Purpose for plcs – time for Boards to focus
Together with a group of Chairs, NEDs and advisors, Blueprint has produced this short paper which aims to move Board’s understanding and ownership of purpose beyond the framing of the FRC Guidance. We argue that plc Boards must step up now to meet the challenge of societal expectations in the post covid recovery and to do this they need to commit seriously to becoming “purpose-led”
The paper sets out in simple practical terms what this implies in terms of profit, ESG, behaviour and measures, and ends with 6 questions for Boards and Board members individually to ask themselves.
What is the challenge and why is purpose important
The challenge for business is meeting the rising expectations of society in the aftermath of the pandemic. Many people want to see businesses recover but in a way that actively contributes to addressing endemic problems of societal inequality and climate change, bringing not only jobs and income but also a better society.
The best way for businesses to meet this challenge – and in the process to become better businesses – is by becoming “purpose-led”. This orients a business to focus on the benefit to society that arises from its success – what it does, and how it does it. It is a transition which the FRC corporate governance code already encourages, but which many large companies have still to make in practice. The time to do it is now.
Why the Board
Without board ownership and collective commitment, work on purpose risks being a transient project rather than a fundamental orientation which outlasts the tenure of existing leadership.
A purpose-led company needs a Board that “owns” the purpose, and sees its role as the collective trustees of the purpose, ensuring that it is a constant North Star which guides decision taking and behaviour, and thereby ensures long-term sustainable perfomance.
The Board is there to guide and govern the business. Purpose brings discipline to strategy. And being purpose-led also brings a powerful and consistent way of thinking about the wider challenges and opportunities the business needs to address, not least its social and enviornmental impact.
Who is the document for?
The document is designed to stimulate discussion and reflection by plc Boards. They need to challenge themselves about thet extent to which the company is already purpose-led, and, if not, if this is something they want.
The document briefly explores why Boards should bother with purpose, what it means in practice, what behaviour is implied, and how to assess progress. It ends with 6 questions for Boards to ask themselves.
Our suggestion is that if Boards have an initial conversation using this document as a provocation, they also commit to a follow up in 6 or 12 months to review what progress they have made as a Board.