Stakeholders are increasingly expecting companies to play a role in addressing economic, environmental and social issues, corporate purpose has become a strategic imperative that creates widespread benefits across the enterprise, according to a new Deloitte report.
For its new report, C-suite Insights: How Purpose Delivers Value in Every Function and for the Enterprise, the firm surveyed more than 200 C-suite executives and conducted in-depth interviews with leaders across industries to understand how their roles and companies are prioritizing purpose—defined as an organization’s reason for being and the positive impact it delivers for society.
The survey found that there is significant opportunity to strengthen accountability to purpose-related commitments
Although most surveyed C-suite leaders (70 percent) indicate that their role is highly impacted by their company’s purpose priorities, only a third (33 percent) say their compensation is tied to their performance against those priorities. And among those who say their company has a defined purpose that is integrated with core business strategy, 22 percent are not prioritizing the collection of purpose-related data, suggesting purpose is not as central to day-to-day business management as it should be.
“Many businesses have made great strides to implement purpose across their operations, but there is still a long way to go from commitment to impact,” said Kwasi Mitchell, chief purpose officer at Deloitte, in a news release. “While it’s clear that C-suite leaders have a strong desire to prioritize purpose, they still have room to grow and develop their systems of accountability.”
The report also found that greater collaboration on purpose is needed among C-suite leaders to enable information-sharing and ensure priorities are effectively implemented across the enterprise
Among those surveyed, 44 percent say there is a dedicated C-suite leader overseeing purpose or sustainability at their company. Yet among these respondents, collaboration on shared purpose priorities with this dedicated C-suite leader was lowest by far. This can largely be due to the relative nascency of such chief purpose or chief sustainability officer roles.
As for what value purpose can deliver, a majority (79 percent) say it supports their talent recruitment, engagement and retention efforts, followed by customer loyalty and engagement (68 percent). Surprisingly, only 17 percent of leaders say purpose enhances access to capital, despite the projected growth and investor interest in ESG assets.
“Leaders may not fully understand how ESG management and disclosure are related to their overall purpose,” Mitchell added. “Companies are also still adapting to meet the significantly increasing emphasis on ESG by investors and other stakeholders. While standards and frameworks for measuring ESG performance exist, the landscape is rapidly evolving and with it the ability for capital markets participants to compare company progress year over year, as well as across peers.”
To effectively implement purpose, the report notes that companies should clearly and authentically articulate their purpose and embed it into their organizational culture
Establishing a business case for purpose and measuring against it, as well as tying executive compensation to outcomes, can lead to greater accountability and transparency. Finally, creating a chief purpose or sustainability officer position can foster more C-suite collaboration and drive business value while addressing societal challenges.
“Companies can reap clear benefits from treating purpose as more than a tagline or a recruiting pitch; it must be central to corporate strategy,” said John Mennel, managing director and purpose strategy leader at Deloitte Consulting LLP, in the release. “Although most leaders are aware of the power of purpose, it offers an even greater business value than they think—from risk management to access to capital and operational efficiency.”