In recent years, more companies have realised that it’s critical to have a corporate purpose beyond profits.
The current pandemic has served to reinforce the need for businesses to protect the wellbeing of key stakeholders, such as employees, customers, suppliers, and communities, to achieve enduring success. Climate change is another threat that is altering the viability of business models. In this shift from an emphasis on making profits for shareholders to a focus on all stakeholders, or what is called the stakeholder capitalism movement, companies are re-evaluating and updating their purpose statements.
But there’s a gap between buy-in and action. A survey by AICPA & CIMA and the Value Reporting Foundation this month titled Purpose Drives Profit found that almost all organisations have a corporate purpose and most consider it important.
But, the survey found, only half of respondents think their companies have a clearly defined purpose — highlighting a disconnect between having a purpose and actually delivering on it.
The same report found that a majority of executives do not feel that they have the tools and techniques to include broader performance measurements in decision-making. This suggests that the use of a wider range of data, such as environmental, social, and governance (ESG) metrics and other nonfinancial indicators, is crucial in putting a purpose into action, but companies find it challenging to incorporate them. So how do successful companies translate their purpose into reality?
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