It’s well accepted now that purpose-driven initiatives often lead to greater customer loyalty and employee retention. But does becoming purpose-driven actually offer substantial financial returns for shareholders? There has never been proof—until now. In this white paper, explore proprietary research that shows how truly purpose-driven companies achieve stronger long-term growth and profits.
Companies are increasingly interested in the idea of having a greater purpose beyond making money. They’re adapting to a fundamental shift in society. People aren’t just buying things; they’re buying into things. Consumers want to be associated with brands that reflect their values. Likewise, today’s employees want to work for companies that stand for more than just the bottom line. But does it actually pay to be a purpose-driven company?
This question of the true value of company purpose has never been more important. In adopting purpose-driven initiatives, some companies have been met with damaging boycotts, employee revolts, or worse. Many business leaders are concluding that focusing on anything beyond the business of business offers them nothing to gain and everything to lose.
To be sure, multiple studies have tried to quantify the shareholder return of being purpose-driven. While a few have demonstrated increased brand loyalty or “customer love,” none have shown that this kind of engagement translates into superior market performance.
In this paper, we explain why multiple studies have failed to establish a causal link. The problem lies in how a purpose-driven company is defined. Most studies use imperfect proxies, such as customer engagement or ESG performance. But these fail to separate out truly purpose-driven companies from the rest of the pack. And they skew data toward consumer-facing businesses. Consequently, these studies fail to identify purpose-driven companies, compare their performance to other businesses, or provide actionable takeaways.
Download
Fill out the following form to download this pdf.
"*" indicates required fields
Based on decades of research and work with clients by Jump Associates, five critical factors distinguish purpose-driven companies from their competitors: Activated Purpose, Aligned Culture, Stakeholder Centricity, Next Level Leadership, and Future Focus. The Purpose-Driven Scorecard allows us to evaluate a company’s progress along these five factors. Companies that score 65 or higher out of a possible 100 are considered purpose-driven.
When defined as such, our results show that purpose-driven companies demonstrate a significant advantage in long-term stock market performance compared to their less purposeful peers.
Purpose-driven companies provided shareholders with a 13.6% CAGR return on average over a twenty-year period. That’s three times their closest industry competitors and five times the S&P 500.
Our results prove that purpose-driven companies gain a sizable competitive advantage over time. They do so by identifying their “North Star” and integrating that into their strategies and operations, staying focused on the long term.
Interested leaders are invited to evaluate their company along the five factors of a purpose-driven company. An online version of The Purpose-Driven Scorecard is available for those who’d like a starting point to assess their purpose-driven strengths and areas for growth.
Complete the form on the side to download the full white paper.
