Most boards operate on a 50-year-old definition of corporate governance in which the singular purpose of the firm is profit generation for shareholders. But that is changing, and this article sets out why and how. It is a call to action for boards everywhere to put their organizations and humanity on a sustainable path by adopting best practices in Purpose Governance. Not doing so will imperil their organizations – and society.
What is Purpose Governance? As set out in the world’s first Purpose Governance Playbook, it is governance of an organization’s purpose, particularly a purpose that transcends organizational self-interest. As defined by the Social Purpose Institute at United Way, a social purpose company is a force for good and a force for growth. Social purpose companies align their strategic goals with society’s. [Note: a social purpose could focus on environmental or social topics, but either way, it goes beyond a profit, product, or customer purpose.]
Three drivers of Purpose Governance are moving up the day of reckoning where having and governing a societal purpose will be the hallmark of good governance and a well-run board:
- Investors
- Education
- Standards
