A friend of mine in financial services has always referred to the corporate responsibility, sustainability, and ESG (environmental, social and governance) field as “values business.” He did not mean it as a compliment—more of a condescending aside. In his view of the money world, “value” equates with valuation: hard numbers at the bottom line, stock price, and ROI. That definition implies the widest universe of possible profits, rather than a slice of revenue from a limited activity within it.
That was then, this is now. In the last three years, he has been inquiring for more details about what seems to be happening to the traditional view of transactional economics that has always described fundamental business philosophy—you know, that Milton Friedman dictum of profit as the be-all, end-all “social responsibility” of any for-profit company.
What’s shaking things up for this long-time financier and his ilk are the unmistakable signs of a surge in companies that point to an expanded sense of purpose as part of the profit equation.
Driving home the credibility of this movement to the reality-by-the-numbers folks, more in-depth research is starting to emerge that proves the point. The latest evidence comes via a research report from Accenture, “From Me to We: The Rise of the Purpose-led Brand.” The report’s basic findings confirm that Brands Taking Stands is gathering force as a North Star in navigating the increasingly stormy waters of business in 2019 and beyond.
The bottom line: “Stand up to stand out.”
These are the report’s qualitative findings. It’s easy to read between the lines of these values-based conclusions and see various aspects of brand strategy and reputation that contribute to ultimately profitable relationships such as point of difference, leadership in a politically dysfunctional civic society, and an appeal to ideals beyond material goods and services.
Here are a few numbers from the report’s survey of consumers that support these statements:
One eye-opening note: These findings are globally relevant, based on polling 30,000 consumers in 35 countries, including more than 2,000 in the U.S. Not only are multinationals global in their strategies, consumers are globally consistent in their responses.
For the un-persuaded, the report lists some cautions re: risk mitigation that should convince even skeptics. Check these findings: 48 percent of U.S. consumers who are disappointed by a brand’s words or actions on a social issue complain about it, 42 percent walk away from the brand, and 21 percent never return.
Accenture’s timely report lands against a backdrop of news that confirms purpose as a key driver for business today. At last week’s World Economic Forum in Davos, Switzerland, BlackRock CEO Larry Fink’s annual letter to the business community was a big topic. The 2019 missive doubled down on last year’s call to companies to serve a social purpose.
“Profits are in no way inconsistent with purpose,” wrote Fink. “Purpose is not the sole pursuit of profits but the animating force for achieving them.... We seek to understand how a company’s purpose informs its strategy and culture to underpin sustainable financial performance.”
“The notion of purpose is not new and is widely held in evolved companies,” Hugh Welsh, CEO of science-based health and nutrition firm DSM North America, told TriplePundit. At DSM, he said, “Our purpose instructs every aspect of the organization.”
Welsh said he welcomed the optimism of Fink’s letter. “What I found very forward thinking was the idea that corporate leaders should use their considerable financial, social, political and human capital to drive progressive social change on the issues of the day like climate change, inclusion and diversity, and technology issues.”
BlackRock is putting some serious skin in the purpose game by announcing a new fund that expands options for socially responsible investments. The new money-market fund will invest in debt from issuers who have “better than average” environmental practices, reports Reuters. The company also says it will commit five percent of the net revenue from its management fee on the BlackRock Liquid Environmentally Aware Fund to purchase carbon offsets.
The shift of mainstream investment money into purpose-driven firms is a reaction to the rapid rise in such companies. It’s a sea change in the history of finance and business, and a welcome one.
Previously posted as the most recent Brands Taking Stands newsletter. Be sure to subscribe!
Image credit: David Geitgey Sierralupe/Flickr
John Howell, Chief of Thought Leadership and Editorial Director, is a co-founder of 3BL Media, the parent company of Triple Pundit, begun in 2009. Howell oversees original editorial content procurement and creation. He is also the author of the weekly Brands Taking Stands Newsletter. He has written and edited for Elle, Artforum, High Times, the New York Times Magazine, and the LA Times. Howell is based in Wonalancet, NH.