As social pressure mounts and a highly engaged population campaign for big corporations to make genuine change to the way they operate, we have seen firms all over the world put environmental, social and governance values at the core of their business operations. But is it all a fad?
The United Nations set out seventeen Sustainable Development Goals in 2015, to provide a shared blueprint for peace and prosperity for people and the planet, now and in the future. These themes have provided context to the conversation, and as a result may influence how a corporation defines its social purpose and values.
At Montfort Conversations most recent breakfast roundtable, industry experts came together to stress test the global commitment to social purpose and to see, if under the surface, everything was just business as normal. In a financial services context, is profit being put over purpose, and how can organisations aim for profit AND purpose?
To start the discussion, James Olley, Senior Consultant at Montfort Communications, asked the panel whether corporate purpose had a genuine place in today’s financial landscape.
There has been some cut through of this message to board level, with some businesses becoming highly advanced at integrating purpose into their organisational structure and operations. However, there exists a dichotomy between businesses who genuinely put purpose at the heart of what they do, and those who use purpose as a PR tool.
For Sarah Gordon, CEO of the Impact Investing Institute, at a corporate level this means dispelling the “myth that you cannot have financial return as well as social impact.” There is widespread misunderstanding as to what purpose is and how to apply it. A well-defined corporate purpose, that benefits a wider community, can be built into investment processes and can be more than just a tick-box exercise.
Alex Hilton, Head of Sustainability at HMRC and Former-Charity Trustee, sees employees as one of their major stakeholders, and he believes that should be put at the core of how they operate.
Sarah Gordon, through her work at the Impact Investing Institute, understands that “conversation has to be had throughout an organisation to articulate what their purpose is for it to be genuinely authentic. This means not just conversations with c-suite and the board, but engaging directly with all stakeholders, employees, customers and suppliers.”
For Scott McKenzie, Head of Change and Employee Engagement at Montfort Communications, the true value of purpose is its ability to unify employees around a single cause. By understanding exactly what their organisation is trying to achieve, they can align themselves to that purpose, and benefit stakeholders day to day. Sarah Gordon furthers this by citing research showing that “organisations taking positive actions in area’s germane to their sector, will improve their financial performance.”
Emma Hardaker-Jones, Director of HR at Legal & General, however, notes that “Organisational purpose is having little cut through because the conversation is too intellectual. Organisations have to make it real, for real people.” The channels through which real people can express their concerns and engage with the topic of purpose are limited. This presents an internal communications challenge, whereby corporations need to understand how their business affects the people on the ground and must be able to translate that into actionable change.
Even for those with a well-defined purpose, the transition to full integration of that purpose into business operation is not an easy one, especially in financial services. There are multiple barriers to overcome and a lack of well-defined rules of engagement.
Scott McKenzie sees credibility as one of the biggest barriers to aligning stakeholders with purpose. Those who are making statements about their commitment to ESG factors, but are unable to validate them operationally, open themselves to the risk of reputational damage.
Alex Hilton agrees, believing that organisations need to be honest and not allow themselves to get carried away with what is on trend. It can be very easy to choose a hot-topic and align your purpose to it, but organisations should be thinking very carefully about how this applies to their business and what the material impacts are. Sarah Gordon adds to this point stating that for businesses to have sustainable profit lines in the long-run, they must be sustainable operationally.
Scott McKenzie’s advice to companies who want to get to the heart of their purpose is, to “invest time with their management teams and employees to understand what makes them tick, and what that means for their impact on wider society”, before placing those values at the heart of their organisational and business strategy, giving clarity and confidence to employees and wider stakeholders.
Montfort are always on-hand to offer advice and recommendations for clients to help steer them through the complexities of these issues.
For any more information on the event or to discuss further issues or initiatives raised, do not hesitate to get in touch with one of the Montfort team:
+44(0) 203 514 0897