Business

Ignoring purpose ‘risks market share’

Three out of four consumers are more likely to buy from brands that put purpose before profit, new research shows – with four in 10 believing purpose is used simply for corporate spin. The findings come as social enterprise agency UnLtd launches a new tool to help business embed purpose in their work. 

AR_Londonalt500The publication of the research showing a rise in consumer demand for purposeful business coincides with the launch of Purposely, a free government-backed digital tool that helps businesses to “simply embed purpose”.

Purposely was designed and created by UnLtd, the foundation for social entrepreneurs, in partnership with law firm Bates Wells Braithwaite (BWB), with strategic support from the government’s Department for Digital, Culture, Media & Sport (DCMS).

UnLtd, which funds and supports social entrepreneurs, defines businesses with a purpose beyond profit as “those committed to fulfilling a social, economic or environmental need”.

The new tool helps entrepreneurs, third-party suppliers and service providers to embed a company’s purpose into their governing articles. By making it easier for businesses to have a legal commitment to social purpose, says UnLtd, companies will be able to redefine what success looks like beyond profit and create a duty for directors to act in line with this purpose for years to come.

The launch of the Purposely tool follows the findings of the government’s 2016 mission-led business review, which showed an appetite for purpose-driven businesses, but also a lack of knowledge in effectively embedding purpose within the DNA of businesses.

The market research, by Message House, shows that 73% of consumers – and 81% of 18-34 year olds – are more likely to buy from brands that put purpose before profit.

Forty per cent of consumers believe that purpose is used for corporate spin and marketing, damaging their prospects of buying from brands that fail to “truly embed” their purpose.

Six in 10 consumers have called out brands for not ‘walking the talk’ and failing to back up their declared purpose with action. Fewer than a third (30%) believe that publishing a company’s social purpose on a website is an indicator of a brand taking purpose seriously.

On the other hand, making purpose legally binding came joint top in a list of methods for proving that a business is serious about purpose, with over half of consumers (54%) favouring this option.

Purposely is accessible via a free online portal and asks users a series of questions about their business, before providing a set of modified company articles based on their answers. This tailor-made legal framework legally obliges founders and business leaders to live aspects of their purpose, “the scope of which is determined by how purpose-driven they wish to be”, says Unltd.

unltd_logoUnLtd chief executive Mark Norbury said: “Purpose is crucial in business because it enables entrepreneurs to build companies that truly reflect their vision, values and ethics. For some entrepreneurs, this means putting a social or environmental purpose as the core driver of their business. For others, it means delivering social impact alongside commercial goals.

“Our new research makes crystal clear that purpose is about so much more than marketing. It needs to be embedded in the very heart of a business. Using Purposely will offer businesses several commercial advantages in the modern age – increasing trust in consumers, enabling businesses to recruit better talent, and helping founders to secure their vision and legacy in their organisation’s DNA.”

Minister for sport and civil society Tracey Crouch said: “As the mission-led business review showed, many business leaders recognise this but are often unaware that company law already allows them to commit to a purpose beyond profit and build this into their governing documents.

“This is why the launch of Purposely is so important. It offers business owners a simple and authentic way to take the first step in putting purpose at the heart of their company.”

B Corps, which allow businesses to build in purpose to their work through performance standards, are growing in popularity. Today there are nearly 170 B Corps in the UK, including tech-led ventures Bulb Energy and Yoti, and investors Bethnal Green Ventures and ClearlySo.

Reason Digital co-founder Matt Haworth said: “We changed our articles so we could embed the values of the organisation in its governance. This has helped us steer decision making in the business, including turning down work that doesn’t fit with our values while remaining profitable.”

Since starting in 2002, UnLtd has given over 13,000 awards to individual social entrepreneurs to start up and scale their impact and deliver positive social change.

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