The voices championing purpose-led business have grown louder in recent years.Organisations - large and small - are increasingly expected to do more than drive revenue margins. Pressure from consumers and employees means more brands than ever are judged by their commitment to economic and social governance (ESG).
But how does the impact of COVID-19 weigh against the shift towards purpose-led business? Will the global pandemic usher in a new dawn of conscious capitalism, or will spiralling public debt, austerity and polarisation strengthen the appeal of traditional capitalist values?
Last week’s PRCA COVID-19 Taskforce Forum - chaired by Blurred Partner, Matt Peacock - brought together a world-class panel of speakers in Chicago, London and Delhi to explore the rise of purpose-led business.
Taking a stand
According to Isos Mori, Chief Executive, Ben Page, the commercial case for purpose-led business shows no sign of abating.
“Our data shows you can do well by doing good” said Ben, reflecting on studies that prove purpose is as much a business imperative as it is a societal one. “There’s a strong sense that is the direction we’re heading in”.
The recent #BlackLivesMatter protests have sparked a wave of content from businesses eager to align their organisations with the sentiments of their consumers. But the power brands have to weigh in on societal issues comes with significant responsibility. Laura Sutphen, Executive Vice President & Global Head of Social Purpose, Golin, helps brands understand this responsibility.
“What works for one company, doesn’t necessarily work for another,” said Laura. “Before you think about messages, stop to think about human needs...and are you genuinely trying to help, or are you actually helping yourself?”
Even heavyweight brands including Nike - whose support for former NFL player Colin Kapernick in 2018 was viewed as a commercial success - can fall short on this. Laura explained that Nike had received criticism for their response to #BlackLivesMatter for failing to make enough progress on equality issues internally.
Purpose across borders
Staking a claim on societal issues can be made all-the-more complex for multinational organisations. Messages that resonate in one part of the world can prove catastrophic elsewhere. Local knowledge and cultural context play a critical role in the success or failure for brands.
Girish Balachandran works in Delhi as Managing Partner of ON PURPOSE COMMS.
“We’re not yet at a stage in India where consumers are showing a preference for brands taking a stand on issues. Functionality and value for money take priority. However, as India attracts more foreign investment to power its economic ambitions, investors will demand higher standards of ESG reporting from organisations.”
Purpose-led communication might be met with apathy in some regions, but in others, the consequences can threaten more than a company’s reputation.
“It’s simply not possible to have a global position on LGBTQ+ rights if you’re a multinational organisation operating in countries where homosexuality is ilegal,” added ex-Vodafone Corporate Affairs Director Matt Peacock. “Trying to take action could actually endanger the lives of employees in some parts of the world.”
Internal culture
The panellists were unanimous in their view that COVID-19 will accelerate the shift towards purpose-led business, but not before more brands pay the price for misjudging the public - or the internal - mood. The panelists called on leaders to gauge the mood of their own employees before considering any public moves.
Laura Sutphen astutely highlighted that the recent protests had led to a convergence of employee communications, crisis communication and social purpose. The three functions have to work hand in glove. But if the culture of your organisation is out of step with the issues you’re commenting on, brace yourself.
“A wrong move on a big issue can destroy your business,” added Ben Page.
The business case
While some brands have embraced ESG head on, others have dragged their feet. Matt Peacock was clear on why so many brands who’d dismissed the importance of purpose were now sitting up and paying attention
“Many private companies have come to the party late because they realised they’re missing out cheaper capital”, said Matt.
“Market data shows the cost of capital is higher for companies that don’t embrace ESG...that has focused minds”.
Matt drew the event to a close by sharing his belief that we were at a “hinge point” in history.
“While capitalism has caused many of the problems society now faces, capitalism itself has the potential to provide the cure.”
Watch the full recording of the event and find out more about the PRCA’s Global COVID-19 Communications Taskforce Forum here.