Social purpose is on the move. More and more companies are adopting a social purpose as the reason they exist but often the effort stops there. Following adoption, companies need to ensure the social purpose is implemented authentically, in collaboration with stakeholders to achieve it. There is often a purpose governance gap, for companies governed by a board of directors.
In this brief 7-minute video I unpack this Purpose Governance Gap and suggest strategies to address it. Whether or not your company has a board of directors, however, these tips and tactics are relevant.
The video sets out the role of the board in establishing and embedding company purpose. It was created by the Cambridge Institute for Sustainability Leadership for their new “Governance for a Sustainable Future” online course launched in early 2024.
Boards need to make sure the purpose is defined and sets the course for strategy and stakeholder relations. The video previews the steps to close the Purpose-Governance Gap, including refining the board’s terms of reference to include oversight of purpose, updating the strategy to align with and execute on the purpose, quarterly oversight of progress on this strategy, and ensuring purpose delivery is included in the CEO’s performance objectives and company incentive program. It also addresses how boards can support purpose-driven cultures and makes a few suggestions like ensuring the company values are driving the purpose, ensuring incentives are aligned and including purpose questions in employee engagement surveys.
Becoming a social purpose organization is a process of business model transformation. If executives lack awareness or understanding of how to bring this about, they can turn to their professional associations or peers to learn from them.
All in all, purpose governance is not about adding more work to the board agenda. It is not a check-box exercise, but something that should be included in the routine work of the board, adding value to the organization and society.
Watch the short video on how to embed purpose into corporate governance.
