Pressure is increasing from society, government, and the business community at large for organisations to ensure they positively impact people and planet, as well as generating profit. In response, more and more businesses are defining their Social Purpose, their reason for existence beyond financial profit.
But what does having a Social Purpose mean? And how does this strategic business term lead to real tangible action on the ground.
This week follow us as we unpack the business jargon and explore how having a Social Purpose can ensure businesses have a positive impact on our planet (and its people) today, and in the future.
So what is a business Purpose?
A business or organisational Purpose defines an organisation’s reason for existence – i.e. why they were founded.
It has formed an integral part of a business’ toolkit for a long time, guiding strategic decision making amongst senior leadership. Knowing why you exist, and why you are working on a day to day basis as an organisation, can help you articulate where you are going in the long-term. This helps guide decision making, ensuring any short term decisions taken by an organisation can bring long term benefit.
According to the Nobel Prize winning economist Milton Freidman, the concept of business Purpose was originally to make as much money as possible (without breaking the law of course!), i.e. that there is “one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits, so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”
But Purpose is now being re-branded, and having a Social Purpose is being increasingly painted as a must-have for a fit for the future, resilient and successful company in today’s world.
And what is a Social Purpose?
A Social Purpose extends the organisation’s reason for existence and acknowledges their role in having a positive environmental and social impact:
As defined by leaders in this area… ‘a Social Purpose business is an organisation whose enduring reason for being is to create a better world. It is an engine for good, creating social benefits by the very act of conducting business. Its growth is a positive force in society.’
In an attempt to simplify this, a Purpose defines why an organisation exists. A Social Purpose defines why an organisation exists in the frame of ‘business as a force for good’ – for people and planet!
If all businesses see themselves as existing in order to bring benefit to the environment and to society, it should mean that the decisions they make will lead to positive impacts for environment and society.
WIN WIN WIN!
And why is it becoming popular?
For many businesses, leaders and their employees, pursuit of profit is no longer enough, and more and more businesses are realising that being good to people and planet also leads to ‘good’ financial returns. B Corps are an excellent example of this, demonstrating the monetary value of using business as a force for good (cheeky plug for our previous article on this movement).
With the climate crisis ongoing, changing consumer attitudes and a desire by employees to work with companies whose values reflect their own, pressure from investors to demonstrate a companys’ commitment to Environmental, Social and Governance factors, and more, businesses with a Purpose beyond financial returns embedded within their core business have been shown to be significantly better performing than their peers!
Social Purpose ultimately helps a business view themselves as embedded within the environment they operate in, and consider everyone (and everything!) that their business impacts in their business decisions. As we all know, we are all reliant on the natural systems we reside within. This systems-perspective can only help organisations to flourish, and generate positive impact for nature and society in the process.
Read more about B Corps, embedding a Social Purpose within their business, here