Last August, 181 CEOs signed the Business Roundtable’s updated “Purpose of a Corporation” statement, committing to lead their companies for the benefit of all stakeholders, including customers, employees, suppliers, communities and shareholders.
Eight months later, amidst one of the world’s worst pandemics, this commitment is experiencing a radical pressure test.
In the pandemic’s early weeks, we saw companies act as a source of relief, addressing needs and filling gaps in myriad ways to step in where government efforts were falling short. Most prioritised the health and financial well-being of employees and customers and then donated money, time, resources, or products to help the most vulnerable in their communities and on the frontlines. Many also modified and evolved their business models, tapping idle human resources and production capacities, to serve as a force for good. For some, this response was natural; companies heading into the pandemic with a well-established purpose responded with speed and impact. However, those with a less defined sense of purpose often struggled to find their voice and make a meaningful difference.
Regardless, the pandemic’s flurry of activity may have triggered a deeper and more purposeful commitment by companies to all of their stakeholders. At a crossroad, companies have begun to embrace the fundamentally redefined role of business moving forward.
"As we shift from relief to pandemic recovery, the landscape will change dramatically. People will want a return to life as they once knew it - a return to work and school and to celebrating milestones and holidays,together. And they will look to business to lead the way.
In fact, companies who were active in relief but choose to be silent in recovery, will likely pay a price for purpose washing. Those with a clear and compelling corporate purpose - which defines its unique value in society and allows it to both grow and positively impact the world - will have a built-in filter for decision making, guiding investments and engaging with all stakeholders.
Moving beyond recovery, corporate purpose will be even more important as we rebuild to a place where we are stronger and even more resilient. Purpose will help companies determine how to best protect their employees and supply chain for the future, how to innovate products and services that reflect pandemic shifts in consumer behaviour and relationships, and how to use their business operations and assets to further make a positive impact on the world.
Ideally, what will ultimately result from our pandemic experience is a stronger and more direct connection between business progress and the value delivered to all stakeholders, as purpose - not profit - becomes the true measure of a company’s worth.