Amid climate change and ecosystem collapse, companies are under pressure from all sides to put make sustainability part of their core purpose. Ben Kellard of CISL invited 11 leading purpose and sustainability experts and practitioners to explore how best organisations should do this. This is what they came up with
The wider context in which companies are operating is rapidly changing, but are companies keeping pace with these changes and stakeholders’ expectations of them?
Recent findings, such as the UN IPCC report, make it very clear that the 2020s will be the decisive decade if we are to avoid the catastrophic consequences of runaway climate change. The World Economic Forum’s report also highlighted profound social instability and environmental risks such as extreme weather events, biodiversity loss and ecosystem collapse, to the extent that, according to AXA’s CEO, a “plus-four degrees world is not insurable”. The global challenges that need to be addressed to deliver a better future for all are summarised in the UN’s Sustainable Development Goals. Such challenges will profoundly reshape the economy and society and ultimately determine the viability of business itself.
So how can businesses respond to these profound changes? A lot has been written about purpose, the idea of companies pursuing more than simply profits, but what would a sustainable purpose look like? Are the ideas even compatible?
That’s why I invited 11 other experts and practitioners, from both purpose and sustainability, to get together to explore these questions late last year.
Today we are sharing a paper that reflects the conclusions drawn at that roundtable about the necessity and opportunity for companies to adopt sustainable purpose. The paper aims to guide leaders and contribute to the dialogue on how best to integrate thinking and practice on organisational purpose and sustainability.
So why should businesses adopt a sustainable purpose?
System failure Addressing these challenges and avoiding “runaway collapse” will require a co-ordinated, systemic response across civil society and both the public and private sectors. However, the lack of adequate global legislation and standards to provide clear rules of the game for a viable global economy coincides with growing nationalist and populist politics. And while capital markets are waking up to these global challenges, they continue to operate in largely short-sighted and dysfunctional ways. The misallocation of capital results from a failure to properly integrate environmental and social costs into companies’ profit and loss statements.
The business imperative The result is that the unintended consequences of business as usual are undermining the very viability of business. In this regulatory vacuum, businesses can no longer leave it to markets, governments or a relatively weak civil society to respond to these challenges. It’s in businesses’ interests to take an urgent and proactive role in delivering the transformational change required.
The immediacy of these global challenges exerts an imperative on any company that wants to adapt to a viable future, as no business can thrive long term in an unsustainable world. Businesses need to demonstrate that they are a force for good – and people expect them to; a view amplified by technology and a level of connectivity that enables transparency and much faster scaling of citizen action.
Profit then becomes the consequence and lifeblood of a well-run business, not its purpose
Dilemma On the one hand, most companies feel compelled to maintain profit as the primary goal, based on the assumption that this is compatible with continued access to the talent, capital, customers and trust they need. On the other hand, they are increasingly expected to recover the mindset that puts people and society at the heart of business success – and reflect this in the core of the business. Profit then becomes the consequence and lifeblood of a well-run business, not its purpose.
A sustainable purpose For companies to thrive for the long term, purpose and sustainability must go hand in hand. Consumers, regulators, civil society and capital markets will, and already are, demanding it.
The concepts of organisational purpose and sustainability are complementary and mutually dependent and can be combined to deliver long-term benefits, through:
identifying long-term value creation both for the organisation and for society, in ways that support the planet;
improving business performance and differentiation;
building trust and reputation with stakeholders, especially customers;
attracting and retaining talent; and increasing employee motivation and wellbeing.
How are these two concepts complementary?
Sustainability frameworks have defined the planetary boundaries and basic human requirements that provide an enduring “safe space” for sectors and organisations to operate within. However, on its own, sustainability risks being perceived as a peripheral technical function of a business that is still misunderstood by most leaders.
Organisational purpose has the potential to galvanise stakeholders around a positive and inspiring reason why a company exists, unlocking the human need for meaning by enriching the lives of others. However, if a purpose fails to benefit society or ignores global challenges, there is the risk of a credibility gap.
But combined, a sustainable purpose is a meaningful, enduring reason for an organisation to exist that provides solutions to global challenges,or benefits society, in a way that sustains the social and environmental systems we rely upon. This positively expresses how the core business creates ongoing value across its extended activities, by contributing to a sustainable future.
To successfully develop and implement a sustainable purpose, companies need to understand the wider ever-changing impacts of global challenges
A sustainable purpose aligns the core identity and actions of the company around benefitting society and creating a sustainable world that connects with people’s desire to improve their own and others’ wellbeing in the long-term. How wellbeing is improved depends both on the purpose and the quality of relationships the business creates and sustains. This can be achieved by driving social change or through addressing human dignity and the common good across all stakeholder groups ranging from suppliers, employees and citizens.
Implementation There are two main risks to living out a sustainable purpose: dilution, where the concepts are watered-down; and divergence, where the management of purpose becomes fragmented across different agendas and teams.
To successfully develop and implement a sustainable purpose, companies need to:
1. Properly understand the wider ever-changing impacts of global challenges on the company and the company’s influence on them, using a robust sustainability framework.
2. Use this understanding to inform the choice of long-term sustainable purpose for the company.
3. Develop strategic responses to deliver its purpose at two levels:
– how the company will directly and indirectly contribute to wellbeingsustainably across its entire supply chain through to the use (and disposal) of the product/service, and;
– how the company will shape and influence the wider sector/systems to underpin ongoing success (such as regulation; market mechanisms and empowering citizens)
4. Integrate the purpose into the culture, governance, commercial strategy, management and operations of the company so that it informs decision-making at all levels.
So what does this mean for your organisation? Does your organisation have a sustainable purpose that positions it well to thrive in the long-term?
To find out more go to sustainablepurpose.com. #sustainablepurpose
Members of the round table, held in London in November 2018, in alphabetical order: John Elkington, co-Founder and chief pollinator, Volans Ventures; Sue Garrard, former SVP communications and sustainability, Unilever; Prof David Grayson, emeritus professor Cranfield School of Management, co-author of All In: The Future of Business Leadership; Prof Victoria Hurth, University of Plymouth, co-author of The What, the Why and the How of Purpose; Ben Kellard, Chair, director of business strategy, Cambridge Institute of Sustainability Leadership; Soulla Kyriacou, COO, Blueprint for Better Business; Hugh Pidgeon, director, dialogue consultancy Collective Intelligence; Jonathon Porritt, founding director, Forum for the Future; Rosie Warin, CEO of Kin&Co, purpose practitioner and thought leader; Charlotte West, sustainability professional and author of Business in the Community’s The Purpose Toolkit; Andrew Wilson, executive director, purpose, Edelman; Charles Wookey, CEO, Blueprint for Better Business
Ben Kellard is director of business strategy for the Cambridge Institute for Sustainability Leadership. See also his LinkedIn article about the initiative here