In his latest annual letter to the world’s top CEOs, Larry Fink of BlackRock, one of the world’s largest investment management groups, strongly promotes the importance of purpose saying that purpose is, “a company’s fundamental reason for being” and the “animating force” for achieving profits.
Fink’s letter follows a significant year for purpose, with the new UK Corporate Governance Code stating that, “a board should establish the company’s purpose, values and strategy, and satisfy itself that these and its culture are aligned”. The updated guidance for an annual report’s strategic report reinforces the importance of purpose and its place within the annual report, saying that, “an entity’s purpose, strategy, objectives and business model are inter-related concepts”.
But an unintended consequence of regulatory change may be ‘purpose washing’, pandering to fulfilling the letter of a requirement regarding purpose, rather than engaging with its spirit. Company leaders must embrace a purpose-based narrative which goes hand-in-hand with the sustainability strategy.
Luminous Director of Stakeholder Engagement Stephen Butler tells how your company can avoid the pitfalls of purpose washing.
- Ensure there is clear articulation of why your company exists, linked to sustainability strategy and business impacts.
- Use purpose as a tool for ensuring you hire the best employees and motivate your existing workforce. A clear statement of your purpose can inspire the best talent to join your company… and to go on to forge their career with you.
- Use purpose to drive transformation – make it the backbone of strategic planning.
- By clearly stating the common goal, purpose can unite different elements of a diverse business.
- Purpose is for now and for what lies beyond the horizon. Use its durability to show your vision for long-term value creation.
The Luminous view
Use purpose as the hook upon which to secure your company narrative. Clearly articulating your purpose can more closely bond the business and its stakeholders. There’s a significant increase in employee engagement for companies that prioritise purpose.
Purpose must be lived and considered – it is more than a slogan. PwC’s paper ‘Greater expectations: the age of the stakeholder has arrived’, explains that just 30% of companies have a stakeholder-led purpose describing the key groups that are integral to business success. Surely, we can do better than this?
How can Luminous help you with your purpose?
We take the ‘three Cs’ approach:
- Clarity: we’ll find and articulate your purpose for you.
- Communication: we’ll help you put your purpose message across to stakeholders.
- Consistency: we’ll help your leaders all set the same tone from the top to help initiate purposeful behaviours from your workforce.
Would you like to learn more? Just get in touch with firstname.lastname@example.org