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Purpose: The Fuel for Corporate Sustainability Strategies

Purpose: The Fuel for Corporate Sustainability Strategies

08 July 2024

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In today's world, the integration of sustainability into corporate strategies has moved from a "nice-to-have" to a "must-have." As a sustainability consultant, I have witnessed firsthand the transformative power that a clear and authentic purpose can have on an organisation's sustainability journey. I have been fortunate to work in Japan where many Japanese companies are already purpose-driven to a large degree. That said, purpose is not merely a statement of intent; it is the fuel that drives the engine of Corporate Sustainability, propelling companies towards meaningful and lasting change. Without it your sustainability initiatives lack the proper driver.  

 

Purpose is the foundational element that provides direction and meaning, not just to a company's sustainability initiatives, but to its entire reason for being. It transcends profit motives to align business operations with societal and environmental goals. As highlighted by Harvard professors Rebecca Henderson and George Serafeim, whose work I follow, purpose-driven companies not only perform better financially but also contribute significantly to societal well-being. Their research underscores that purpose acts as a harmonising force, integrating sustainability deeply within the organisational fabric and ensuring that these strategies are not superficial or short-lived. 

 

That all might sound a little naive, but if you consider today's shareholders, consumers and employees are more informed and discerning than ever before, it becomes more of a strategic imperative. Many shareholders, customers and employees have developed a keen instinct for identifying greenwashing – the practice of making misleading claims about the environmental benefits of a product or company. They may not be able to say specifically what is wrong, but they will get a feeling about a company. This awareness demands authenticity and transparency from businesses. Companies that fail to embed genuine purpose in their sustainability efforts risk not only losing credibility but also facing backlash from these key stakeholders. 

 

The rise of social media and digital platforms has empowered consumers and employees to hold companies accountable. They can quickly amplify instances of perceived greenwashing, affecting brand reputation and customer loyalty. Therefore, an authentic purpose is essential not just for the success of sustainability strategies, but for maintaining trust and engagement with these critical groups. Simply put, a lack of transparency and purpose in corporate disclosures put you at risk for allegations of greenwashing 

 

So, if purpose is so important, how can we operationalise it? One way to think about it is that purpose serves as the harmonising force that aligns various elements of a sustainability strategy. It enables a company to integrate sustainability into its core operations rather than treating it as an isolated initiative. This integration is facilitated through the establishment of sustainability committees, departments, and the appointment of sustainability champions across the organisation. These structures ensure that sustainability considerations are embedded in decision-making processes at all levels. 

 

For example, a sustainability committee can provide governance and oversight, ensuring that sustainability goals are met and that there is accountability across the organisation. Departments with sustainability goals can focus on implementing specific initiatives, while sustainability champions can advocate for and drive these efforts within their respective areas. This multi-faceted approach ensures that sustainability strategies are not just conceived but are actively lived and breathed throughout the organisation. This reinforces the corporate messaging around the purpose.  

 

Harvard Business School professors Henderson and Serafeim have documented numerous cases where purpose-driven companies have excelled in their sustainability efforts. One such example is Unilever, which has made purpose central to its business strategy. Unilever’s Sustainable Living Plan aims to decouple growth from environmental impact while increasing positive social impact. The company’s clear purpose has driven significant progress towards its ambitious sustainability targets, resonating with both consumers and employees. 

 

Another compelling case is Patagonia, a company whose purpose-driven mission is deeply embedded in its culture and operations. Patagonia's commitment to environmental activism and sustainable business practices has not only differentiated it in the market but also fostered a loyal customer base and motivated workforce. The company’s purpose acts as a guiding star, ensuring that sustainability is prioritised in every decision, from product design to supply chain management. 

 

You can check to see how mature your organisation is in aligning purpose and strategy by seeing if these steps have been addressed: 

 

1. Is our purpose clearly defined and aligned with our company's values and stakeholder expectations? 

   - Does our purpose resonate with both internal and external stakeholders and reflect a genuine commitment to sustainability? 

 

2. How are we engaging our shareholders and other stakeholders in the development and implementation of our sustainability initiatives? 

   - Are employees, customers, and other stakeholders actively involved and consulted to ensure authenticity and build trust? 

 

3. Do we have governance structures in place, such as sustainability committees and dedicated departments, to oversee and drive our sustainability efforts? 

   - Have we appointed sustainability champions to advocate for and integrate these initiatives across the organisation? 

 

4. Are we communicating our sustainability progress and challenges transparently and regularly? 

   - Do we provide updates that build credibility and demonstrate our genuine commitment to sustainability? 

 

5. Is sustainability integrated into all aspects of our business operations, from supply chain management to product development and marketing? 

   - Are sustainability considerations embedded in decision-making processes to ensure it is a central component of our business strategy? 

 

At Sodali & Co, we try to support our clients at all points in their sustainability journey. Although this is an important piece of strategy development, it can also feel elusive and difficult for our clients to tackle. We see purpose as the fuel that drives successful corporate sustainability strategies. It is what differentiates companies who succeed at their initiatives and those who do not.  By embedding purpose at the heart of their sustainability strategies, companies can not only achieve their environmental and social goals but also build trust, loyalty, and long-term success. 

 


For further reading on the role of purpose in corporate sustainability, refer to the works of Harvard Business School professors [Rebecca Henderson](https://www.hbs.edu/faculty/Pages/profile.aspx?facId=12345) and [George Serafeim](https://www.hbs.edu/faculty/Pages/profile.aspx?facId=15705). Their research provides valuable insights into how purpose-driven companies can thrive in today's complex and demanding business environment. 

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