Why Purpose and Profit Can (and Should) Go Hand in Hand
Today, the majority of businesses still focus on profit and rapid growth. But customers and other stakeholders have been demanding a mix of purpose and profit from companies for a while now. While many believe that these cannot go hand in hand, it is in fact much harder to fulfil a purpose in the absence of money.
Successful businesses, including Patagonia, Unilever and Microsoft, have already shown that adding environmental and social purpose to your business model is feasible and will ultimately lead to success. With this article, we would like to show why a corporate purpose matters and how you can integrate it into your business operations without sacrificing profits.
The economy is key to a more sustainable and carbon neutral world
Companies have a huge impact – not just on our economy but also on the environment. Research has shown that just 100 companies are responsible for 71% of the world’s emissions. Businesses are therefore key to help create a more sustainable world.
The good news: many companies already no longer view environmental purpose as “nice-to-have” but have, in fact, incorporated it into their core business models.
According to the Green Startup Monitor 2020 of the Federal Association of German Startups, 21% of all German startups can already be classified as “green” because their products and services directly contribute to environmental causes and climate action. Green startups are just as growth- and profit-oriented as other businesses, but also create social and environmental added value.
But it’s not only startups that lead by example. Big corporations such as Unilever show that considerable growth can be driven by purpose. Unilever’s sustainable brands, such as Dove and Vaseline, actually account for 75% of the company’s growth.
Why should you as a company follow these examples? Let us walk you through some more specific benefits of integrating purpose into your business model.
4 Essential Benefits of Combining Purpose and Profit
1. Develop a stronger brand and gain competitive advantage
Today, many businesses offer similar products and services. Integrating environmental purpose and social impact into your business is a great way to stand out and create a unique selling point to attract customers. Simon Sinek put it right by saying that “people don’t buy what you do, they buy why you do it.” To build a strong brand, clearly show how your business makes an impact rather than focus solely on your profit margin.
Purpose-driven ice cream brand Ben & Jerry’s has been working on positive environmental and social impact since 2002 by launching carbon offset programmes, working on reducing emissions and partnering with NGOs to fight for social justice. CEO Matthew McCarthy strongly believes that “businesses that don’t [address] a specific social or environmental concern in their community, no matter how big or small, are going to find themselves irrelevant in the coming years.”
2. Increase employee engagement and productivity
More than ever before, employees today are demanding more meaningful workplace experiences – and are willing to leave if this need is not met. When employees find their job fulfilling and feel they are working towards a purpose, their engagement and productivity is increasing significantly, making it a benefit for the business at the same time.
Case in point: As part of their “Road to Zero” environmental plan, Sony started a variety of activities to reduce their own carbon footprint, develop more sustainable products and technologies and promote a low-carbon and conscious consumer lifestyle. Sony also heavily involves their own employees, for example by promoting proper recycling and energy conservation across all Sony locations and asking employees to drive these initiatives.
3. Attract and retain investors
Purpose has become an important driver of revenue and investment value. While ESG (Environmental, Social and Governance) investments were more of a niche investment strategy back in 2015, they led to a major shift in the investment landscape. PwC expects the share of sustainable investments to account for over 50% of the total mutual European fund assets by 2025 – putting financial and non-financial criteria on a level playing field.
4. Drive performance and reduce cost
Some of the most successful businesses globally are not always the ones that are profit-focused only. Research has shown that businesses that integrate purpose into their operations are able to realise efficiencies along their supply chain, reduce costs over time and gain more profitable returns.
Unilever has impressively showcased this ever since launching their Sustainable Living Plan in 2010. They created this initiative to improve their environmental footprint and at the same time increase social impact. By improving energy efficiencies across their manufacturing sites, they did not only do their part for the environment but also managed to realise substantial savings.
How to achieve meaningful growth
Now you might wonder how to combine purpose and profit. Many of the businesses that successfully integrated purpose into their operations have used different strategies. Here are a few important ones to keep in mind:
1. Find purpose that is relevant to your business and your stakeholders
Your purpose has to reflect who you are as a brand but it should also align with your stakeholders’ values and needs. Understand how they tick and showcase how your business impacts what matters to them.
2. Talk the talk and walk the walk
Promote your purpose through both words and actions and be transparent about it. By authentically adding purpose to your business, you gain trust from your stakeholders and can continue to increase growth and revenue.
3. Show real impact and tell stories
Identify new metrics to track and show how you’re achieving your goals and make an impact. Go beyond official reporting and use the power of storytelling to share insights and achievements. Storytelling connects your company with the audience and inspires them to act.
4. Go ahead and take the first step
For many organisations, integrating purpose into their core business seems to be an “all or nothing” approach. But we encourage businesses not to wait to entirely transform who they are as a company, but instead follow a step-by-step approach.
Combine Purpose and Scale to Generate Impact
Profit and growth are two of the most important goals for businesses. But despite the common belief that purpose stands in the way of profit, examples show that as companies begin to integrate purpose into their operations, profits are likely to follow and scale over time.
By adding purpose to your business, you can become one of the first movers in your industry, create positive impact and drive influence. The larger the company, the greater the impact can be.
You are wondering how to get started? This is where we come in. Planetly helps businesses understand their carbon footprint and find important levers to reduce it over time – an important first step on the journey towards a more sustainable economy.
Reach out to us to get started: firstname.lastname@example.org.