Combining profit and purpose
What is the purpose and responsibility of business, now and
in the future? This is the topic that Coca-Cola Enterprises (CCE) commissioned the Doughty Centre for Corporate Responsibility to explore ahead of its 2014 Sustainability Summit. We did so through interviews and surveys with current and future European business leaders, as well as desk research.
While current business leaders have grown up and managed businesses through a period of drastic change where business purpose and responsibility have been tested to new limits, future leaders have experienced both recession and societal stresses that they see worsening in the future. As a result, the two generations have very different views of the ‘social purpose’ of business and how well companies are delivering it.
1. Should business have a social purpose?
Current and future business leaders both agree overwhelmingly that businesses should have a social purpose. However, defining social purpose is more challenging. While future leaders perceive social purpose and commercial purpose to be inextricably intertwined, many current business leaders do not equate
social purpose automatically with corporate responsibility or sustainability, while other business leaders link social purpose and CSR activities more explicitly.
2. Does business now have a social purpose? If so, what interpretation of social purpose?
While current and future business leaders agree overwhelmingly that businesses should have a social purpose, far fewer future leaders than current leaders agree that businesses currently
do have a social purpose. For future leaders, social purpose indicates: operating in a responsible, transparent manner, with regard for social and environmental impacts; taking a long-term view of the company’s fortunes; being prepared to consider alternative business models and being willing to collaborate with Government, NGOs and other actors to build a more prosperous society. For current leaders, responsibilities equate with optimising social and environmental impacts.
3. What is hindering companies’ efforts to fulfil their social responsibilities?
Current and future business leaders differ in their views regarding the barriers which prevent companies fulfilling their social responsibilities. Future leaders believe that internal issues such as management attitude, lack of information and financial considerations are the biggest barriers. By contrast, current leaders perceive external issues such as government and legislation and regulators to be among their firms’ biggest barriers to combining social and environmental purpose with profit.
4. What would encourage businesses to adopt a social purpose?
Both current and future business leaders feel businesses that combine societal and economic value will have competitive advantage now and in the future. However, fewer future leaders than current leaders feel that those businesses that focus
purely on economic value will have competitive advantage. While current leaders highlight the benefits of adopting a social purpose as relevance to the next generation, business survival and closer relationships with customers as key benefits, future leaders cite engaged employees, increased innovation and increased trust in business as the major returns.
5. How should a business define its purpose?
Both generations perceive profitability and shareholder value as indicators of current business success. However, while current leaders believe these will remain key, future leaders believe future indicators of success will include societal and environmental impact, innovation and development of talent, all of which reflect integration of social purpose into the business.
Overall, we see an evolving spectrum of views and understanding about business purpose and business dynamics, requiring new leadership skills and a fresh approach to managing, developing and retaining talent. An enabling environment to encourage businesses to define their purpose might include requirements to cost the externalities and greater corporate transparency
and accountability. Companies themselves need to collaborate better to share examples of business success and provide clarity around their social purpose.
Read the whole report here