August 19 was a landmark day for purpose. It was also a landmark day for business leaders.
For the first time since 1978, 181 of America’s top CEOs put a stake in the ground — by working to redefine the role of business in society — and adopting a new definition for the purpose of a corporation.
The revised "Statement on the Purpose of a Corporation" written by the Business Roundtable, puts the interests of all stakeholders first and introduces a broader, more long-term view of value creation. We at Porter Novelli celebrate their commitment to lead with purpose. We also understand and identify with the motivation to act now.
Contrary to popular belief, purpose is more than a fad or trend. Purpose is the path forward because business is about more than profit, it’s about making a difference.
Porter Novelli has conducted business based on this philosophy since 1972. We believe purpose defines an organization’s authentic role and value in society, allowing it to grow its business and positively impact the world.
Our research confirms that Americans echo this mindset. Need more proof?
We found that 72% of Americans feel it is more important than ever that the companies they buy from reflect their values, and that 89% of Americans have a more positive image of a company that leads with purpose.
We have recently seen several examples of employees pushing companies to align with brand values. And we know that most Americans consider a company’s purpose and authentic role in society when making a variety of decisions, from where to work to how to invest.
In 2018, a famous letter from Larry Fink, CEO of BlackRock, called for CEOs to put purpose in the core of their organization to drive success. Our own 2018 financial analysis of Fortune 200 companies reveals that the top 1/3 of purpose-driven companies outperformed the bottom 1/3 by 60% in year- over-year stock price appreciation (2017 vs. 2018).
Businesses now have permission to lead with their heart (and values) on their sleeve; an exciting moment for executives who aim to make an impact beyond the bottom line. In fact, the Business Roundtable announcement encourages it.
Over the last several years, we have seen businesses transform the way they use their scale, products and services, and connections for good. We have witnessed bespoke partnerships that use innovative technologies to streamline, customize and improve the way we do business and serve those in need.
We have seen groundbreaking partnerships between corporate America, nonprofits and government entities develop, expand and flourish. But more than anything, we have seen how much of a difference we can make — here and abroad — on the issues that matter most to our citizens.
One example is Brands for Good, a coalition including P&G, National Geographic, Target and Visa working towards an environmentally and socially sustainable future.
Another is The CEO Action for Diversity & Inclusion that represents top leadership and business commitments to advance diversity, inclusion and equality within the workplace.
An equally notable example is One Young World’s Lead 2030, the first coalition of global businesses working together to support youth-led innovation for sustainable development goals.
Each of these activations, if successful, could drive meaningful change for all — companies, communities, our country and the world. Purpose is more than a moment in time or a drop in the bucket, but rather a responsibility we have as leaders to challenge ourselves to make decisions driven by shared value.
So, congratulations once more to the 181 companies who committed to leading with purpose. This is an incredible start and we hope others will follow your lead. The greater the collective involvement, the more potential there is for businesses and leaders globally to change the world for the better.