“I had never heard of social purpose before, but it intrigued me. After learning about it, I was convinced and drafted a social purpose for my business.” This quote is from a business leader who recently attended a United Way workshop as part of its new social purpose business series.
With this action, the leader joined a growing number of businesses around the globe that are redefining their role in society: They are looking beyond generating economic value to creating social value as well. Rather than standing on the sidelines, these companies shift from passive bystanders to playing an active role in sustaining the communities they serve.
For some, social purpose transcends maximizing profits and shareholder value, and for others, it is how they create value and grow. Either way, they recognize that the revenue-generating side of the business and the social impact side can co-exist and in so doing, generate greater impact than if each were treated as separate and distinct. Investors are taking notice, too. Significantly, BlackRock, the world’s largest asset manager with over $6 trillion in assets, is calling upon companies to determine their sense of purpose.
In his 2018 letter to CEOs, chairman and CEO Larry Fink pointed out that society is demanding that companies serve a social purpose. “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society,” he wrote. “Companies must benefit all of their stakeholders, including shareholders, employees, customers and the communities in which they operate.” In the letter, he urged companies to find their social purpose by asking, “What role do we play in the community? How are we managing our impact on the environment? Are we working to create a diverse workforce? Are we adapting to technological change? Are we providing the retraining and opportunities that our employees and our business will need to adjust to an increasingly automated world? Are we using behavioral finance and other tools to prepare workers for retirement, so that they invest in a way that that will help them achieve their goals?”
He argued that without a sense of purpose, no company can achieve its full potential. And he tied that directly into financial performance. Not only are large investors starting to pay attention, but so too are community-based NGOS.
Read more: https://www.greenbiz.com/article/companies-dupont-microsoft-drive-social-innovation