Corporate purpose must go beyond branding. Here's why

Corporate purpose matters. Purpose statements should clearly articulate why an organization exists; making money is not enough anymore. Three-quarters of employees (77%) and consumers (76%) say it’s important that the organizations they work for/buy from to have a clear social purpose. Explicitly tying company strategy to purpose can spark innovation and growth.

However, all too often, purpose statements fail to make an impact beyond the “About us” section of the corporate website. An Accenture study found that 52% CEOs say purpose is more of a talent-branding tool than a real catalyst for change. The same study found that just 30% of employees see a link between their work and their company’s broader purpose.

More encouragingly, a recent Accenture/UNGC study found that 41% of CEOs are re-evaluating their organization’s core purpose given today’s rapidly changing environment. This presents an opportunity for companies to set out how they hope to deliver on the twin goals of profitability and sustainability. But, to do so, they need to connect their purpose with material actions. How?

To elevate purpose from statement to strategy, leaders must lean into “Mission & Purpose” – one of the “Five Elements” of responsible leadership we identified with the World Economic Forum. This leadership quality, that seeks to advance common goals by inspiring a shared vision of prosperity, can then be coded into the organization’s DNA. Firstly, through practices that make corporate purpose tangible (“Animated Purpose”), and secondly through a systematic approach to upholding and enhancing business ethics (“Dynamic Ethics").

Leadership teams need to establish a set of practices that bring corporate purpose to life within an organization, making sure that it influences decision-making at all levels.

Companies need to exercise Transparency & Accountability on their journey to achieving their purpose to win stakeholder trust in organisational governance. Allbirds, a footwear and apparel company founded in California, aims to “reverse climate change through better business”. To hold themselves accountable, Allbirds not only measures every aspect of its carbon footprint, tracking emissions in five different areas (materials, manufacturing, transportation, product use and end of life), but also displays the average product footprint as a label.

These external signals should then be complemented by clear incentivization: linking Executive Compensation to long-term goals and sustainability targets. At Davos 2023, the Reward Value Foundation launched the Principles of Responsible Remuneration (PRR) supporting companies to develop executive pay aligned with long-term sustainable value creation. Their research on CEO pay models shows that targeted incentivization can boost “clean” production by 10%.

Purpose should also drive the ethical parameters that the company is willing to operate within. The approach must be rigorous enough to cultivate trust, but agile enough to address changing expectations of what constitutes sustainable business practices.

Firstly, companies should consider how they ensure fair Competition & Conduct – helping stakeholders understand the organization’s definition of sustainable business and its associated behavioural boundaries. For example, Walmart aims to help “customers save more of their hard earned money for the things they care about most”. This goal is supported by a firm commitment to fair competition that leads to “stronger innovation, lower prices, and better quality”.

Leadership teams must also set clear boundaries around employee welfare throughout the supply chain through comprehensive Labor Standards. Key initiatives include identifying and excluding forced or slave labour and using human rights criteria when selecting and assessing suppliers. Lululemon embeds its purpose “to elevate human potential by helping people feel their best” by investing in well-being and education initiatives for factory workers and their local communities.

Finally, companies need to develop Environmental & Quality Standards. These shape the organization’s impact on everything from emissions to biodiversity to building stakeholder trust. Natura's purpose to "nurture beauty and relationships for a better way of living and doing business" drives the Brazilian company's environmental activities. The company has committed to achieving 95% biodegradable formulas and expanding Amazon preservation, while also aiming for zero deforestation and 100% traceability/certification in key supply chains by 2025.

These practices help turn intangible ambition into tangible action. They can incentivize your people, integrate sustainability into day-to-day decision-making and inspire trust throughout the value chain, all while increasing innovation, consumer loyalty and profitability. Responsible leaders must elevate purpose from a simple branding tool to an actionable articulation of how the organization plans to remain viable in the long-term.

Accenture and the World Economic Forum's research into Sustainability DNA is available here. You can also take an assessment of the strength of your organization’s DNA.