Guest writer: Richard Aldwinckle, Sustainability & Purpose Adviser to Unilever, 2002-17
In July 2018 the Financial Reporting Council published a revised corporate governance code, requiring premium listed companies to “establish the company’s purpose” and ensure it aligns with values, strategy and culture. So you would think that companies without a purpose would have spent the past year busily devising and applying one to their business.
However, a review of FTSE 100 company websites one year on shows that over half (54) do not yet have a purpose, a quarter (24) have purposes that are actually missions, describing what they do, not why they exist, and 15 have purposes that are all but meaningless, such as ‘to inspire a better future’ and ‘celebrating life everywhere every day’.
Only a handful of companies have purposes that appear to meaningfully explain how their businesses aim to materially benefit society, such as GSK, which seeks to develop innovative medicines and vaccines, and make them more available and affordable, to help millions of people ‘do more, feel better, live longer’, and Pearson, which develops educational products and services to ‘help people around the world make progress in their lives through learning’.
So what is going on? Why are most companies failing to grasp the opportunity to grow their business, help society and motivate their employees with a pertinent purpose? At least part of the problem seems to be a failure to understand not only what a purpose is, but how to develop one that both creates new commercial opportunities and makes a significant improvement to the wellbeing of people and the planet.
While large listed companies wake up to the need to meet the FRC’s requirement to publish a purpose in their next set of accounts, there are pitfalls ahead. As Unilever’s new CEO, Alan Jope, highlighted in June, a growing number of product brands have been cashing in on the ‘brands with purpose’ movement with ‘purpose-washing’, or ‘woke-washing’ as he called it, peddling campaigns designed to ‘make them cry, make them buy’ rather than taking “real action”.
There is a genuine danger, as companies turn to outside help to develop their purposes, that purpose-washing could spread from the marketing world to the corporate world, if it hasn’t already, and from product brands to company brands. In the same way these marketing campaigns pollute the efforts of product brands that are genuinely trying to address real social challenges, companies that confuse developing a company purpose with creating a new corporate slogan, or see this as merely a brand positioning exercise, risk undermining the efforts of the all too few companies that are doing it right and making a difference.
That is why I welcome an initiative by Ben Kellard, Cambridge Institute for Sustainability Leadership’s Business Strategy Director, to convene a group of purpose and sustainability specialists to agree on a common definition of what a company purpose is, that spells out the need for purpose to drive sustainability strategy, business decision-making and long-term sustainable value. Because without a clear explanation of why purpose has to link with sustainability, there is a concern companies will continue to confuse mission with purpose, create trite taglines, or believe doing a bit of philanthropy and community relations means job done.
Kellard’s multi-stakeholder round table, which included such purpose proponents as Blueprint’s Charles Wookey, and sustainability specialists as Forum for the Future’s Jonathan Porritt, proposes the phrase ‘sustainable purpose’ to signal that purpose and sustainability are symbiotic. Their definition argues that for a purpose to be sustainable, it must provide solutions to global challenges, or benefit society in a way that sustains social and environmental systems and creates value for the business.
In other words, purpose isn’t just about re-badging existing philanthropic or eco-efficiency initiatives, as some companies would have you believe, nor is a purposeful business the same as a responsible business. It’s about purpose directing business strategy, and sustainability being part of business strategy. It’s about developing commercial solutions to sustainable development problems and sustainable solutions to commercial systems.
However, also, implicitly, it’s about big businesses making a big difference to the significant issues on which they can have the biggest impact. In other words, to be credible, companies have to have a level of contribution that is commensurate with their scale and reach. For example, Unilever’s products are used two and a half billion times a day in over half the households on the planet. Its ‘making sustainable living commonplace’ purpose drives its sustainable living plan, which aims to help more than a billion people improve their health and wellbeing and to halve the environmental footprint of its products. (Full disclosure: I helped develop their purpose and sustainable living plan)
I would urge any company looking to develop a new purpose or evolve an existing one, to develop a sustainable purpose, drawing on the roundtable’s definition. To find their purpose ‘sweet spot’, they should overlay their business growth and product development strategies, the views of stakeholders, their impacts and influences, and the wellbeing or environmental challenges they are best placed to benefit. Then use this sustainable purpose to drive a business plan with ambitious sustainability targets that reflect their size and footprint.
I would also call on those companies that are, by common consent, the leading lights of the purpose and sustainability movement, to share details of the methods they used to develop their purposes, explaining what worked and what didn’t, and how they have integrated them into business strategy, processes and decision-making. Through sharing good practice and pooling experiences, agreeing a common approach to how companies should develop their purpose in tandem with their business and sustainability strategies, would be the logical next step. An open-source, best practice model, has to be the most effective way of discouraging companies from hiring agencies without the necessary strategic capabilities, and, more importantly, helping them devise meaningful purposes that make a difference.