Commission calls for purpose-led recovery and growth
Businesses in Scotland can best weather current economic storms and seize future market opportunities by becoming purpose-driven, according to a group of business and economic leaders.
The Business Purpose Commission for Scotland has launched its report Now is the time for purpose: Putting purpose at the heart of Scottish business presenting the business case for purpose and setting out practical actions that businesses, supported by the Scottish and UK Governments, can take. We believe the business-led, government-commissioned plan to equip businesses to become purpose-led is a world first.
A business’s purpose is its reason for existing, which drives its strategy, activities and sales. This has come to be associated with bottom-line financial returns to shareholders above all other stakeholders. However, this focus on maximising profits has been shown to harm businesses, social prosperity and environmental sustainability.
The report presents clear evidence that now is the time, despite the challenges around the costs of doing business, for businesses to embrace a purpose to “find profitable solutions to the problems of people and the planet”. This focus will allow them to attract and retain customers and employees, and build trust, in Scotland and globally.
A new opinion poll for the Commission found that half Scottish people think that the reputation of businesses in Scotland is excellent or good. However, 45% of people have only a neutral opinion or did not know, while 5% thought that it is bad or terrible, including a higher proportion of people in lower skilled jobs.
Critically, while nearly half of people (48%) think that the role of businesses currently have in society is to maximise the returns for shareholders/owners, just over a quarter (27%) think that it is to find profitable solutions to the problems of people and the planet. However, when asked about the role that business should have nearly two-thirds of people (65%) think that businesses should play a role in finding profitable solutions to the problems of people and the planet.
And most businesses agree. A survey of Scottish businesses by the Fraser of Allander Institute found that more than half (53%) think that finding profitable solutions to the problems of people and the planet best reflects the role that businesses have in society, compared to a quarter of businesses who think that it is to maximise returns for shareholders/owners within the confines of the law.
Making the business case for purpose, the report highlights international evidence of benefits including:
- Customers want to buy from them – two thirds of people will pay more for socially driven products
- People want to work for businesses with a purpose – around two thirds of millennials take a company’s social and environmental commitments into account when deciding where to work
- Businesses are more resilient – 73% of them say a well-defined purpose helped navigate disruption
- Businesses are more innovative – 53% of businesses prioritising purpose said they were successful with innovation and transformation efforts, versus only 19% not prioritising it
Long-term evidence shows that a focus on purpose increases businesses’ bottom line and over the next 15 years purposeful businesses are forecast to achieve 10% higher growth than other businesses.
Everyone in Scotland would benefit from more purpose-led businesses as international evidence points to a link with greater economic resilience, fair and meaningful work, lower inequality, and higher quality of life.
The Commission acknowledge the current difficulties for many businesses and calls for support to make it as easy as possible for more businesses to become purposeful. The report describes many impressive examples of purpose-driven Scottish businesses of all sizes and sectors already leading the way – including Advanced Clothing Solutions, Amiqus, Edrington, Macphie, Jerba Campervans, and SSE – and offers a practical guide for how purpose can be put at the heart of every Scottish business.
The Commission sets out a vision that by 2030 all businesses in Scotland will have become purposeful businesses which profit from finding solutions for people and planet. The report makes 12 recommendations for business, governments and other stakeholders, including:
- Encouraging businesses to define, communicate and measure their business purpose
- Establishing a world-leading hub for Environmental, Social and Governance (ESG) investment
- Amending company law to require businesses to state and report on their business purpose
- Mainstreaming and scaling-up public and private sector business support for purpose-led business
Amanda Young, Chief Sustainability Officer at abrdn, co-chair of the Commission said:
“I’m delighted to see that the Commission’s findings demonstrate that purpose-led businesses can prosper not only financially, but also through their contributions to economic prosperity, societal wellbeing and environmental sustainability. I believe passionately that consideration of wider issues affecting society and the world we live in should be at the heart of business strategy and indeed as engaged investors, we expect a full range of long-term risks to be considered as we all work towards a more sustainable future.
“The report is a call to action to businesses of all shapes and sizes to develop and nurture their own business purpose and I welcome the fact that practical recommendations are provided to help businesses along that journey.
“I believe businesses have a valuable role to play in making the world a more prosperous place for all and without them, we won’t be able to solve some of the world’s biggest environmental and social problems.”
Colin Mayer, CBE FBA, Emeritus Professor of Management Studies, Blavatnik School of Government and Saïd Business School, University of Oxford, co-chair of the Commission said:
“As the first business-led, government-initiated commission on purposeful business, this is a landmark report. It provides a clear and compelling case for purposeful business, and the substantial benefits that the Scottish economy, people, and environment will derive from it. It sets out both the business practices and government policies that will help establish Scotland as a world-leading purposeful nation for generations to come.”
The Scottish Government supported the creation of the Commission and Employment Minister Richard Lochhead said
“I thank the Commission for this very thoughtful and detailed report which places Scotland at the forefront of an exciting agenda to unlock the potential of purposeful business to meet the great economic, social and environmental challenges ahead.
“The Scottish Government will consider the recommendations carefully. The report presents clear evidence that now is the time for businesses to embrace a purpose to find profitable solutions to the problems of people and the planet. This focus will allow them to attract and retain customers and employees, and build trust, both in this country and across the world.”
Sara Thiam, SCDI CEO said:
“SCDI’s mission is to support a more inclusive, sustainable, and prosperous Scotland for all. This is a chance for Scottish businesses to lead the world in investing in making Scotland a better place to live and work today and, critically, for future generations.”