Commission calls on businesses to commit to a targeted recovery

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According to a group of business and economic leaders, Scottish businesses can better weather the current economic storms and seize future market opportunities by becoming purpose-driven.

The Business Purpose Commission for Scotland has launched a report setting out the business case and setting out practical actions businesses, backed by the Scottish and UK governments, can take.

He said that while business purpose has become associated with net financial returns to shareholders – above all other stakeholders – this focus on profit maximization has been shown to harm businesses, the social prosperity and environmental sustainability.

The report presents evidence that now is the time, despite the cost challenges of doing business, for companies to embrace a goal of “finding cost-effective solutions to the problems of people and the planet”.

The report argued that this focus will enable businesses to attract and retain customers and employees, and build trust, in Scotland and around the world.

A new opinion poll for the commission has found that half of Scots think the reputation of businesses in Scotland is excellent or good. However, 45% of people only have a neutral opinion or don’t know, while 5% think it’s bad or terrible, including a higher proportion of people in low-skilled jobs.

While almost half of people (48%) believe that the role of business in society is to maximize returns for shareholders/owners, just over a quarter (27%) believe it is to find cost-effective solutions to the problems of people and the planet.

Asked what role businesses should have, 65% said they should play a part in finding cost-effective solutions to people and planet problems.

A separate survey of Scottish businesses by the Fraser of Allander Institute found that more than half (53%) think finding cost-effective solutions to people and planet problems best reflects the role business has in society. , compared to a quarter of companies who believe it is about maximizing returns for shareholders or owners within the limits of the law.

Making the business case for purpose, the report highlights international evidence of benefits, including:

  • Customers want to buy from them – two-thirds of people will pay more for social purpose products.
  • People want to work for companies with purpose – around two-thirds of Millennials consider a company’s social and environmental commitments when deciding where to work.
  • Companies are more resilient: 73% of them say that a well-defined objective has helped them overcome disruptions.
  • Companies are more innovative: 53% of companies that prioritize the goal said they were successful in their innovation and transformation efforts, compared to just 19% that did not prioritize it.

The commission recognized the current difficulties of many businesses and called for support to make it as easy as possible for more businesses.

The report outlines examples of purpose-driven Scottish companies of all sizes and sectors already leading the way, including Advanced Clothing Solutions, Amiqus, Edrington, Macphie, Jerba Campervans and SSE.

The commission has set out a vision that by 2030 all businesses in Scotland will have become useful businesses that will benefit from finding solutions for people and planet.

The report made 12 recommendations for businesses, governments and other stakeholders, including:

  1. Encourage companies to define, communicate and measure their business objective.
  2. Establish a world-leading platform for environmental, social and governance (ESG) investments.
  3. Change in company law to require companies to declare and report on their business purpose.
  4. Integration and scaling up of public and private sector business support for purpose-driven businesses.

Amanda Young, director of sustainability at abrdn, co-chair of the commission, said: “I passionately believe that addressing broader issues affecting society and the world we live in should be at the heart of business strategy and , indeed, as committed investors, we expect a full range of long-term risks to be considered as we all work towards a more sustainable future.

“The report is a call to action for businesses of all shapes and sizes to develop and nurture their own business purpose and I welcome the fact that practical recommendations are provided to help businesses along this journey. .”

Colin Mayer, Emeritus Professor of Management Studies at the Blavatnik School of Government and Saïd Business School, University of Oxford, co-chair of the commission, said: “This landmark report provides clear and compelling arguments for of a targeted business, and the substantial benefits that the Scottish economy, people and environment will derive from it.

The Scottish Government has backed the creation of the commission and Employment Minister Richard Lochhead has said the government will now consider the recommendations.

“The report presents clear evidence that now is the time for companies to adopt a purpose to find cost-effective solutions to the problems of people and the planet.

“This focus will enable them to attract and retain customers and employees, and build trust, both in this country and around the world.”

The Business Purpose Commission for Scotland is a group of 25 leaders from businesses of all sizes, social enterprises, the voluntary sector, trade unions and universities.

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