! As we contemplate the light at the end of the pandemic tunnel and think about what it will take to ‘#emergestronger’ or ‘#buildbackbetter,’ social purpose is moving to the centre of strategy conversations. But what is a ‘social purpose’? How can you secure its benefits for your business? And how can you put investments to work to support a purpose agenda?
What is a Social Purpose?
The Social Purpose Institute at United Way (SPI) defines a social purpose business as “a company whose enduring reason for being is to create a better world.” This is what our communities need as we embark on the road to recovery post-COVID. And it’s what 21st century business needs if we’re going to solve the wicked problems of social justice and the climate emergency.
Developing a Social Purpose in Your Business
So, how can you harness these benefits for your business? Along with our partners at the Social Purpose Institute, I believe there are four critical steps to developing a social purpose.
Step 1: Socialize the Concept
For your social purpose to make an impact on your business and society at large, you’ll need leadership buy-in.
Dissecting terminology can be helpful as a starting point. There is often confusion about the differences between social purpose, CSR, and ESG. “Social purpose isn’t what you do—it’s why you exist,” said Mary Ellen Schaafsma, Director of the Social Purpose Institute.
Whereas CSR and ESG describe environmental and social practices that businesses follow, social purpose is at the core of a company’s raison d’être.
Share the Social Purpose Business Case with your executives, board, investors, and owners. Start asking questions: Are we ready? Is this the right time? Will this create value?
“Building a consensus amongst leadership is critical to the success of the undertaking,” says Ms. Strandberg, President of Strandberg Consulting and Advisor to SPI.
Step 2: Develop a Social Purpose Statement
There are many ways to develop a social purpose. Some companies will turn to the UN Sustainable Development Goals and select one or more goals that they think their business could contribute to achieving. Look at what’s happening in society—is there a problem your business could help solve?
Once you have a draft social purpose statement, turn to your “critical friends,” as SPI calls them, to stress test it and ensure it accurately reflects your values and the reality of your business. “Leaders learn a lot about their businesses through social purpose discussions,” says Ms. Schaafsma.
Step 3: Bring your Social Purpose to Life Internally
Before you launch your social purpose externally, it needs to become a lens that you apply to every internal business decision. Examine your products, services, policies, and procurement. Can you optimize them for social purpose? Are there any gaps to fill in order to achieve your social purpose goals?
Help employees understand how the new social purpose will impact their roles. Build social purpose check-ins into your regular employee touchpoints. Exit out of products and services that don’t serve your purpose. “Collect proof points before you go public,” advises Ms. Strandberg.
Step 4: Share your Social Purpose Externally and Grow
Your business now has a true social purpose and it’s time to shout it from the rooftops! Incorporate social purpose into external communications and engage your full community to help you achieve your goals. Then, reap the benefits.
What Role is Investment Playing in Social Purpose?
The majority of Canadian consumers (89%) believe business needs to place the same weight on society’s interests as on business interests. The next generation of talent is also famously purpose-focused: 60% of millennials want to work for companies with a purpose. Consumer trends and talent management are each drivers of business success—and therefore valuable to investors.
Larry Fink, CEO of Blackrock—has put his money behind social purpose. “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society… Society is demanding that companies, both public and private, serve a social purpose,” Mr. Fink wrote in his widely quoted Annual Letter to CEOs.
As the world turns toward recovery, investors are tracking the upswing of interest in social purpose and identifying ways to put their capital to work. Joel Solomon, the pioneering impact investor and Co-Founder of Renewal Funds makes the opportunity clear: To invest in purpose-based businesses is to put money into “regenerating ecosystems and engendering a healthy balance between people and planet. Money that builds true security: long-term, safe, fair resilience.”
After a year when our resilience (personal and organizational) has been tested to the limit, the notion of investing in resilience intrigues. What value might that unlock?
- Social Purpose Business Case and Workbook by the Social Purpose Institute at United Way
- Accelerating Social Purpose in Business: GLOBE 2020 Advance Recommendations