The market economy is under tremendous pressure to grow — and grow differently. Accountability, transparency, and making an impact on communities in which they operate are all becoming central to how businesses are reshaping their purpose.
Seven out of 10 Canadians believe companies should show how they make the world better. Research shows that 58 percent of social purpose businesses demonstrate a growth rate of 10 percent or more, compared to 42 percent of those not prioritizing social purpose.
These are insights into the ways businesses will operate in the future, and the Social Purpose Institute (SPI) is leading the charge in that direction. Incubated and run by United Way of the Lower Mainland in Burnaby, BC, the Institute is helping businesses embed social purpose into everything they do.
The SPI defines social purpose as an emerging trend where companies define their reason for being in social terms, and place it at the core of their operations.
58 percent of social purpose businesses show a growth rate of 10 percent or more, compared to 42 percent of those not prioritizing social purpose.
In early 2016, United Way Lower Mainland (UWLM) began noticing that businesses were changing the way they approached corporate social responsibility (CSR). “Many businesses wanted to go beyond cutting a cheque… The old way wasn’t resonating with anyone anymore,” says Mary Ellen Schaafsma, director of the Social Purpose Institute.
After seeing more businesses start their own foundations, partner with community agencies, and expand beyond traditional CSR practices like donating to charities, UWLM wanted to offer something different. Schaafsma says the organization “looked for new ways we could pivot our relationship with the business sector and add more value to them.”
She says social purpose goes beyond CSR. “We’re not bashing CSR, but we see the greater potential for social purpose. It’s not a department or strategy or things the company does — it actually becomes who the company is,” Schaafsma explains.
Over the last few years, some large corporations have adopted a social purpose, bringing this practice to the mainstream — most notably, household brand Maple Leaf Foods. In 2017, the company announced its social purpose, which is to “raise the good in food.” Previously, the Canadian company had a sustainability strategy, although it was not the company’s core mission or purpose. Now, their commitment to food security, climate change, animal health, nutrition, and a sustainable food system is embedded in the company’s purpose, as they aim to be “the most sustainable protein company on earth.”
“We arrived at an intersection between what the world needs and what will enhance profitable growth in our business,” says Lynda Kuhn, Senior Vice President, Purpose and Public Affairs. Maple Leaf Foods has projected a 14 to 16 percent increase in profits in the five years since adoption, compared to the previous rate of 10 percent growth.
In June 2016, UWLM held their first workshop on social purpose business for mission-aligned CEOs in the Lower Mainland and the feedback was positive. As Schaafsma spoke with these socially conscious businesses about bringing their peers on board, the resounding feedback was that it was essential to make a business case for adopting social purpose.
So that is exactly what the Institute did. The organization conducted research and found evidence that purposeful businesses outperformed other companies by 206 percent in the stock market between 2006 and 2016.
The research also shows the benefits of pursuing a social purpose business model range from helping companies attract and retain clients to motivating employees. According to a 2016 report by consulting firm GlobeScan, nearly 70 percent of Canadian consumers believe companies should show how their products and services make the world better.
Soon, SPI developed a year-long program for CEOs to help them look at challenges in their community they could tackle. The cohort program, Social Purpose Innovators, helps guide business leaders to find their “societal reason for being” through research, ideation, testing, and refining. An additional program, Social Purpose Implementers, is designed for companies with an existing social purpose and helps leaders integrate this mission into the everyday work of the company.
One of the program’s participants was Richard Kouwenhoven, President and COO of Hemlock Printers. The program helped Kouwenhoven develop a social purpose statement for the company, and a strategic direction for the coming decades: “To create connections, build community and inspire actions that safeguard the health of the world’s forests.”
And Coro Strandberg, the Social Purpose Advisor at SPI, says Hemlock Printers has brought the social purpose statement to life. “It seems to have unlocked new energy and focus on where a printer company can have impact.”
Now, the company is developing programs and reporting metrics to help them tackle environmental issues. “Already we are making significant progress on our work to address the carbon impacts of our products,” Kouwenhoven says.
Hemlock Printers has expanded their zero carbon neutral program, which includes introducing a fully carbon-neutral 100% post-consumer paper and plans to reduce the carbon emissions in their supply chain.
While Kouwenhoven says it’s too early to determine if social purpose has had an impact on the company’s profits, he says their new strategic focus has helped accelerate growth. As the company has leaned in to sustainability over the last eight years, sales have grown by over 50 percent.
Kouwenhoven expects the growth trajectory to continue, and says this is “in large part thanks to the fact that we have prioritized sustainability as a core competitive advantage for our business.”
Strandberg agrees: “There is a global move underway, calling for companies to adopt social purpose as the reason they exist. I think that expectation or trend is going to continue, if not accelerate, for the next five to 20 years.” She predicts the development of a social purpose certification and potentially legislation that would require companies to disclose their social purpose. She also predicts that in the future, companies will compete on the basis of social purpose.
“There is a global move underway, calling for companies to adopt social purpose as the reason they exist. I think that expectation or trend is going to continue, if not accelerate, for the next five to 20 years.”
For Kouwenhoven and Hemlock Printers, this was a motivation in their transition to becoming a social purpose company. “We don’t want to be on the sidelines, watching other businesses attempt to tackle substantial and systemic issues, we want to be an active participant, helping lead the way.”
With leaders like the Social Purpose Institute providing frameworks for incorporating purpose into every aspect of business, more local corporations will be empowered to join the movement toward using the private sector to address some of the most pressing social issues of our time. With the help of SPI, local Canadian companies are poised to set the standard for new, more purposeful, and more hopeful ways of doing business.
The research is clear: Canadians are more willing to be customers, employees, and investors of companies who make a social impact, demonstrating the potential of social purpose to grow beyond the impact space and become a mainstream business practice in corporate Canada.