CSR: Purpose of a Purpose in Business
It has become very popular in recent years for companies to have a short and accessible purpose statement. Such corporate purposes are then communicated internally to employees and to external stakeholders via brands, websites, press releases and corporate reports. Understanding what is the purpose of this purpose is highly important in today’s time.
Meaningful corporate purpose resonates with a wide range of stakeholders. This not only makes it consistent but true to the company’s products and services, operations and behaviour. It must resonate with every employee of a company in their day-to-day activities, or else the gap between a statement of corporate purpose and people’s lived experience of it will be significantly experienced.
This is why purpose has many applications as guidance for corporates towards being a sustainable profit-making entity in the following ways:
Long-term value creation
Long-term value creation includes the value created by an entity for society as a whole: financial value for shareholders, economic value in supply chains, environmental value across value chains, social value for host communities and sustainable livelihoods for employees. The most purposeful companies have a clear understanding of the role they play across these stakeholder groups and are well placed to adapt their business model to changing conditions so that they thrive over time.
Corporate strategy
The most impactful corporate purposes are fully integrated into corporate strategy, with clear connections with an entity’s business objectives and alignment with the products and services it sells. Governance arrangements support executive oversight of corporate purpose and hold the senior leadership team to account for how effectively and meaningfully corporate purpose is being “lived” in the company and across its supply chain and broader value chain.
Values and behaviours
The most tangible expression of a company’s purpose is the values and behaviours demonstrated by the corporation as an entity and its people as individuals, teams and leaders. For example, can an organisation which claims to be a responsible corporate citizen, be truly purposeful if it also aggressively pursues tax avoidance schemes in host countries? And can a company which claims to be creating long-term value for society at large, be truly purposeful if this is achieved by exploiting its staff and suppliers?
Trust
Erosion of trust has been the single most pervasive issue at the interface between business and society since last few years. The corporation is a social and legal construct, and if it is not serving the society in a manner commensurate with its financial performance, then society will inevitably change the permitted form of the corporation. A purposeful business imbibes trust in society, instilling confidence among those whom it serves as customers and those who, in turn, serve it as employees, suppliers, regulators and local host communities.
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Regards,
The CSR Journal Team
