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Purpose-Driven Companies: Lessons Learned
October 29, 2020 | Report
The number of companies in the S&P Global 1200 with purpose statements has almost tripled in the last five years, and the number that identify as purpose driven has grown more than tenfold over the same period. What can be learned from some of these companies? Interviews with senior executives at 15 purpose-driven companies—a selection of leading firms that average over 100 years in business—shed light on the reasons why companies decided to become purpose driven, how they make purpose part of their culture, the impact of purpose on their business, and the governance implications of becoming a purpose-driven company.
Executive Summary
Public corporations generally have a stated purpose. Indeed, Delaware law requires every public company incorporating to have the purpose of engaging broadly in lawful activities.1 Beyond that legal baseline, of course, there has been a debate for over 50 years about the purpose of a public company—whether it exists primarily to further stockholders’ economic interests or to serve a broader set of stakeholders. The choice, however, is not binary: companies need both to be profitable to survive and to serve stakeholders such as customers and employees to thrive.2
Some companies, however, have also explicitly committed themselves to serving a public purpose. In the US, over 7,500 companies—mostly new, small firms—are benefit corporations, which, by law, are required to serve a public purpose.3 A
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