The evidence is clear: companies that believe in doing good, not just doing well, are more resilient and successful
The COVID-19 pandemic has been tough for local businesses, but it’s also reminded them what really matters. “Social purpose during these times is not a distraction,” says Hugh Jones, VP operations at Vancouver-based Gray Line Westcoast Sightseeing. “It helps us to focus on what’s important and how the business should align itself as we scale up again.”
With most of its tourism activities travelling through the city’s Downtown Eastside, which suffers from some of the worst poverty in Canada, Westcoast Sightseeing sought to turn that negative perception into a positive one. It partnered with Exchange Inner City to develop an information guide so staff can speak positively about the neighbourhood, its history and the social challenges being addressed by community agencies—helping to advance the company’s purpose, Guiding Shared Experiences to Foster Social Awareness.
Westcoast Sightseeing is just one of the many businesses that my colleagues and I at the Social Purpose Institute have worked with to uncover their purpose, and one of many using it to adapt during the pandemic.
Here in B.C. and around the world, companies are redefining their role by fostering business and societal success. They’re embracing a social purpose to navigate turbulent times and attract and engage talent, customers and investors. During this crisis, businesses that believe in doing good as they do well are showing up in ways that will endure long after the pandemic has ended. They’re using their purpose to stay strong and become more resilient for the future.
Just ask Larry Fink, chief executive of BlackRock, the world’s largest investment firm, with almost US$8 trillion in assets. In his 2019 letter to CEOs, Fink stressed the importance of having a “a clear embodiment of your company’s purpose in your business model and corporate strategy.” This past March, Fink returned to the same theme in a letter to BlackRock shareholders: “Companies and investors with a strong sense of purpose and a long-term approach will be better able to navigate this [COVID] crisis and its aftermath.”
The business case for social purpose
As it turns out, having a social purpose as the core reason your company exists is good for your business. Evidence is mounting that companies willing to tackle societal challenges by pivoting their business models towards their purpose, whether to combat racism, build inclusive societies, or halt deforestation, perform well when it comes to growing market share, meeting changing employee needs and attracting new capital.
In a 2018 global study of 8,000 consumers, nearly two-thirds told Edelman said they chose, switched to or boycotted a brand based where it stands on social issues, a big jump from about half the previous year. When Edelman polled Canadians as part of a 2012 survey of consumer attitudes toward social purpose, 89 percent said they believe business needs to give society’s interests as much weight as its own.
Sixty percent of millennials polled for a 2016 Deloitte global survey said they wanted to work for companies with a purpose. Purpose-driven workers have 20-percent longer tenures, are 47 percent more likely to promote their employers and report 64-percent higher levels of fulfillment in their jobs, according to a 2015 study.
Purpose-oriented companies tracked by Harvard University researchers experienced four times higher sales growth than their rivals. A recent study by London-based Kantar Consulting revealed that over a 12-year period, brands recognized for a high commitment to purpose saw their brand value grow 175 percent on average, versus 86 percent for those perceived as having a medium commitment.
For companies, society’s needs are innovation hot spots. The Shared Value Initiative, a branch of global consulting firm FSG, looked at the insurance industry through that lens. Its research showed that for insurers, incorporating social needs such as health and wellness into their core business strategy would create a lasting competitive advantage.
In the 2020 Edelman Trust Barometer survey, 73 percent of those polled agreed that businesses can do things to improve local community conditions as well as increase profits. Stakeholders have raised their expectations that companies will contribute to building healthy communities. By future-proofing their communities, social purpose companies future-proof their business.
Social purpose companies have strong stakeholder relationships and are more profitable than those focused exclusively the bottom line. Having stakeholder buy-in makes a social purpose company fundamentally more agile, and able to respond quickly and effectively when opportunities arise or danger threatens
Based on those potential benefits and on my work with businesses through the Social Purpose Institute, here’s the new bottom line for social purpose companies in the time of COVID:
- Your social purpose can help you attract customers, investors and employees, building your competitive advantage now and for the future
- Leveraging your resources and competencies in innovative ways to advance your purpose can deliver social and environmental benefits, along with stability and growth for your business
- Creating value for all stakeholders, your purpose can amplify your brand and make it more relevant
- By contributing to stronger communities and regions, your business helps create a stronger operating context in which it can succeed
As the pandemic continues, businesses with a social purpose are finding that they’re more resilient and able to pivot. That’s because their decisions revolve around a North Star that helps them confront the most daunting challenges. When we come out the other side of this crisis, companies that showed up with purpose will win more loyalty from employees, customers and suppliers. They’ll also build back faster—and better.
Mary Ellen Schaafsma is director of the Social Purpose Institute at United Way of the Lower Mainland.