I’ve been following the brand purpose discussion for a few years. So, while the discussion around purpose isn’t new, there have been some significant business shifts recently that are elevating the conversation around brand purpose and building momentum behind the purpose movement.
A few of these include:
1. The Business Roundtable Statement on the Purpose of Business.
In the fall, the Business Roundtable, a non-profit consortium of chief executives in the U.S., redefined the purpose of business. This declaration evolved the function of business from a shareholder-first model to a stakeholder model.
The subtle semantic change has a big impact on how businesses view their primary responsibilities. It also heightens an organization’s need to be clear about the value it provides to each of their stakeholders.
There are those who argue the letter doesn’t provide enough guidance. However, the result is still a mindset shift among some of the most influential business leaders today. I wrote about this statement in September if you want to read more.
2. The Davos Manifesto 2020.
In December 2019, the World Economic Fund released The Davos Manifesto 2020: The Universal Purpose of a Company in the Fourth Industrial Revolution. In it, the WEF outlines a clear and thorough definition and overview of company purpose and stakeholder primacy. Regardless of sector or size, this Manifesto outlines exactly what it means to build a purposeful company that serves its stakeholders without sacrificing profit. I would highly encourage you read it. Find it here.
3. BlackRock: A Fundamental Reshaping of Finance.
In 2018, Larry Fink, chairman and CEO of BlackRock, released a letter asking business leaders to take the lead on social and environmental impact. A year later he discussed the relationship between purpose and profit.
His 2020 letter, A Fundamental Reshaping of Finance, outlines the correlation between climate risk and investment risk. He shares how climate risk will shape their investment strategy, the allocation of funds and their desire for greater transparency and additional disclosures. Yet, still, Mr. Fink continues to hold firm on his beliefs around purpose saying, “A company cannot achieve long-term profits without embracing purpose and considering the needs of a broad range of stakeholders.” Read the entire letter.
There are still a host of questions surrounding how we evolve the function of business. However, it’s clear that momentum is building around the purpose movement.
