Why companies are increasingly focusing on a more purpose-driven approach
According to a recent Ernst & Young report, 53% of Millennials and Gen Z say that sustainability is important to them when making purchase decisions. This next generation’s growing sense of responsibility towards the world around them helps explain why organizations worldwide are increasingly building into their strategic plans the implications of the huge challenges facing the world such as geopolitical tensions, climate change, and growing inequalities.
At the same time, policymakers are playing an increasingly important role in defining sustainable business practice. Indeed, regulatory policy is already having a significant impact, while the question of how to create a sustainable economy has moved to the center-stage of politics in many countries. A younger generation of purpose-driven — rather than profit-driven — leaders are in the vanguard of this trend.
According to a study by American Express, millennials will account for 75 percent of the global workforce by 2025 and already form the largest generation in the workforce in Europe and the U.S., requiring organizations worldwide to adapt to their more ethically conscious and purpose-driven mindset.
There are key benefits for organizations when they do so. Building a business around a sense of purpose helps push their operations toward outcomes that all stakeholders can value. Equally important, companies that are more purpose-driven and ethically focused, and that foster a reasonable work-life balance are better placed to attract and retain top professional talent and create goodwill among consumers.
Special mention should be made of family businesses. Since they are set to be passed on to the next generation of family owners, such businesses are often more open than others to adopt a sustainable approach and to think about the next decade rather than the next quarter. This is because for family-owned businesses, stewardship goes beyond wealth; it is also about preserving family values, which often extend beyond the company and touch on the wider world in which it operates.
“Accelerating the transformation towards sustainability for family businesses means engaging successive generations to uphold the family legacy,” suggests Evelyn Yeo, head of investments Asia at Pictet Wealth Management. “Family businesses can gradually change their business model to take greater account of material sustainability and the impact they wish to have on their community.”
“Responding to today’s challenges by developing a more sustainable business may in turn bring about innovation and new market solutions, stimulate the future business proposition and lead to new opportunities,” Yeo says.