2020 Proves Corporate Purpose is More Important Than Ever
Corporate purpose has increasingly become a watchword for companies looking to distinguish themselves in the modern era. The aspiration to higher values beyond profit is something that stakeholders are increasingly seeking from the enterprises they support. In January, the World Economic Forum’s Annual Meeting sought to establish the Davos Manifesto of 2020, which held that the purpose of any company is to “engage all its stakeholders in shared and sustained value creation,” stating that a common commitment to policies and decisions can “strengthen the long-term prosperity of a company.”
Corporate purpose has never been as on display or under the spotlight as in 2020. The coronavirus pandemic, social justice movements, economic instability, climate crisis, political turmoil and hyper-partisan rhetoric are just some of the issues companies had to address this year. Those that are best positioned to come out the other side are often those that have relied on purpose to guide decisions impacting their stakeholders. While these decisions may sometimes pose a financial disadvantage in the short run, in the long run they engender a sense of trust and deeper loyalty between companies, brands and consumers.
Some examples of purpose-driven leadership and decision-making by companies in 2020 include:
- Passenger airlines are facing some of the toughest losses in 2020. The three largest airlines in the United States reported 3Q revenues more than 70 percent lower than the same period last year, with little relief in sight. While nearly all airlines implemented increased cleaning and other COVID-related protocols, Delta Airlines has stood out for its leadership in on-board safety. The airline was one of the first to mandate masks onboard, with strict enforcement, and recently announced they are leaving middle seats open through March 2021. In an interview with TIME Magazine in July, CEO Ed Bastian attributed these decisions to the company’s commitment to “restoring confidence in consumers in air travel again the face of the pandemic.” While the airline continues to burn significant cash daily, Bastian said that “we know space and distance is one of the key attributes to containing the virus and keeping people confident and safe…having that commitment that on every single flight on Delta our customers will have the seat next to them open, is huge in their minds.”
- While many companies rushed to commit or recommit to racial and social justice efforts in the wake of George Floyd’s death this summer, ice cream company Ben and Jerry’s was already at the table. Ben and Jerry’s was one of the first companies to embrace the concept of corporate purpose, believing that the three parts of its mission – economic, social and product – must thrive equally in a way that respects people and supports the communities they live in. When CEO Matthew McCarthy took over the business in 2018, he issued a challenge for the brand to double down on its social impact work. In an interview with Forbes in June, Rob Michalak, the Director of Social Mission Special Projects, acknowledged that, “We respect that some people will have a set of values that are meaningful and important to them, and we may lose some customers. But what we’ve also learned is that those who share those values are more deeply loyal… actually two and a half times more loyal than just regular customers—that’s of great value. They understand that we stand for something and we’re authentic about it.”
- Companies quickly learned this year that blog posts and tweets from leadership promising to address systemic racism would not be enough. In addition to highlighting Black creators on its homepage and donating $5 million to organizations supporting Black artists and other important endeavors, Netflix took the extra step of moving two percent of its $5 billion cash holdings to credit unions and banks that primarily serve Black communities. In a blog post on the move, Aaron Mitchell, Netflix director of talent acquisition, and Shannon Alwyn, Netflix’s treasury director, wrote that, “Black banks have been fighting to better their communities for decades but they’re disadvantaged by their lack of access to capital. The major banks, where big multinational companies including ours keep most of their money, are also focusing more on improving equity, but not at the grassroots level these Black-led institutions can and do.”
- As the political rhetoric of the 2020 presidential election kicked into full swing earlier in the year, all eyes turned to social media companies like Twitter to address the growing amount of misinformation and outside political influences on their platforms. Though not always politically expedient or popular among all users, Twitter expanded its systems for monitoring potential election misinformation and has been at the forefront of fact-checking politicians on both sides of the aisle – even when that means fact-checking the president of the United States himself. Despite backlash, a Twitter spokesperson recently told the The Wall Street Journal that, “Our teams remain vigilant and will continue working to protect the integrity of the election conversation on Twitter.”
2020 has proved that the future is uncertain, change is ever-present and those companies that react quickly and adapt to uncertainties are better placed to come back stronger. Most would agree this was not the best year in the books, but one positive thing it taught us was to focus on what is important: to take risks and live by your values, prove that people really are more important than profit and that building trust now and leading with your values will benefit everyone.