The term social purpose is becoming pretty much ubiquitous, and companies across sectors face pressure to define what it means for them. Leading investment firms, including BlackRock Inc. and State Street Corp., have called for public companies to disclose how they serve society, over and above producing profits. Employees also have heightened expectations of employers. The latest Edelman Trust Barometer found a company’s efforts to contribute to society are the single-largest factor in increasing employee trust. Most recently, regulators have begun to enter the fray; the UK’s Financial Reporting Commission now requires companies to disclose how they contribute to society along with the standard financial and governance information.
Social purpose has its roots in a number of past movements, including corporate philanthropy and corporate social responsibility (see Evolution Not Revolution). Unlike its predecessors, however, social purpose is not just about doing good; it is about doing well by doing good. The goal is no longer to simply be a responsible company, it is to unleash social purpose to drive growth or mitigate risk.
To understand more about how leading companies are tackling this complex topic, we interviewed 15 corporate affairs executives at large public companies across Europe. While
social purpose is broader than a communications or branding issue, corporate affairs executives offer an objective assessment of what makes social purpose efforts successful, as they have a unique perspective on how internal aspirations match external perceptions. Across the lessons they share, a key theme prevailed: Don’t underestimate the task ahead.
THE PATH TO SOCIAL PURPOSE
What distinguishes social purpose from past movements is the central role it is intended to play in strategy. A key question for companies embarking on this journey include “What are the business imperatives and will a purpose-led strategy affect and enhance them?” Unilever is widely regarded as a leader in this field and in 2010 set a series of ambitious goals to reduce environmental impact and improve working conditions for its global employees and their communities. At the core of these goals, however, are key business issues: cost, growth, risk
Successfully defining and implementing social purpose-driven strategies is not a fast or simple process. Across sectors, it is not unusual to hear that progress is slow. “The board is only just addressing this topic,” said one corporate affairs executive we interviewed. Another acknowledged that “the level of apathy and lethargy at the senior leadership level can be a real challenge.”
Others find they have to re-focus existing enthusiasm to keep it on point. “It is not about hungry polar bears for us,” said the communications director of a leading company. “There needs to be a recognition that increasing trust will take time and so the societal-led strategy we undertake needs to be highly credible and for the long term.”
For others, the challenge is keeping up with already-high expectations. “In this
company the hard wiring of social value is embedded,” said one European director of corporate affairs and sustainability. “If we want to be profitable, then
corporate social value is intrinsic to our business. It is just a modus operandi.”
THE UNIQUE ROLE OF COMMUNICATIONS AND CORPORATE AFFAIRS
A social purpose effort gone wrong is often discounted as “just” a PR exercise; a superficial attempt to earn kudos rather than a fundamental change. Yet across the FTSE100, particularly where the Corporate Affairs Director (CAD) or Chief Communications Officer (CCO) holds an executive committee position, these executives play a critical role in facilitating the cooperation and collaboration that is essential to social purpose progress.
CADs, at the top of their game, are influential and impactful on many fronts. They bring excellent inter-personal skills, have a bias for action and a clear ability to coalesce. They have a track record of acting as a vital conduit between the outside world and the inside -- and the best ones are unafraid to challenge and disrupt where needed. They also have an instinctive understanding, born out of years of crisis and issues management, to know when something does not resonate with the values of the brand, and when it might have unforeseen negative consequences. In the US, particularly, our psychometric research shows that CCOs score higher than the average senior executive when it comes to their ability to act as a strong connector.
Interestingly, our research further shows that the motivations and personal values of this group lean towards altruism and therefore this group will have an innate appreciation and an authentic interest in this corporate purpose agenda. Their track record for story-telling, and therefore their natural ability to bring to life a purpose-led strategy that resonates across multiple
audiences, is also extremely helpful.
EVOLUTION, NOT REVOLUTION
While a small cadre of companies such as Carlsberg, Merck and John Lewis have long seen social value as an inherent part of their businesses, the concept has slowly evolved to a much larger group of companies in various forms.
Lessons from Leaders
Regardless of their stage of progress, all companies can benefit from the experience of those who have begun working through social purpose in their organizations. The 15 executives we interviewed offered the following four lessons for approaching the topic:
Social purpose is
strategy. But finding a collective spirit is probably the most significant single factor in embedding it in the heart of
Social purpose must be the will of the CEO – yet it cannot only be the will of the CEO. It needs dedicated resources – yet it can lose steam if tucked into a technocratic sustainability team. By the very nature of social purpose, “there is NOT a single line of ownership, no “one-stop shop,” said one executive we interviewed. “Someone needs to break down the
To that end, executives at leading companies encourage collaboration on the specifics of the strategy, rather than a top-down edict. “The gestating, the designing and the introduction of KPIs were a collective combination,” as a result of this process, “all exco members were aligned,” said Miles Webber, director of corporate affairs and sustainability at LandSec. At Unilever, to get the Sustainable Living Plan fully aligned to business objectives, a steering group comprised of eight executive committee members met every two months to thrash out the details.
For ongoing oversight, consider a cross-functional team to avoid turf battles. “There shouldn’t be a battle between HR and Communications over culture and values although there often is,” said one leader. “Collectively HR and Communications can find common ground and bring valuable insight and ideas to the table.” Other key players internally include the CFO, along with heads of corporate strategy, supply chain, health and safety
and sustainability. Many companies are either reviewing or currently creating performance metrics for the leadership team around the value of collaboration and accountability as directly linked to the sustainability and social purpose agenda.
One key membership criterion beyond function? “You need low ego people – those willing and open about asking others to help with a solution,” said Sue Garrard, former executive vice president of sustainable development at Unilever, echoing the words of many others. Likewise, Miguel Veiga-Pestana senior vice president of corporate affairs & sustainability at Reckitt Benckiser Group believes “you need ambassadors and you need to create movements internally.” Developing strong, lasting, credible working relationships is paramount to success.
Many companies have longstanding efforts to give back to society in the form of charitable giving or employee volunteering. While those are typically narrow programs, some executives find they can provide a useful (and tangible) contrast to the end goal of social purpose. As one communications executive told us, “we used to give away £150 million to charity but there was no focus and, being a somewhat scattergun approach, there was little understanding or follow-up on impact.” With that assessment in hand, it became clear that the company “needed to redesign and pare it back.” Others are more extreme. “I inherited a charity focus with volunteer targets, [but] most executives had no understanding of
real social impact,” one recently-appointed executive said. As a result, “I have killed the philanthropic approach and am wrapping it into this social value work.”
One risk with
social purpose is that the executive committee “whimsically signs up, depending on the mood,” but doesn’t follow through, said one corporate affairs director. To create accountability, consider following Unilever’s open approach and declare the company’s intents and goals at the outset of its strategy, even before there are results to show.
Whether it is a public declaration or an internal one, though, social purpose strategies need formal metrics and targets that are reviewed on
regular basis in order to hold leadership accountable. Toward this end,
include collecting and reporting relevant data to the board in plans from the outset, and make sure the company’s ‘Society Strategy’ is on the agenda at least quarterly if not monthly. Otherwise, like most complex goals, social purpose is in danger of being a short-lived fad.
Getting social purpose strategy and governance in place takes time. For one, board members and executive leaders may initially be resistant to a fundamental shift in strategy, particularly those who adhere to the Milton Friedman school of thought that shareholder return is a company’s top priority. “Getting the exco to commit took several attempts – they were very slow to shift their position,” confided one executive who successfully helped launch a social purpose strategy. “[It took] lots of engagement and communication internally, setting out the business case, to gain traction. You needed a lot of personal resilience.”
Even when leaders are on board conceptually, it is important to
recognise that most are not that confident talking about social good and corporate strategy in the same breath. Executives at leading companies noted their leadership teams often needed to develop new “muscles” and to truly understand how the societal strategy would drive growth.
To help in the learning process, create a safe space for mutual support and learning around social purpose. Give people the language and vocabulary to talk about social purpose, including familiar terms such as cost, risk, growth
and trust. This was very much the Unilever mantra. “Once people understood the link to growth, we really gained traction,” commented Sue Garrard. And do not be discouraged if progress is uneven. “Some elements of the business case, and
integration, were easy and instant, others took 5 to 10 years. We were learning along the way.”
Social purpose is still in its early days. While every company must define its own understanding of social purpose, best practices around the process of setting the strategy and overseeing it are likely to develop as more companies engage in the topic. The talent pool will also develop over time, with experienced social purposeminded leaders emerging from all functions.
Creating a strategy driven by social purpose is a journey. It takes considerable persuasion, collaboration, persistence and patience. However, the end goals – creating value for the company while creating value for society – are worthwhile ones.
CHANTAL TREGEAR is a leadership consultant in the Corporate Officers practice, based in London, with particularly deep expertise and experience in Corporate Affairs and Communications.
Special thanks to many contributors with their thoughts and perspectives on this interesting topic and, in particular, to executives from Aviva, Anglo American, BHP, Barclays, BT, Diageo, HSBC, IHG, LandSec, National Grid, Smith & Nephew, RB (Reckitt Benckiser), Unilever and Vodafone.