The Next Economy
Reimagining Canada’s Economy:
Putting Purpose Before Profit Will Ultimately Net the Highest Returns

The pandemic created a pause in the economy and an opportunity to re-examine our assumptions about the way business operates. There’s a new, broader awareness that the recovery phase of the pandemic can facilitate rethinking the role of businesses in the economy.

We’re witnessing tectonic shifts in what society expects from business and what business expects from itself. Increasingly, more business leaders agree that short-term, profit-driven thinking needs to be replaced by long-term, stakeholder-centric, purpose-driven thinking. This is the route not only to business success but the way to unlock the resources and reach of business to tackle the climate emergency, rising inequality, the pandemic and other societal challenges.

Bottom line: We’re looking at a historic moment to redesign an economy that is more consistent with Canadian values. Canadians and the businesses they work for and lead can create an inclusive, low-carbon, purpose-driven economy, powered by the pursuit of long-term wellbeing for all — in which business, regulatory and financial systems foster an equitable, flourishing, resilient future.

This week (Nov. 15-19) is Canada’s first-ever Purpose in Business Week; along with the Propelling Purpose Summit (Nov. 17-18), it is laying the groundwork for Canada’s purpose-led economy. Business, government and thought leaders are convening to create a Roadmap to accelerate the purpose economy and mainstream social purpose in business, through six critical levers: corporate leadership, post-secondary education, trade and professional associations, ecosystem enablement, public policy and social-purpose procurement.

Interestingly, 15 percent of companies on the Toronto Stock Exchange have a stated social purpose; though many haven’t fully integrated their purpose into their daily business. It’s a good start, but more needs to happen to create a purpose economy.

When BlackRock CEO Larry Fink sent his 2018 letter to CEOs, he challenged CEOs to define their purpose and catapulted social purpose to the forefront of business thinking. Fast forward to 2021, Fink reported that the pandemic that took hold in 2020 accelerated capital investment in sustainable assets to the tune of $288 billion globally, a 96 percent increase over the year prior. Fink states in his 2021 letter that, “Over the course of 2020, we have seen how purposeful companies with better environmental, social, and governance (ESG) profiles have outperformed their peers.”

The business case to pivot to purpose includes better employee retention and attraction. Recent research by Edelman points out that the current employee value proposition (EVP) now includes traditional pay and career advancement, a newer focus on employee wellbeing: “The Employee Value Proposition (EVP) now looks like a tripod, balanced on the traditional enticements of pay and career advancement; a newer focus on employee wellbeing, with flexible hours and remote work; and now an employer commitment to act for good on society’s biggest challenges. Employers must stand up every leg of this tripod if they want to win and retain the activated employee.”

Purpose-driven businesses also attract new partners in business and government, opportunities for new mergers and academic partnerships, and NGO partners who are equally as invested in the company’s success, given its ambition to create a better world.

Social purpose builds trust, attracts capital and helps businesses navigate turbulent times. Companies that opt to propel their purpose also propel trust, employee retention, corporate culture and ultimately revenue by moving into the realm of long-term business success.

Social-purpose companies have an ultimate goal to contribute to the common good; they have a societal and/or environmental purpose as their reason to exist and implement it in everything they do. They set deliberate, strategic societal goals to advance their purpose. If an organization’s social purpose is to protect the world’s forests, it has strategic goals tied to forestry conservation. If an organization’s social purpose is to improve health and wellbeing, its strategic goals are tied to national health improvements. Purpose-led companies set strategic goals that are deliberate and deliver on the stated purpose.

In my experience helping companies develop and implement a social purpose via the Social Purpose Institute at United Way BC, most of the companies adopting a social purpose as their North Star have an ambition to also help their industry become a force for good – even the small businesses. A lot of businesses have an underlying purpose and set of values – but they haven’t formalized it. The goal is to bring their purpose to life and plan for the future. Once unleashed, these purpose-driven companies are set to mobilize entire sectors to contribute to a sustainable future, propelling the purpose economy.

Electric vehicles didn’t appear on Canada’s roads overnight, but we’re now seeing increasing adoption — thanks to a concerted effort involving a range of tools including government incentives and procurement, private-sector investment, post-secondary training, production increases and rising consumer demand.

Turning the tide in the direction of a purpose economy demands the same multi-pronged approach — and a galvanizing effort on the part of business leaders to champion authentic, purpose-first business as a force for good.