By Adam Woodhall — There are many gathering storms our society is facing, but having a purpose is increasingly seen as a way to navigate these uncharted and often rough waters. Many businesses are discovering the multiple tangible and non-tangible benefits that a purpose can provide, and seeing how it goes hand in hand with sustainability. Fortunately for those attempting to steer their corporations, there are trusted advisors being pilots toward calmer waters. Two such organisations offering a safe hand on the helm are the EY Beacon Institute, created as a “catalytic force for purpose-led transformation across the working world,” and Positive Luxury, whose mission is to “inspire people to buy better and influence brands to do better”.
They are very different organisations, but have come together with a common purpose themselves: to further the purpose agenda by producing a report on an area which is a fascinating case study of this critical field: “Shopping with a Purpose”. To some it might seem that consumerism and leading with a conviction are a contradiction in terms, but according to the leaders of the EY Beacon Institute, Valerie Keller (pictured left, above) and Positive Luxury, Diana Verde Nieto (pictured right, above) there is a lot more to this particular story.
Front line of capitalism
“Retailers offer an excellent lens through which to examine these issues – they are the front line of capitalism. In today’s always-on world, they are in the market every minute of the day. Luxury retailers and brands, in particular, are often viewed as the aspirational vanguard,” says Keller in her foreword to the report.
Verde Nieto is firm in her belief that “when you buy luxury, people will not throw that away. Luxury is an investment, normally associated with excellent raw materials, quality and craftsmanship, because of these inherit values it also has a secondary life.
“In this new normal that we are living politically, businesses can help to solve some of the big societal problems we have,” continues the CEO of Positive Luxury. “If we can inspire luxury brands to really start communicating and integrate sustainability within their business models and processes, then we have a good chance to inspire people to buy better and the brands across every area of the market to actually do better”.
Purpose-driven leadership is increasingly seen as key to the development of resilient organisations that are profitable in both the short and long term. EY defines ‘purpose’ as being an aspirational reason for being that is grounded in humanity and inspires action. As that famous cultivator of luxury lifestyles Sir Richard Branson observes: “I think anybody who sets up a business sets it up with a purpose. I think just being in business itself, you’re almost definitely creating something to make a difference to other people’s lives. Otherwise, you won’t have a successful business”.
The report from EY and Positive Luxury observes that many luxury brands and retailers began life with a deeply rooted purpose, but that some have now drifted from the purity of their purpose, in some cases driven by the dogma of shareholder value. This, along with many other factors, has led to a trust deficit between people, leaders, business and governments. A brand’s greatest asset is now often seen as the trust consumers have in it. Positive Luxury has recognised the importance of this, launching the “Butterfly Mark” trust symbol which companies can use to build confidence in their product or service.
Building customer loyalty
As Valerie Keller observes: “A recent report we produced with the Harvard Business Review (HBR) Analytic Services found that 80% of executives believe that purpose helps build customer loyalty.” However, this report found only 46% of companies had a strong sense of purpose, although a further 44% said their company is trying to develop one.
There is clear evidence in the EY/HBR report for the business value of purpose, with 58% of those identified as prioritising purpose as having 10%+ growth over previous 3 years, against 42% for “Laggards,” where purpose is not understood or communicated. An even clearer gap is demonstrated when considering companies with flat or declining growth. Only 15% of the “Prioritizers” experienced flat or declining growth, while 42% of “Laggards”, those that haven’t joined the purpose party, had flat or declining growth.
It is not only the report authors that believe in its power. Positive Luxury’s ‘Sustainability Council’ numbers well-known author and commentator John Elkington; the founder of Forum for the Future, Jonathon Porritt; Chief Sustainability Officer for BT, Niall Dunne; and a professor of behavioural and brain sciences amongst its many members.
The consumers are also demonstrating their interest in purpose-led brands, with 66% of responders to a global survey saying they are willing to pay more for sustainable goods, up from 50% in 2013. This is definitively translating into increased revenues, as in the past year sales of consumer goods from brands with a demonstrated commitment to sustainability have grown more than 4% globally, while those without grew less than 1%.
Patagonia clothing is one of those well-known brands that could be expected to be gaining value from their purpose. The company ironically saw a significant sales uplift after they ran their famous anti-shopping ad on Black Friday in 2011 reading, “Don’t Buy This Jacket”.
Gucci is less likely to be seen to be leading the purpose charge, but the Chief Sustainability Officer of their parent company, Kering, states in the Shopping with a Purpose report, that “sustainability is embedded in the very core of luxury. If one of the key roles of our industry is to beautify the world, we have greater responsibility to do so ethically and sustainably”. The Kering group has used its mission of ‘Empowering Imagination’ to inspire innovation—for example, setting up their Materials Innovation Label, which has generated a catalogue of 2,000 responsibly sourced alternative materials. And in the spirit of building trust through transparency, the company reports on the targets it fails to hit and discusses its learning.
EY’s Valerie Keller neatly summarises the opportunity for businesses in luxury and beyond as this:?“Businesses that move from a lower case 'p' of profits to an upper case 'P' of Purpose discover that they are better placed to survive and thrive".