In today’s world, we know customers are increasingly choosing to do business with organizations that share their values and put them first. Likewise, research shows companies that embed a social purpose in their strategy and operations attract and retain the best and brightest employees. They are also more likely to generate long-term returns for shareholders. These are, in fact, three priorities for most company leaders — and they present a profound opportunity.
Good business and doing good are mutually compatible aims.
Leaders who authentically articulate a social purpose for their organization and align the full weight of their resources, strategy, products and operations toward that purpose will be most successful in earning trust and loyalty, driving long-term growth and making important contributions to society’s greatest needs. They’ll build the enduring, great enterprises of the 21st century.
Engaging people
Research reveals that some 87 per cent of global consumers will buy brands that support a cause they care about. That’s a 79 per cent increase since 2008. And 76 per cent refuse to buy a brand if it doesn’t. In fact, 89 per cent would switch brands if another brand of similar quality supported a good cause, a 25 per cent increase since 2009. In short, consumers are advocating for the causes they care about through their wallets.
Mounting research finds people are increasingly looking for jobs that give them personal fulfilment. This is true from the baby boomers down to gen-Z; it’s not just a “millennial thing!” Employees who identify as “purpose-driven” workers have 20 per cent longer tenures, are 50 per cent more likely to occupy leadership positions, and have 64 per cent higher levels of fulfilment in their work. When the cost of turnover is calculated to be $20,000 or more, the value of retention goes straight to the bottom line.
Driving financial returns
Speaking of bottom-line results, while people propel businesses forward, investors want to see financial returns. It is expected that they, too, will come to prefer social-purpose businesses.
Purposeful businesses outperformed other enterprises by 134 per cent in the stock market in 2019. In the downturns of 2000 and 2008, companies that operated with a clear sense of purpose outperformed the market by a significant margin — as much as a factor of 10.
Organizations that truly embrace this shift do so by using their core business to serve a greater social purpose that benefits all of their stakeholders — customers, communities, suppliers, team members and investors. We’re so convinced that social purpose is fundamental to the future of business that we’re co-authors and signatories to A Call to Purpose, a new initiative that calls on CEOs and other business leaders to articulate, adopt and align their resources toward their social purpose, and to lead the way toward a purpose-based economy.
Role of business in society
In individual businesses, the potential benefits of social purpose go on and on — strengthened third-party relationships and collaborations, increased trust in the operating context, more innovation, and enhanced resiliency. These are valuable traits in every sector. But what if we look across all sectors, thinking about the role of business in society as a whole?
In the face of major global threats such as climate change, biodiversity loss, social inequities and social polarization, businesses are increasingly being asked to contribute to solutions. Those who focus on a social purpose shift their approach from merely mitigating risks to contributing to solutions. The fundamental role of our economy is to increase the long-term well-being of all people and the planet. Leaders who set their gaze on optimizing their strategy to what society needs can open up new avenues of revenue and opportunity.
Social purpose business leaders recognize that companies are significant economic and powerful societal actors. When their strategies, operations and priorities embrace those dual roles, they develop businesses that make meaningful contributions to solutions to the challenges society and communities face.
People in Canada agree
At this time of economic challenges and rising inequality, pandemic recovery and environmental emergency, Canadians are calling on all sectors of the economy to contribute to the health and well-being across society. They expect businesses and their leaders to deliver a positive social impact, enhance environmental sustainability, create value for stakeholders, demonstrate good governance and generate profits. Embracing and embedding social purpose is the key that unlocks this potential.
The Canadian Purpose Economy Project envisions that by 2030, 25 per cent of Canadian businesses will be adopting, disclosing and authentically embedding a social purpose across their operations and relationships, and collaborating with others to achieve it.
Once a quarter of Canadian businesses are leading with purpose, the momentum for business being a force for good will be unstoppable. In this economy, businesses unlock all their assets, influence, reach and scale in collaboration with others to help Canada address its societal challenges and realize a flourishing future.
This is the opportunity and the power of business as a force for good in society. We are convinced this is the future of business and that by moving toward an economics of purpose, we can benefit Canada and all its people, from coast, to coast, to coast.
Nancy MacKay is the founder and CEO of MacKay CEO Forums, the highest impact and least time-intensive peer group for over 1,200 CEOs, executives and business owners across Canada.
David Redfern is the president and chief executive officer of Lafarge Canada’s Eastern Canada division. Today, more than ever, his purpose as a leader is to build progress for people and the planet by decarbonizing cities.
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