SB'24 San Diego is open for registration. Register early and save!

The Next Economy
Purposeful Policy:
How Governments at All Levels Everywhere Can Accelerate the Purpose Economy

Policymakers everywhere now have a blueprint — and role models — for purposeful policy to better align corporate behaviour with public interest and to create allies for the work that lies ahead.

With negative economic, social and environmental indicators spiraling, hope can still be found in the rise of the social purpose business: a company that uses its expertise, resources, relationships, influence and reach to help solve society’s problems. Imagine a future in which the purpose of all business was to improve society in some way — whether by addressing income inequality, tackling food insecurity, conserving the world’s forests, or hastening a circular economy. If businesses unlock their resources and assets to put society on a sustainable footing, there is hope for humanity’s future.

However, this trend, while escalating, is at nowhere near the pace needed to ensure nine billion people can live well on the planet by 2030. It took a hundred years to entrench today’s business model; but we do not have the luxury of another hundred years to transform it.

Enter the Purposeful Policy Platform — a set of measures all levels of government anywhere can deploy to accelerate the Purpose Economy. As defined by the Canadian Purpose Economy Project, the Purpose Economy is an economy powered by the pursuit of long-term wellbeing for all in which business and regulatory and financial systems foster an equitable, flourishing, resilient future. And governments hold the key to its realization.

Fortunately, governments are starting to lead the way. The Scottish government created the Business Purpose Commission to make recommendations on how Scotland can become known at home and abroad for nurturing purposeful businesses. In the government’s response to the report, Richard Lochhead — Minister for Just Transition, Employment and Fair Work — shared that the government seeks to be a global hub for purposeful business that profitably solves the problems of people and planet, and that business purpose sits within the Scottish government’s wider approach to economic development and transformation.

The cities of Burnaby and Vancouver in British Columbia (BC), Canada, declared “Purpose in Business Week” two years running — in which they demonstrated their support for social purpose business, embodied in this statement from Burnaby’s proclamation: “The awareness and proliferation of Purpose in Business promotes building a critical mass of social purpose businesses contributing in new and innovative ways to a better world.” Both cities are hubs for social purpose business and have partnerships with the United Way BC Social Purpose Institute to promote social purpose to businesses in their jurisdictions.

In the government of BC, Ravi Kahlon — former Minister of Jobs, Economic Recovery and Innovation — wrote a post declaring his support for social purpose business: “A social purpose economy is key to building inclusive, sustainable prosperity.” The Canadian government is active, too. To help advance social purpose progress, it commissioned Corporate Knights — creator of the annual World’s 100 Most Sustainable Corporations ranking — to rate 34 social purpose companies on their purpose execution.

The Government of Canada also commissioned a report on government reforms and policy measures to help support and incentivize Canadian businesses and entrepreneurs to adopt and implement a social purpose as the reason they exist. The reforms in the report, Promoting Purpose in Canadian Public Policy, are directed at local, regional, provincial and national governments to help social purpose business thrive and grow. They are designed to mainstream social purpose in business so that being a social purpose company will become the standard and expected way of doing business. One of its 250 recommendations is to amend the Canada Business Corporations Act to require companies to state their purpose and disclose their progress on it.

This recommendation was picked up by two legal scholars — Richard Janda and Iseoluwa Akintunde of McGill University’s Faculty of Law. With support from the David Suzuki Foundation, they published Bringing Corporate Purpose into the Mainstream: Directions for Canadian Law. As they state:

“The idea that corporations should have a stated purpose articulating social and environmental objectives is no longer confined to academic circles. It is now driving conversations in boardrooms and at annual general meetings. Those conversations are also shifting from why statements of corporate purpose are needed to how they can be implemented and brought into the mainstream. This paper seeks to advance the Canadian discussion of corporate purpose and to argue in favour of establishing a more solid legal scaffolding for it through reform of the Canada Business Corporations Act.”

It then goes on to call for legislative amendments requiring a new mandatory statement of purpose by the board of directors, subject to a ‘comply or explain’ approach regarding the adoption of a social purpose; and a change in the fiduciary duty of company directors, requiring them to pursue the purpose of the corporation in consideration of its best interests. The authors argue that these are “elements of a broader governance framework needed to ensure that purpose-driven companies become solidly anchored in the Canadian economy.”

As the saying goes, if you can imagine it, you can achieve it. The Purpose Economy, whose purpose is to benefit people and the planet, is coming to fruition. But to achieve it, we need policy reform at scale to anchor it as the new business norm. Fortunately, the benefits to business and governments are significant. As Minister Kahlon’s blog states, social purpose businesses “build a stronger and more resilient economy, stimulate innovation and growth, generate meaningful work, and attract and retain talent and capital. [They] also help governments achieve objectives such as advancing equity, reconciliation, and sustainability in business; and unlocking company resources and assets for the public good.”

Policymakers everywhere now have a blueprint — and role models — for purposeful policy to better align corporate behaviour with public interest and to create allies for the work that lies ahead. There is tangible hope that with government leadership, we can redefine the role of business in society and create the economy we need.

Advertisement