‘A must-have, not a nice-to-have’: Companies without a strong purpose could struggle to keep up
Consumers are between four and six times as likely to buy from, champion, trust, and defend companies that have a strong purpose at their core, according to a recent global study of 8,000 global consumers and 75 companies and brands.
“Companies are going to get left behind if they don’t believe in values and ESG [environmental, social and corporate governance],” said Maya Chorengel, co–managing partner of the Rise Fund, at Fortune’s Most Powerful Women Summit on Monday. “It’s becoming a must-have, not a nice-to-have. We are now living in a world where it’s table stakes to be forward about your values.”
The Rise Fund has $12 billion of assets under management, and invests in companies that drive measurable social and environmental impact but also demonstrate an ability to deliver strong returns.
Customers, said Chorengel, are increasingly making choices to spend their money in ways that reflect their values, and doing deep research into the brands they buy, where they buy, and how they buy. They’re becoming “very good at finding companies that walk the walk in addition to talking the talk.” Employees, she added, are also looking for companies that reflect their values, and are often willing to get paid less in order to work for such companies.
Large financial institutions like Goldman Sachs have long felt a responsibility to invest in underserved communities, but those investments were typically philanthropic in nature. That’s all changing, said Edith Cooper, the cofounder of Medley, who also serves on the boards of PepsiCo, Amazon, and EQT. Investment management firms like TPG are quickly learning that there’s a lot of untapped opportunity in spaces that traditionally didn’t have access to investments and expertise but are increasingly important to society.
These firms want to “fuel organizations that are going to significantly impact the way people live and work,” Cooper said. People are no longer willing to embody a different reality at work than they do at home, she noted; they want their work to matter and have high impact.
Cooper sees the 2008 financial crisis as a turning point. “People were just tired of it,” she said. “Tired of the same old ‘Oops, we’ll do better,’ and tired of doing the job in the same way with the same motivations, and they weren’t going to tolerate it.” Prior to the crisis there was a narrative in the business world that millennials were the “everyone gets a medal” generation because they wanted to feel good about their work. That was an easy way to dismiss millennials, she said, but boards eventually had to start listening to their concerns and taking them seriously.
The killing of Eric Garner in 2014 by a New York City police officer was also a turning point, she said; boards realized that they needed to pay heed to how their employees were doing and feeling as they coped with the trauma of racial violence. Cooper said she had fielded many calls from coworkers and contemporaries in the business world that week. “It was really the first time in my career where we pulled people together and asked how they felt,” said Cooper. “By listening to people who were driving the future of firms, we were able to do things that really spoke to those challenges.”
Cooper noticed what she calls the “step change in speed” of board members focusing on being value-driven, which in part inspired her to launch Medley alongside her daughter, Jordan Taylor. Medley aims to provide the kind of coaching that’s available to executives to people who are earlier in their careers, providing them with access to a world that’s typically reserved for those who are already members of the business elite.
“People are making huge changes in their careers because of COVID-19,” said Taylor on Monday. “They’re moving across the country, making career changes, thinking about how they approach their relationships.” They care about where they work and what they do, and employers who don’t meet those needs, she said, won’t last very long.
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