Why Purpose Aligned Businesses Outperform in the Long Term

Michelle Di Fabio shares her takeaways from the Shared Value Summit and why it is important for organisations to create shared value.

At the Shared Value Summit held in Sydney recently, the message was consistent and clear: businesses with purpose at their core create shared value for society and outperform in the long term.

The conference was successfully attended by the not-for-profit, government, academic and corporate sectors, who came together to discuss and debate shared value through interactive panels, knowledge sharing and a practical “planet saving” simulation.

It emerged that the success factors to create sustainable growth and shared value include organisational leadership, partnerships, education and targeted communication.

1) Aligning strategy to purpose is pivotal

A clear organisational strategy connected to purpose and leadership results in value creation.

This point was unequivocal, shared value starts at the top and must be aligned to an organisation’s strategic priorities.

We are increasingly seeing organisations adopt the UN Sustainable Development Goals (SDGs) as a framework to align strategy with an organisation’s values/purpose, and for reporting. The SDG framework is effective when it’s embedded into the organisation’s core strategy. Only then are the SDGs relevant and “can make a huge difference,” says Maria Cristina Papetti from Enel.

Strategic alignment to the SDGs is increasingly prevalent in the financial services industry and global pension funds, such as CalPERS, which are using the SDGs as a framework to assess impact on assets.

2) Partnerships are key

When an organisation focuses on delivering value for all stakeholders, it’s a win-win for delivering financial and social returns.

Developing partnerships is critical for engaging with stakeholders driving impact. Why? We cannot achieve impact at scale alone.

Beth Delaney, assistant secretary from DFAT encourages all businesses to think innovatively about how they form partnerships and engage the private sector.  

The healthcare sector is one to demonstrate how partnerships create value. There is a significant shared value opportunity to tackle mental health, not only for the corporations involved, but more importantly for society.

Damien Mu, CEO of AIA Australia, spoke about their mission to help improve the health outcomes of all Australians and their mental health partnerships in place.

“Almost one in two employees will experience mental health in their lifetime,” he said. It also has a multi-billion dollar financial impact on the economy.

The water industry is another to demonstrate how partnerships are driving impact. Sue O’Connor spoke about Yarra Valley’s partnership model locally and nationally to tackle recycling water and developments at scale. These programs create value by looking at innovative and sustainable models to address environmental changes and population growth.

3) Education creates value

When programs have education embedded in them, they have capability to create significant value for all stakeholders, both financially and socially.

UniLever has achieved success in education, exemplified by the brand Dove, rated as the number one self-esteem educator program in the world. UniLever also runs a school hand sanitisation program in Vietnam impacting over 13 million people to date.

Lion, a food and beverage company is also making an impact with their education program on responsible alcohol consumption. Their R&D on the healthier choices sought by consumers has led to product innovation and educated consumers by providing nutritional profiles and increased product range to address Australia’s growing obesity rate.

4) Know your stakeholders, measure and communicate your impact

Targeted communication drives stakeholder engagement to create value, purpose and deeper connection.

It’s important to understand your audience when communicating impact, as the messaging and channel will differ for each.

Mark Kramer, founder and managing director of FSG, defines four distinct audiences to communicate shared value to: government agencies, investors, employees and the public. Understand what is important for each of these audiences and how to best communicate impact, whether more emotive through storytelling or numerically.

Strategic priorities should be linked to a set of relevant metrics that are measured and communicated. There is a greater focus on integrated reporting to communicate shared value. Sustainability reporting alone is not enough to satisfy all stakeholders.

Shared value is a multi-year journey and there is an abundance of evidence to suggest that purpose aligned organisations create social value and economic return for society, as a whole.

As reinforced by Kramer and evidenced by Harvard Business School’s Shared Value research, “Companies who were living their purpose, outperformed their peers.”

About the author: Michelle Di Fabio is the founder and managing director of Strategic Global Advisory and is a shared value and impact investing specialist. @MichelleDiFabio