Everyday, companies commit to bettering the world, acknowledging their role in addressing today’s most pressing issues, such as climate change or inequality. But if businesses are to succeed in transforming the world for the better, their commitments must be met with action.

A new report published by Corporate Knights investigates how 34 Social Purpose Businesses (a business whose enduring reason for being is to create a better world) with headquarters or significant operations in Canada are implementing their purpose. The Social Purpose Transition Pathway: Helping Companies Move from “Say” to “Do” features both public and private companies (including co-operatives and crown corporations), such as Coast Capital Savings, Unilever, BASF Canada and BCLC.

Findings captured in the report suggest that while companies are increasingly stating a social purpose, not all companies are as successful when it comes to implementing it. In other words, the gap between “say” and “do” varies from one company to the next.

“What’s interesting, is that out of an initial sample of 197 businesses, only 34 clearly stated that they create value for society, and not just for their shareholders or customers. These are the 34 businesses we selected for inclusion in the study, so we’re really emphasizing that, regardless of a company’s rating in this report, they’re already doing good work and arguably ahead of the curve,” says Michelynn Lafleche, who co-authored the report.

To rate companies, Corporate Knights developed a new rating system to assess companies’ Social Purpose implementation. Companies were given an overall score and divided into four quartiles – platinum, gold, silver and bronze – to establish a score-based rating.

To learn more about the companies involved, their ratings and best practices for Social Purpose implementation, read the full report here.

Key Findings

Companies taking action to embed their social purpose are embedding purpose in some areas more than others. In addition to disclosing progress on their purpose, Corporate Knights found that companies tend to be strongest when it comes to aligning values with their purpose. Many companies also include social purpose deliverables in their corporate strategies, business plans or strategic priorities.

Companies tend to lag in two central areas related to social purpose governance: board oversight and CEO role. This means that when CEOs and boards are not guided by an explicit statement of responsibility to implement or govern its social purpose, the company may struggle to execute on purpose across all criteria.

Corporate Knights found that the private companies included in this study were stronger social purpose performers than public companies. Overall, they tended to execute on multiple criteria and seemed to do so with greater success than the rated public companies. The reason for this remains unclear, but could relate to factors such as company size, co-operative form, lack of shareholder focus, or exposure to Social Purpose training.

Embedding purpose in the corporate strategy and executive performance incentives are considered the two top indicators of authentic purpose execution. Execution on purpose-driven pay and performance objectives for the CEO and executive team varied from one company to the next, with well over a third of companies scoring 0 on this criterion.

Toby Heaps, CEO and co-founder of Corporate Knights shared his thoughts, “[t]his Social Purpose report captures an important sentiment at the heart of Corporate Knights’ mission. We believe that to address society’s challenges, business needs a new operating system. Businesses that adopt a social purpose as the reason they exist get part way there, but need to go the second step to implement their purpose. This operating system is in its infancy, and that is where this report comes in. We hope the best practices and recommendations we’ve outlined in this report provide the guidance companies and their boards need to fulfill the potential of their purpose and put society on a sustainable path.”

Source: Cision News Wire