Mary Ellen Schaafsma
Understanding Societal Purpose in Business
In recent years, societal purpose has become a buzzword in the world of business. Companies are increasingly recognizing the importance of aligning their goals with the greater good of society. Here, we'll explore what societal purpose is, how it differs from other similar concepts, the benefits it brings to businesses, and how it can help start-ups grow and prosper.
What is Societal Purpose in Business?
Societal purpose refers to a company's reason for being. It is the fundamental reason why a business exists, beyond just selling products or services. A company with a strong societal purpose strives to make a positive impact on society, while still achieving financial success.
How is it Different from CSR, ESG, and Responsible Business?
Corporate Social Responsibility (CSR), Environmental, Social, and Governance (ESG), and responsible business are similar concepts but differ from societal purpose in their scope and focus.
CSR is focused on corporate citizenship, and it involves a company's voluntary activities that go beyond regulatory compliance. It includes philanthropic activities, such as charitable donations and employee volunteering.
ESG is focused on the environmental, social, and governance practices of a company. It evaluates how a company performs in these areas and how it manages risks and opportunities related to these factors and is used to assess the long-term sustainability of a company.
Responsible business is a broader concept that encompasses both CSR and ESG. It refers to a company's commitment to behaving ethically and sustainably in all areas of its operations, from its supply chain to its products and services.
Societal purpose, on the other hand, is about the core reason for a company's existence and can be focused on either social or environmental aims. It is the overarching lens on all the business does, aligning everything, including its CSR, ESG and responsible practices, so that it all ladders up to why the company exists, at all.
The Main Business Benefits of Societal Purpose?
Societal purpose has many benefits for businesses. By aligning with a greater societal purpose, a company can differentiate itself from its competitors and appeal to socially conscious consumers. Societal purpose attracts and retains talent. People are increasingly looking for companies that share their values and are committed to making a positive impact on society.
By having a strong societal purpose, a company builds a loyal customer base that believes in the
company's mission and values, and act as their peer-to-peer ambassadors.
Purpose drives innovation and growth. By using a Purpose lens, a company identifies new business opportunities and creates innovative solutions to meet the needs of society relevant to their Purpose.
The benefits of Purpose increase your company’s valuation. With an authentic social purpose
integrated into their business models, companies experience a positive impact to the three
underlying factors to enterprise valuation (dividends, cost of equity, growth rate).
How Does Purpose Help Start-ups Grow and Prosper?
For start-ups, having a strong societal purpose can be a powerful tool for growth and success.
By defining their societal purpose early on, start-ups attract investors who share their values and are equally passionate about the company's mission.
It helps them build a strong company culture and attract top talent. When a start-up has a purpose beyond just making a profit, it can create a sense of meaning and motivation for employees, who are more likely to be engaged and committed to the company's mission.
It is a clear lens for prioritizing goals and making strategic decisions. By focusing on their purpose, start-ups identify their core competencies and the areas where they can make the most impact, leading to more focused and effective business strategy and faster growth.
A clear societal purpose helps start-ups navigate uncertainties. Start-ups face many obstacles and setbacks, and a clear purpose provides a sense of direction and increases resilience. Societal purpose is becoming a key consideration for any business that wants to thrive in today's rapidly changing and socially conscious world.
Call Purpose Pathways Consulting at 1 (604) 499-1702 or email email@example.com to discuss how to help define your company’s unique and best-fit Purpose. https://www.purposepathways.ca/