Can a business be both purposeful and profitable?

The phrase ‘purpose-driven’ is used in business parlance, but what does it mean and can it go hand in hand with growth and profitability?

The two can be mutually exclusive, with ‘profit’ being in moral conflict with ‘purpose’. But they can actually make a lucrative combination. A profitable company will be able to do more to support a movement or cause, and in turn, such commitment can boost profitability.

Patagonia, the highly successful outdoor gear and clothing retailer, is often cited as a prime example of this, as it has had a social and environmental commitment since its founding in the 1970s and its ‘targeted profitability’.

Rewiring the business world for good

We all operate within a capitalist system, and we can leverage the positives of this and use the company-customer relationship for the greater good. The first step can be as simple as a charitable partnership.

For example, in rewards programs, online retailers often offer discounts at checkout to encourage customer loyalty. Instead, giving customers the option to donate the value of their discount to a chosen charity, or offering to round up to the nearest whole pound, with the rounding going to the charity, immediate profit for charity, at no cost to the company.

And if business suppliers throw in a gift such as a mouse pad, pen or pack of sweets, this budget, already allocated, could be put towards good causes and make an immediate difference. These are simple ways to use ‘business for good’ without significant financial impact on the bottom line, yet with the potential to increase brand and customer loyalty by being a company with a conscience.

For companies with the resources to do more, donating a percentage of total sales, or profits, to charity is a way to take even greater positive action. To take online retail as an example, in Britain online retail sales are responsible for more than £2 billion in revenue in a year average week. If retailers donated just 1 percent of online sales proceeds to charity, this would amount to more than £20 million every week.

Where the financial support a company provides rises in line with profits, business growth itself becomes a force for good. As the company grows, so does the impact it has. This can encourage stakeholders to remain loyal, including customers and employees, which is obviously good for business.

Real purpose requires real dedication

Becoming truly purposeful requires the full commitment of business leaders. The purpose should permeate the entire company, from its employment and financial practices to its culture and the organizations it chooses to work with, underpinned by transparency and accountability.

One approach is the advocacy-based business model, through which a company takes a position on a socio-economic or environmental problem. For example, an auto parts supplier might formulate a mission to reduce the environmental impact of the automotive industry. This underlying purpose would then influence every business decision, from the choice of materials and how they are disposed of, to new employees, premises and partnerships. Every part of the company should take this fundamental purpose into account, including corporate culture.

This model is one approach to building a purpose-driven company, but there are other ways leaders can turn their company into a force for good. Having a clear and positive purpose is an effective way to increase stakeholder trust and engagement, thereby increasing business resilience in difficult times.

B Corp – is certification worth it?

Another hot topic is B Corp certification, which is often mentioned in the same breath as ‘purpose-driven’. Is it just a long-term fad, or is there real value in pursuing certification?

The answer depends entirely on the individual company and its approach to certification. By definition, certified B Corps are companies that have been verified by the global nonprofit network B Lab to meet high standards of social and environmental performance, public transparency and legal accountability to balance profit and purpose.

Becoming a B Corp is not an end goal, but instead represents a company’s continued commitment to reducing its impact on the environment and operating in a sustainable and ethical manner.

People’s perception of B Corp status has peaks and valleys, but with… 1,500 B Corps in Great Britainand more than 8,000 worldwide, certification offers a growing network of like-minded companies to connect, collaborate and raise awareness of the movement to bring more companies into the mix for the greater good.

For a company that wants to take a more purpose-driven approach, going through the B Corp certification process can be a good start to discovering that purpose.

The bigger picture

Becoming a purpose-driven company is a journey that won’t be completed overnight. It’s also not about giving away all your profits, or putting your customers’ needs aside for a greater purpose. Instead, it’s about keeping the bigger picture in mind and continually making conscious decisions that will benefit the people you work with and the planet you live on, and choosing to partner with other organizations that do the same feeling and acting.