Businesses must get serious about purpose beyond profit, or risk losing market share
Today sees the launch of Purposely, a free government-backed digital tool that helps businesses to simply embed purpose.
The launch coincides with a rise in consumer demand for more businesses to put purpose before profit, with new research – launched alongside Purposely – which shows that almost three quarters (73%) of consumers are more likely to buy from brands that do so. Amongst millennials, this figure is even higher, with 81% more likely to buy from purpose-driven brands, demonstrating the importance of corporate purpose among 18-34 year olds.
The first-of-its-kind tool helps founders, entrepreneurs and third-party suppliers and service providers to embed a company’s purpose into their governing articles. By making it easier for businesses to have a legal commitment to social purpose, companies will be able to redefine what success looks like beyond profit and create a duty for Directors to act in line with this purpose for years to come.
How a purpose can help your business?
The launch follows the findings of the government’s 2016 Mission-Led Business Review, which showed that there is an appetite for purpose-driven businesses, but also a lack of knowledge as to how to effectively embed purpose within the DNA of businesses. The research, conducted by Message House, shows that two fifths (40%) of consumers believe purpose is used for corporate spin and marketing, damaging their chances of wanting to buy from those brands who fail to truly embed their purpose.
Similarly, according to this research, almost two thirds (61%) of consumers have called out brands for not ‘walking the talk’ and failing to back-up their purpose with action. Simply publishing a company’s purpose on the website is no longer enough, with less than a third (30%) believing that this is an indicator of a brand taking their purpose seriously. As few as 29% and 28% respectively see the value of adding a purpose exclusively to the company’s physical product or including it in its marketing materials. On the other hand, making purpose legally binding came joint top in a list of methods for proving that a business is serious about purpose, with over half of consumers (54%) favouring this option.
Tracey Crouch MP, Minister for Sport and Civil Society, commented: “There is huge potential for businesses to play a significant role in society by broadening prosperity and tackling inequality. As the Mission-Led Business Review showed, many business leaders recognise this but are often unaware that company law already allows them to commit to a purpose beyond profit and build this into their governing documents.
“This is why the launch of Purposely is so important. It offers business owners a simple and authentic way to take the first step in putting purpose at the heart of their company.”
Mark Norbury, CEO at UnLtd, added: “Purpose is crucial in business because it enables entrepreneurs to build companies that truly reflect their vision, values and ethics. For some entrepreneurs, this means putting a social or environmental purpose as the core driver of their business. For others, it means delivering social impact alongside commercial goals.
“Our new research makes crystal clear that purpose is about so much more than marketing. It needs to be embedded in the very heart of a business. Using Purposely will offer businesses several commercial advantages in the modern age – increasing trust in consumers, enabling businesses to recruit better talent, and helping founders to secure their vision and legacy in their organisation’s DNA.”
How to use the tool
Luke Fletcher, Partner at BWB, added: “Embedding purpose within a company’s constitution is often felt to be an intimidating task for many business founders, owners and advisers. Purposely makes it easy by providing a tailored version of a company’s Articles that sets out each business’ own unique commitment to purpose – which should help it stay true to its purpose over time.”
Purposely is accessible via a free online portal and asks users a series of questions about their business, before providing a set of modified company Articles based on their answers. This tailor-made legal framework legally obliges founders and business leaders to live aspects of their purpose, the scope of which is determined by how purpose-driven they wish to be.