The shifting expectations of business: aligning strategy, business model and culture with a sustainable purpose.

By Ben Kellard, Director of Business Strategy, CISL

We find ourselves in the midst of a significant global transition. Policy makers around the world are directing trillions of dollars of public investment that will reshape the economy for decades to come in the aftermath of the pandemic. The pandemic has revealed, more than ever before, the highly interconnected nature of the global economy and its vulnerabilities.

These vulnerabilities are likely to be exposed further by global trends that, on our current trajectory, look set to get worse. As Unilever’s CEO Alan Jope put it “the other big problems in the world, things like climate change and inequality, are not going away”. This year UN conferences in Glasgow and Kunming will seek to further the intergovernmental ambitions and frameworks needed to transition to a Net Zero carbon future and protect biodiversity.

Business often comes under fire for its contribution to environmental degradation and social inequalities. However, more recently it has often been the business sector pushing ambition by setting science-based Net Zero carbon targets, calling for broad and ambitious policy change, and exploring corporate biodiversity strategies.

As CISL’s rewiring the economy plan shows, both business and the finance sector have crucial roles to play in this transition through directing capital to sustainable activities and by developing innovative products, services and solutions that benefit society. In doing so they can also create meaningful work and benefit communities.

As businesses look to transition from ‘rescue’ to ‘recovery’ now is a good time to clarify their role in delivering a resilient, low carbon, and fundamentally sustainable economy. The US Business Round Table last year suggested the purpose of businesses is to benefit a range of stakeholders, not only shareholders. But does this go far enough to ensure a business has aligned its purpose and strategy with the transition ahead?

A corporate purpose test

Businesses, and their advisors, should question whether the purpose and strategy is aligned with delivering a sustainable economy, and therefore fundamentally supporting or under-mining their role in the global transition. The purpose should not try to be all things to all people, but rather focus on the distinctive contribution the company makes to society and the world.

The questions below, and their intersection, can help a company find where its purpose might most usefully lie:

  • What opportunities exist for the company to contribute to a sustainable economy?
  • What profitable long-term value propositions will exist into the future?
  • What social and environmental dependencies need to be protected and restored across the value chain?
  • How is the business optimising its distinctive capabilities, assets and offerings?

These questions can enable a business to shape a purpose that positively expresses its distinctive contribution towards a sustainable economy. In doing so, its purpose can act as a ‘North Star’ to direct strategy, drive innovation, and attract and motivate stakeholders.

While no company can isolate itself from these global trends, by identifying how the company can benefit society and their dependencies and impacts on nature and society, they can start to strengthen their long-term resilience and focus more clearly on meeting shifting societal needs.

Leaders’ insights

CISL has worked for many years those with businesses that have sought to align their purpose and strategy with global trends, in order to contribute to a sustainable economy. These companies have learnt many lessons along the way and have gained many insights from which others can learn.

During 2020 CISL convened five leaders from four of these companies (DSM, IKEA, Interface, Unilever) to explore and identify how they went about aligning their purpose and strategy with sustainability, and to understand their efforts to integrate it across the business and their engagement with the outside world.

To provide practical inspiration and guidance to leaders we extracted ten principles backed up by a number of practices that the leaders used to achieve them. The resulting report ‘Leading with a sustainable purpose: Leaders’ insights for the development, alignment and integration of a sustainable corporate purpose:’ is intended to inform any leader, from any organisation, that is planning to develop or revise its approach to aligning its strategy, business model and culture with a sustainable purpose.

Its clear there is still a lot to learn about how businesses can drive the transition and contribute to a sustainable economy. CISL’s Centre for Business Transformation brings together ambitious and leading companies to research, explore and apply what the business role in this transition could look like. It you would like to explore this with us, we would like to hear from you.

The author would like to thank the collaborators from the four companies who contributed to this project: Jeff Turner, Vice President Sustainability (DSM), Inge Massen-Biemans, Global Director Purpose, Brand & Employee Communications (DSM), Pia Heidenmark Cook, Chief Sustainability Officer (Ingka Group (IKEA)), Erin Meezan, Vice President and Chief Sustainability Officer (Interface) and Rebecca Marmot, Chief Sustainability Officer (Unilever).


Editor’s Note:

You can watch Ben describing the drivers behind the purpose debate and exploring what purpose looks like in practice here.

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