COVID-19 has provoked major societal questions – from the role of government in our lives to closely examining our life choices after a mere hour of homeschooling. But brands and institutions that we work for, and with, are also grappling with how they can stay relevant in a reshaped society.
Pre-pandemic brands were already broadening their justification for existence, with many having moved beyond making a maximum profit as legally (and sometimes illegally) possible, in the shortest time. In 2019, the Business Roundtable, which represents some of the world’s largest companies, overturned its 22-year old policy statement – to declare that the purpose of a corporation is to create value for all stakeholders. This shift has been underway for some time, with a very large evidence-base, peppered with names like Unilever and Nike – clearly showing the correlation between brand purpose and profit.
Last year, brands were falling over themselves to support community, social and environmental causes. The Forrester Report even predicted that 2020 would be the year that the world hit ‘peak purpose’ – after which brands could only expect diminishing returns by living by progressive values. So, did the lofty ideals of brands disappear when the effects of COVID-19 swooped in, sending tidal-size waves rippling through economies – or did brand purpose hold up?
The importance of brand purpose in the pandemic
Industries were rocked, cracks in supply chains became chasms – and we were all inundated with a barrage of irrelevant emails from brands telling us ‘we’re there for you’, with vague, untargeted offers of support. But, in a crisis, the core character of many people – and similarly brands – rises to the occasion.
At a basic level, most companies actively prioritised the health and safety of their employees and customers. Some provided wage rises and bonuses to frontline workers, while some retooled their operations to fill critical medical supply shortages, such as beer brands producing hand sanitiser. Long-term relationships were prioritised, with some car insurers refunding rebate premiums and giving credits to customers, while various energy companies kept power on for customers who were unable to pay. In the immediate ‘rescue phase’, the brand purpose of many organisations shone through – and will no doubt stand them in good stead reputationally in the future.
The business purpose behind ESG
Another surprising indicator of how purpose is immune to the pandemic effects, is the record inflows of investment into Environmental Social Governance (ESG) funds, which are screened against non-financial targets, such as environmental impact, management quality and governance structures.
In the first half of 2020, $20.9 billion went into sustainable funds, just short of the total new investment money for 2019. The pandemic has provided a wake-up call to investors of the devastating risk to supply chains from external shocks, including health crises, plus biodiversity loss and climate change. As well as the urgent need to address climate breakdown, the ‘Social’ part of ESG has risen in prominence. The expectation now, is for stakeholders to take a stance on key societal issues – such as Black Lives Matter. Increasingly, investors are going beyond simply avoiding ‘sin stocks’, such as tobacco and coal – by using ‘positive screening’ for stocks that perform highly against ESG criteria. As investors become increasingly discerning, business purpose is becoming accepted as a proxy for future-proof, bankable, long-term investments.
The great reset
The pandemic has put brands’ relationships with all their stakeholders, particularly employees, customers and suppliers, into sharp relief. Now that our behaviour and the nature of our transactions with brands has changed – those that openly set out their brand purpose to drive forward social progress are more appealing to all stakeholders – from investors to customers and, further still, to society at large.
Shaping a new social contract with a broadened set of stakeholders doesn’t happen by accident. It demands a thorough examination of the business purpose – why the organisation exists – based on what value looks like for each set of stakeholders. These insights can inform a unified brand purpose statement based on delivering against your own interests, while making a positive contribution to the world.
As boards take stock and restructure their models, now is a key moment to invigorate a sense of purpose at the heart of post-COVID-19 recoveries, to provide clear frameworks for decision making. For many, it’s not about starting from scratch, but understanding where and how to invest effort and investment to drive purpose and profit. It’s clear from the rise of purpose over the last decade, and its current immunity to COVID-19, that authentic brand purpose will earn greater loyalty and investment, secure the best talent and the most reliable suppliers, while strengthening license to operate from governments and society as a whole.
To get a fresh perspective on how purpose plays a critical role in driving post-Covid prosperity, talk to one of Hoxby’s Futureproofing experts. Contact us on hello@hoxby.com
Read more about what we offer at Hoxby and all about Hoxby Futureproofing (PDF).
Nick Hay is a communications expert, specialising in social innovation and brand purpose. He is part of the Hoxby community.