Planet under Pressure

EVERY COMPANY NEEDS A
[STATEMENT OF] PURPOSE
Is corporate purpose more or less important in a time of crisis? Some would say that survival
must trump purpose. This is true for any company whose purpose is unclear. It will lack the
necessary guideposts for making the inevitably hard trade-off decisions. In which case, the
decisions will be disconnected and possibly contradictory. Companies that do have a clear
purpose, articulated by their board of directors, will make these decisions in a way that is more
holistic and self-reinforcing. They will also make decisions that support their long-term – even if
delayed – goals. A clearly articulated purpose provides the foundation for every decision that
needs to be made in this difficult time.
By Jennifer Motles Svigilsky and Dr. Robert G. Eccles
The Long and Short History of Purpose
In 2018, BlackRock CEO Larry Fink wrote
the open letter “A Sense of Purpose.”
He stated: “To prosper over time, every
company must not only deliver financial
performance, but also show how it
makes a positive contribution to society.”
His letter captured the attention of the
corporate community, although many
were confused about what Fink wanted
them to do. Were they meant to forgo
profits in the pursuit of purpose?
That same year, Professor Colin Mayer of
the University of Oxford’s Saïd Business
School published an academic treatment
of purpose in his book Prosperity: Better
Business Makes the Greater Good. He notes
that from a 1,000-year perspective on
corporations, shareholder value maximization
is a relatively recent phenomenon,
having emerged over only the past 50
years or so. Purpose is actually an old
idea going back to original principles
about why companies exist. As Mayer
puts it: “The purpose of companies is to
GOAL
2025
The board of directors
of every company
publishes a “Statement
of Purpose”
134
Global Goals Yearbook 2020