We have witnessed a world in constant change, in which businesses are demanded to explicitly state the “why” of what they do, while the “how” must be subject to standards superior to mere compliance.
Currently, the companies’ social legitimacy is not just given by their capability to generate wealth but also by their ability to contribute to society. This is an opportunity to reconsider what we do and look for the best possible way to do things.
For this, it is fundamental to change the mentality of “shareholders as the priority and stakeholders as the second” and consider that the company’s reason to be or purpose is maximizing benefits for all its stakeholders.
The importance of the company having a clear purpose befalls from their explicit statement of the potential an organization has to improve the lives of the people and the planet. That purpose directs the business’ important decisions and maintains all collaborators aligned towards a common goal.
At the same time, it is important to highlight that by articulating a clear purpose grounded on commitments and measurable environmental, social, and governance (ESG) goals, companies can better fulfill society’s expectations.
The importance of purpose (as a generator of value)
The stakeholders, from investors and regulators to employees and customers, have increased their pressure on companies to address humanitarian, social, and environmental problems. Thus, ignoring the construction of a clear purpose has become a risk.
With the COVID-19 pandemic and the subsequent economic recession, companies have faced unprecedented difficulties; it is especially here where the company's purpose must guide the decisions made.
Good purpose management can bring countless benefits. According to the McKinsey & Company, consulting firm, “organizations that define their purpose and use it to guide their activities see a clear upside in improving company reputation, alerting management to risks early, establishing the organization as a leader in raising industry standards, and enhancing business performance”.
How to state the purpose
According to the PwC consulting firm, the purpose is what gives the organization the necessary courage and identity to pursue a positive change in the world. It must be the deepest expression of an organization's potential to improve the lives of people and the planet.
To state the purpose, it is important to:
- Include the company's contribution or the impact it seeks to generate on society.
- Consider all its stakeholders.
- Consider a triple impact (economic - social - environmental).
- Have a long-term vision.
- Relate to a virtue.
Once the purpose has been stated, we must ensure it is lived within the organization. For this, it is necessary to make it a part of the culture, tuning in to the collaborators’ motivations with the purpose.
Purpose and Sustainability
Finally, it is important to highlight that a company with a purpose must necessarily be a company that manages its sustainability affairs. The complementarity between both concepts is fundamental to create trust in society since it is the way to ensure coherence between what is stated (contribution to society defining the company’s reason to be) and what is done (managing stakeholders’ needs, reducing its negative impacts, and enhancing its positive impacts)..
Start reporting now!
Sustainability reports are an innovative tool to improve your company’s annual management, foresee potential crisis, strengthen credibility with the environment, and benefit society as a whole.
Its implementation and the launch of an organizational sustainability culture will only bring benefits for every area in your company, particularly today, where society’s demands invite us to be concerned and involved in sustainable development.
Su implementación y la puesta en marcha de una cultura de sostenibilidad organizacional traerá solo beneficios para todas las áreas de tu empresa, particularmente hoy donde las exigencias de la sociedad invitan a preocuparnos e involucrarnos con el desarrollo sostenible.
Learn more about how to create new value for your business with sustainability reports.
