Corporate purpose is defined as “producing profitable solutions for the problems of the people and planet, and not profiting from creating problems1.
This definition is indicative of a paradigm shift that has been taking place over the past two decades. The world in which business operates today has become more challenging, more worrisome, more globally interconnected – and more self-aware. This has resulted in a dissipation of the transactional relationship between companies and clients, with an increased expectation for businesses to go beyond simply meeting their needs on a products and services level.
With increased social and regulatory pressure, investors have been gradually – even if sometimes begrudgingly – driving purposeful change as part of risk management. Now, external stakeholders, with no direct ‘skin in the game’, have realised that they can affect change as well.
Once upon a time, it was the product alone which provided the foundation of every successful business – but no more. Consumers are voting with their wallets with the E, S and G playing a key role in influencing their choices and affecting product/service development.
A concept that is hard to pin down, some may describe it as a company positively contributing to society, but it is more than that. In ‘The Heart of Business’, former CEO of Best Buy – Hubert Joly, states that to land on a meaningful, authentic, credible, and powerful purpose, a business must find the intersection between the following:
Corporate purpose isn’t new. While the renewed attention it has garnered is, the idea of businesses being expected to figure out, live and breathe their purpose isn’t something that just came into existence by chance. It has taken those at the epicenter of power to take a ‘risk’, if you could call it that.
The regulatory world has also provided a reminder to businesses that there are external pressures which lie beyond just shareholder returns.
Although, the regulatory landscape is complicated and ever evolving, what we can be sure of is a general cyclical pattern which we have seen over the past couple of decades. It is a process that typically involves several stages: intensive behind-the-scenes work from NGOs; charitable organisations and respective industry leaders with legislative bodies working to translate expectation into a tangible framework; and eventually, regulation. Then, what we would have previously perceived as best practice becomes mandatory and the bar continues to rise.
Whether it be expectations around emissions reduction, DEI, human rights or business ethics – the regulatory world is channelling the frustrations of wider society by showing an increased expectation for businesses to stand up and be counted. We all expect more.
A key stride in the right direction is the Corporate Sustainability Reporting Directive (CSRD), which was adopted in November 2022 and came into force in January 2023. Its adoption is set to improve the publication of sustainability data and to incorporate the concept of “impact”, i.e. viewing sustainability issues from the perspective of the impact of the company’s operations on people and planet, rather than only from the perspective of risk to the company’s operations.
Introspection must start somewhere and, despite the fact we have seen regulatory advancements over the past few years that are pushing companies to report in line with their purpose, the CSRD calls for this on an unprecedented level. Its reach and its expectation of businesses is pushing those in scope – which is ever expanding – to conduct double materiality assessments and kickstart internal changes to the operating model.
The corporate world, as seen from the outside, is not driven by emotion, feeling or sentiment – it is driven by financial performance and operating profit margins. However, when you look deeper at the market in relation to its function within society, it becomes clear that what produces profit is winning the hearts and minds of those around you is.
So, here is how redefining Purpose can benefit your business:
External pressures on companies' licence to operate are increasing, with investors becoming more purpose-conscious, consumers having a desire for sustainability to be embedded in their everyday products and regulators are enforcing the will of society through legislation.
However, best practice goes beyond a tick-boxing exercise towards compliance. With the right resource, any company can become compliant – it is what you do beyond this that matters. And it is in this journey, that there is often a need for an external partner to take a fresh view and reshape what you already know.
While we are not able to create purpose for you, we take a proactive approach in working with our clients to cultivate, foster and bring their purpose to life. We play a positive role in acting as an external driver for our clients with the belief that what starts as an external pressure, will eventually morph into internal pressure; best practice becomes mandatory; achieving a full circle with a desire to continue to work hard and raise the standard.
Black Sun Global is an international stakeholder engagement agency that’s been helping global brands drive change for more than 30 years. At the forefront of corporate communications, we offer integrated solutions, covering strategy, reporting, ESG advisory and digital activation – all powered by insights, technology, and market-leading expertise.
By addressing stakeholder interests, we turn one-way communications into engaging two-way dialogues that deepen relationships, fuel innovation, and drive more sustainable business practices.
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