Purposeful businesses extend beyond just trying to make a profit and also aim to achieve positive social or environmental impacts. As well as providing their service or product with minimal negative impact, they attempt to use their brand voice and influence to make a positive impact.
In recent years, much attention has been paid to Corporate Social Responsibility (CSR) and "conscious capitalism." Encouraging many companies to begin operating more responsibly, realizing that business owners can utilize profits and influence for social good. In fact, a survey was conducted on 500 Fortune CEOs, and they discovered that a mere 7% of the CEOs believed that their companies should "...Mainly focus on making profits and not be distracted by social goals."
Patagonia and The Body Shop are two brands emphasizing social and environmental responsibility and are examples of purposeful businesses. A growing number of certifications are also popping up to allow a business to prove their business's positive social impact. These certifications can help to combat greenwashing (deceptive marketing that indicates but doesn't prove that a product is environmentally friendly) and empty promises. A brilliant example of a certification that makes choosing sustainable brands easier is B-corp certification.
This article aims to provide concrete examples and actionable strategies so businesses worldwide can become purposeful by being a force for positive change.
What is a Purposeful Business?
A purposeful business utilizes the organization's income and audience to make an impact beyond profit. Instead, it directs time, resources, and money toward overcoming a relevant challenge or problem in the outside world. The primary goal of a purposeful business is to make a difference in the world. However, this does not mean that the company does not attempt to make a profit; without capital and the influence that comes from success, the possibility of making real change is limited.
Companies that prioritize purpose-driven causes seek to use their profits and growing brand voice to positively impact social, environmental, humanitarian, or ethical issues within their local and global community.
How does a business become a force for good?
There are many unique ways a business can become a force for good beyond making a profit and serving shareholders. There are a plethora of important and impactful causes that a company can align itself with, and taking impactful action towards supporting materially.
It's critical that if a business is looking to become a purposeful organization, it finds ways to materially impact its chosen cause instead of simply communicating its support to its audience. To avoid greenwashing, a business should aim to either redirect funds directly to a cause or charity and/or motivate its customer base to make donations to do so. Alternatively, companies should make changes to their operations, supply chain, and organizational structure that positively impact the planet and the business.
There are many ways a business can become a meaningful force for good which can include:
- Becoming accredited by BCorp, 1% for the planet, or other organizations that create ethical business practices and advocate for social issues such as anti-racism, women's rights, LGBTQ+ rights, etc.
- Lead with purpose — implement company culture from a place of leadership.
- Becoming more sustainable and environmentally conscious. This can be via promoting sustainability internally, changing business operations to become less environmentally, and choosing more eco-friendly suppliers.
Make operational changes
To make a true and authentic change to your business, it will be important to take stock of and consider all of your operations, stakeholders, and employees. Of course, no business is perfect; the first step to change is identifying which areas of your business are negatively impacting the planet, your employees, or your customers. This can take the form of implementing proper waste disposal processes to improve recycling or choosing a different supplier based on environmental criteria.
Sustainable certifications can strengthen your business's branding and make eco-conscious customers feel more confident in your products or services. Consumers can filter through the many brands claiming they are eco-friendly and find the true socially and environmentally responsible products and services by looking for certifications such as B Corporations or 1% for the planet. This seal of approval is a great way to establish trust with customers and demonstrate the genuine efforts of your business.
Becoming a Certified B Corporation
What is a B corporation?
A company that voluntarily chooses to meet the highest standards for validated social and environmental performance falls under a B corporation classification. Businesses that are certified B Corporations strive to create a sustainable economic system that benefits people, communities, and the environment. Businesses that apply for B-certification are certified by B Lab, the nonprofit behind B-corps.
A certified B corporation is a business model focused on redefining the general idea of success from only gaining profit to generating positive change in society (3). A leading corporation must be inclusive, transparent, equitable, and able to balance personal profit and public purpose. The governance model involves workers, shareholders, the local community, customers, and the environment.
To become a certified B corporation, you must complete a comprehensive assessment verified by B-lab and meet several stringent requirements (4). To ensure long-term sustainability and continuous improvement, all certified companies must be reassessed every three years.
Some of the requirements for B-corp certification include the following:
- Achieve an Impact Assessment score of at least 80 to demonstrate an adequate social and environmental performance level. (Andrew Davies, CEO of B Labs Australia, had this to say about meeting the requirements, "It sounds easy but is enormously challenging. Most businesses, when they first use the assessment tools they, come in around 50."
- The business has to have been trading for 12 months before applying for B-corp certification.
- Commit legally to restructuring the business model to hold the new governance structure accountable for its overall impact on all stakeholders.
- For optimal transparency, allow all performance information needed to be measured against the standard to be available publicly on the B lab website. It's also important to disclose any operation which appears controversial.
The B-lab company also has an online course that covers what it means to be B-corp.
Partnering with 1% for the planet
What is 1% for the planet?
Businesses worldwide participate in 1% for the planet by contributing one percent of their annual revenue to environmental causes. It aims to prevent greenwashing, certify reputable giving, and hold donors accountable. Certification is awarded to companies that donate 1% of annual sales to environmental causes; the high-bar commitment members make to be certified partners with 1% for the planet.
A significant difference between 1% for the planet and other charitable commitments is that members donate 1% of revenue, not 1% of profits. When companies commit to donating a percentage of their profit, there are a number of things they can do to lessen this amount. These include giving out extensive Christmas bonuses, reinvesting their money into the business, and purchasing personal items such as cars on the business. On the other hand, when a business commits to being a 1% for the planet member, it means that despite the business's financial year, rain, hail, or shine, it will be donating 1% of its annual sales.
Each business owner decides which environmental partners to support through 1% for the planet. Thousands of vetted environmental partners are available on 1% for the planet's online directory. So whether you are passionate about deforestation, protecting sea turtles, sustainable agriculture, or keeping the coasts clean — there's something for everyone.
Implementing Purpose-Driven Leadership Values
As aforementioned, any purposeful business, including those considered B-corporations, should have a purpose and aim at combining short-term profits with long-term ethical and moral goals.
Simply having a purpose is not enough. Well-calculated execution is key to achieving a company's vision. A positive company culture can only come to life with a purpose-driven leader. This means that the company's purpose and values have to stem from the efforts of the key people within the company. They can effectively guide, manage, and lead others by becoming stewards of their beliefs. A leader who embodies the company's purpose and values will encourage others to do the same. Read more about finding and building your purpose within your business here.
A true leader holds all the philosophical and practical principles of the enterprise and considers them during all decision-making processes. Such leadership values are not limited to the company owners but could be implemented by all workers. Below are some leadership values that can help propel a business forward.
A Unified Vision
As a leader, it is crucial to have clear plans and processes to achieve a particular purpose or do specific work-related things. When a leader holds a specific vision at heart and communicates it to everyone on their team, all potential conflicts, vague expectations, or ambiguous assumptions employees are minimized. As a result, all hiring, management, and even firing processes are made easier when everyone is familiar with the values and general vision of the business.
Passion and Dedication
The best way to motivate and inspire team members is for the leader to be passionate about the mission and work at hand genuinely. A strong leader must be dedicated, which is no easy task, but an invaluable quality nonetheless. Regardless of your preferred leadership style, it's critical always to portray the excitement of achieving your goals through your general attitude and mood. Positive energy and passion are highly contagious values and will inspire employees to match the mood you set and keep the mission moving forward.
This will teach your employees that it is possible to face challenges and overcome obstacles if you have the right mindset. Demonstrating dedication also encourages resilience, another value of a successful business leader.
Resilience and Adaptability
Whether it's a global pandemic, economic and political instability, or even climate change, the world has just not had time to breathe. However, one thing everyone has learned from these chaotic and tough times is the importance of a healthy and positive workplace attitude.
By definition, a resilient business is one that is capable of readily adapting to abrupt changes and quickly recovering from setbacks and obstacles. Resilience allows companies to improve the general mental well-being of employees, boost general productivity and engagement and reduce absenteeism even amidst a crisis. Many businesses aim to employ a leader with a resilient mindset, knowing that this will prepare them for hardships and to thrive despite challenges.
Employees feel more secure knowing their leader is well-prepared for what they might have to face if times ever become tough. On the other hand, workers tend to feel vulnerable and uneasy when they are surrounded by uncertainty. Here is more on the impact resilience training has within a business on different aspects of the employees' well-being, from anxiety, overload, and hostility, to mental distress, sleep, and absenteeism.
For a company to remain proactive and sustainable, it's the business owner and any person in a leadership position's main job to nurture resilience and well-being across the company. You are not born with resilience, but that does not mean you can't learn, develop, and strengthen it. Read more about resilient leadership here.
Benefits of Being a Purposeful Business
When a business is purpose-driven and employees are engaged with the business's mission, a business performs better. It's simple — caring about the outcome increases your chances of success. The benefits of being a purpose-driven business are many; let's jump into some further detail on two of the main benefits:
1. Promote Engagement Among Employees
In a world with conflicting interests and personal aspirations, having a clear purpose and unified vision will serve as a common ground for everyone involved in your business. In simpler words, the purpose driving your business becomes a catalyst driving all your employees.
It gives them a solid reason to stay. By engaging their employees and motivating them towards an attainable and focused business trajectory, general productivity will not only be boosted, but the level of employee retention will also increase.
It's important for young workers to feel a sense of growth and accomplishment from their workplace and the little things they do every day to advance their careers. It matters for them to know that their jobs actually make a difference. The Deloitte Insights 2020 Global Marketing Trends Report revealed a 40% higher employee retention rate in companies classified as purposeful. The increased sense of satisfaction, commitment, productivity, and confidence in the workplace could explain this percentage.
2. Improve Workplace Culture
The long-term benefits of a purposeful business extend beyond just workers but will also affect how society and customers view the brand's main image and message. Once a company instils a healthy value-based culture within its management system, all decisions about to be made become aligned with the expectations and performance of the employees, who believe in the cultural change they can achieve through their job.
The organization's success is thus driven by a healthy workplace mindset and effective customer service, which works hard to answer societal and environmental needs and resolve issues in today's world. A company will always benefit and gain profit from nurturing a focused, forward-thinking attitude and purpose-driven culture.
Let's Meet Some Popular and Purposeful Businesses
The idea of owning a business that is not only running and growing but also has a positive impact may sound too good to be true. However, there are innovative and creative brands that push the envelope with their every move. Let's meet some of them below.
Patagonia, is a B-corp-certified adventure wear brand founded by Yvon Chouinard, an American rock climber who ventured into business because of his passion for climbing. Yvon is also one of the founders of 1% for the planet and has released a popular book on his experience running a sustainable business called 'Let my people go surfing.'
Over the years, Patagonia has managed to become more than a popular outdoor clothing brand. Now, most people know this company for being philanthropic and charitable activists. They are passionate about their harmless manufacturing and socially responsible management programs, which attempt to find solutions for environmental crises and provide a work environment suitable for their supply chain and employees. They are dedicated to finding answers while being transparent about the fact that they may not always get it right the first time. This paper, 'Patagonia's Plastic Packaging: A Study on the Challenges of Garment Delivery,' is a prime example of the company's transparent approach to finding solutions to its shortcomings.
Patagonia is a pioneer in being a purpose-driven business. Their mission has been clear since the start: "Patagonia is in business to save our home planet" - Patagonia 2018
And this isn't just all talk. Since 1985, Patagonia effectively donates at least 1% of its sales and profits to different environmental organizations worldwide. To date, more than $183 million have been distributed to international nonprofit groups focusing on restoring, preserving, and conserving natural environments.
On top of their activism and B-corp certification, they implement corporate social responsibility into their decision-making and business model, including volunteer hours, helping local communities, and transparent activism.
The Body Shop
The Body Shop is another B-corp-certified company embodying what a purpose-driven business is. The Body Shop has always fought against discrimination and inequality based on gender, body size, or skin color.
Putting their social and environmental justice beliefs at the core of all their work, they have proven themselves dedicated to improving the current world and turning it into a more fair, inclusive, and empowering community. Their products stand for body acceptance and the importance of inner beauty. The Body Shop works hard to instill ideologies that support measuring beauty through self-love, self-esteem, confidence, and positive attitudes to life rather than external physical appearances. They have always fought to break gender and beauty stereotypes by encouraging and empowering women of all classes, races, ages, and body shapes. Feminism has been part of their vision from the start and was always mirrored through their different campaigns and partnerships through the years.
As part of its mission and vision, the body shop supports more than 40,000 people worldwide who are economically vulnerable by providing them access to employment in fair and supportive work cultures.
That's not all; the body shop is against animal testing and supports the production of cruelty-free cosmetics and skin products. The all-natural ingredients they include within their products are 100% made of raw and natural ingredients, which are both traceable and sustainably sourced. Additionally, The Body Shop offers refillable bottles, and they have cut down or eliminated plastic packaging. Finally, to protect endangered species and help them thrive, some of the profits go to help build 75 million square meters of wildlife corridors.
Are There Existing Organizational Systems That Can Support Purposeful Businesses?
Organizational structures are at the core of any company's management system. These different forms of governance influence how a company operates and determines internal communication levels. Depending on their unique needs, businesses can adopt one of many organizational structures which best fit their vision and purpose. A well-defined organizational structure makes establishing a chain of command and direct workplace activities easier.
Assuming these organizational structures all exist on one spectrum of approach styles ranging from completely systematic and mechanism to a more flexible and organic. Of course, each has its benefits and downfalls. Still, more collaborative structures provide more opportunities for employees to build skills and maintain a productive and motivated workplace, creating more ownership of purposeful causes within the organization.
There are two main types of common organizational structures: hierarchical and flat working. Hierarchical management is characterized by top-down management and governance, whereas flat structures prompt cooperation and open communication.
Hierarchical organizational structures are identifiable by having centralized executive decision-making, top-down communications, multiple levels of management, and clearly defined roles and responsibilities.
Although traditional, some large corporations prefer such a governance system since it helps them manage the stability of the different sectors and elements of their business while leaving little room for dynamic changes. It can provide a sense of control for executive and senior management as requests and initiatives are predictably carried out by the lower rungs of the organization's workforce.
There are downsides, however, as these systems can often stifle initiative, creativity, and hamper cooperation and communication within the business. This can drive a lack of empowerment within teams and hamper their ability to undertake and create purposeful projects within the organization.
Such systems create a bureaucracy that slows down collaborations and the decision-making processes. As a result, communication across different departments tends to become tougher as well.
Flat Structure: Why Do They Work?
Flat organizational structures have very few layers of management and encourage collaboration between people with disparate but complementary skill sets to problem-solve within the business.
In some cases, no middle management exists, especially when an organization is just starting up and doesn't need to worry about a huge pool of employees. All workers are interconnected to some extent and get the opportunity to cooperate and collaborate.
This benefits the employee's sense of ownership over the direction of the business and any projects and initiatives they are involved with. When directly involved in meaningful conversations, workers at all levels will feel accountable for their actions and would have to go through fewer people to go through if they ever want to pitch a new idea to the CEO or ask for consultation advice.
Not only does that enhance workplace autonomy, but it encourages transparency and role equity within the work environment. When surrounded by positive and collaborative workplace relationships, communication at all levels improves. Flat structures also encourage flexibility and adaptability, allowing organizations to roll out and implement important initiatives.
Purposeful Businesses: Final Thoughts
Purposeful businesses go above and beyond the traditional expectations of for-profit organizations by reinvesting funds, resources, time, and energy into making a social impact on various important causes.
By aligning with environmental and eco-conscious business practices, supporting social justice causes, and making genuine changes to their corporate and operational systems, businesses can significantly contribute to the betterment of society and the planet.
Several well-known authorities within the space can help businesses become certified as having made the necessary internal and external changes to the business, preventing greenwashing and other exploitative practices.
Through implementing purpose-driven leadership, businesses like Patagonia and the Body Shop have successfully united profit and social responsibility to create truly purposeful companies.
As businesses evolve, becoming more collaborative and less centralized, adopting social causes beyond the bottom line becomes less complicated and more easily implementable within flexible flat hierarchies.
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