How has Covid-19 impacted corporate purpose?
By Andrew Adie, Managing Partner
What is the purpose of business? This question is frequently being asked and tested by a world that is increasingly activist and has increasingly high expectations of its corporate citizens.
Covid-19 has highlighted conflicting opinions on just how important this question will be during the recovery, not just from the pandemic but from the worst recession for 600-years.
Is the purpose of business to make money, generate profits for owners and shareholders and to create jobs? Or should business also have a higher, ethical purpose?
Is furloughing staff, preserving cash and wielding an axe to your supply chain a pragmatic response to the pandemic or a sign of a business that is rotten and out of step with the mood of the times?
As we emerge into a post-pandemic world will companies be judged for the way they do business as much as for what they do and the profits they generate?
These questions are business critical. Firms that reach the ‘wrong’ conclusion (i.e. the one that is found to be out-of-step with public sentiment and ethics) risk being legislated out of business and targeted by activist investors and NGOs who can easily destroy reputations, one Twitter storm at a time.
In reality business has to find a balance that lets it have feet in both camps. Unless we’re to turn into a nation of charities then profit still matters. Post lockdown business will need to put its foot on the gas if we’re to avoid a social and economic catastrophe as challenging as the health crisis caused by Covid.
However, conscious capitalism, purpose and ESG are not going to go away and numerous studies have shown they can be profit and revenue accelerators. Public, politicians and activists and NGOs want leadership from business on key issues: Sustainability, diversity, equality, fairness in business and society.
As anyone working in communications knows, the ability for viewpoints, anger and uprising to spread fast and wide is now an ever-present danger for brands. Burying your head in the sand and hoping for the best is not a viable option.
Companies can only protect themselves by showing true leadership and true purpose and reporting transparently against that plan. Covid may have elevated our societal understanding of the importance of business but it has also raised our expectations of how we want business to conduct itself as a member of society.
When we look back at Covid and the lockdown we will find numerous examples of businesses that have stepped up, donated goods to charities, worked hard to maintain services and tried even harder to retain staff (even on furlough). We will also find examples of businesses axing staff under NDAs, treating their supply chains with contempt and milking government support for their own benefit.
What we can be confident about is that all corporate behaviour will continue to be judged through an ethical as well as a financial lens.
This article was written as part of our Communicating through the Covid Crisis report. To download the full report please click here