Organizational Governance

From Purpose to Performance:
Managing Risks to Unlock Purpose’s Full Potential

Social purpose has become the north star for many companies—but too often, it floats above the messy realities of risk. Without thoughtful consideration of the risks that come with a stated purpose, organizations leave their credibility exposed. The next frontier is clear: to unlock purpose’s full potential and safeguard your company’s reputation, leaders must integrate purpose into risk management.

By Coro Strandberg and Stephen Mallory | Published 2 months ago | About a 5 minute read

Image: Alan Wouda

More companies than ever are embracing a social purpose as their reason for being—a bold and necessary shift in how businesses contribute to society and the environment. But a company’s purpose is only as credible as its ability to live it.

What’s often missing from this equation is how purpose is treated in risk management. Few organizations consider that their purpose carries its own risk profile: there are risks to achieving the purpose, and there are risks that arise from pursuing it. As we enter a new phase of sustainability maturity, it’s time for sustainability and risk leaders to close this gap.

Purpose Isn’t Risk-Free

Purpose can be a company’s greatest strength—attracting talent, aligning strategy, engaging stakeholders, and opening new markets. But it also introduces new vulnerabilities. For example:

Stakeholders may doubt the organization’s commitment and call out “purpose-washing”
Employees might not understand how to act on the purpose in their roles
Strategic priorities might drift away from the core purpose
Boards may fail to govern purpose properly, putting long-term value at risk

At the Canadian Purpose Economy Project (CPEP), we see these as risks that deserve boardroom-level attention. Yet most companies don’t include them in their enterprise risk management systems.

That’s why CPEP partnered with Directors Global Risk Consulting to publish Enhancing Risk Management Practices: A How-to Guide for Social Purpose Companies—the first guide of its kind to help risk and sustainability leaders integrate purpose into their risk frameworks. The message is simple: to advance purpose effectively, we must also manage its risks systematically.

Beyond ESG: A New Risk Lens for Purpose-Led Business

Environmental, social and governance (ESG) risks have become well-established in most risk and sustainability programs. But purpose risks are different. ESG risks assess how external factors impact company performance. Purpose risk asks: What could derail our reason for being? What risks might arise as a result of pursuing it?

Purpose risks are strategic, operational, cultural, and reputational. Ignoring them puts the entire purpose journey at risk—and can quickly erode stakeholder trust.

Our guide offers a five-step approach to managing purpose-related risks and opportunities, adapted from standard enterprise risk management practices:

Risk Identification – Use external scans and stakeholder input to identify factors that could impede or arise from pursuing your purpose.
Risk Assessment – Prioritize based on impact, likelihood, and the strength of existing controls.
Risk Treatment and Optimization – Mitigate top risks and optimize opportunities, embedding purpose risk into strategy, innovation, and crisis planning.
Monitoring – Use key risk indicators (KRIs) linked to purpose progress.
Reporting – Internally and externally, communicate how risks to and from the purpose are being addressed.

Critically, every step involves deepening your purpose commitment. The way to manage purpose risks isn’t to dial back your purpose—it’s to double down on it.

What Purpose Risk Looks Like

To bring this to life, Coast Capital Savings’ 2024 Purpose Impact Report provides a compelling example. Drawing from CPEP’s guidance on purpose risk reporting found in the Purpose Disclosure Guidelines (pages 19 –20), they openly disclose both:

Risks to their purpose, such as economic downturns or geopolitical shifts that affect community engagement; and
Risks from their purpose, like being misunderstood or seen as inauthentic.

Their response? They reinforce the purpose through stronger stakeholder engagement, education, co-creation of initiatives, and a robust Purpose Measurement Framework. In other words, they manage purpose risks by investing further in their purpose—and by disclosing those efforts transparently.

The Role of Sustainability Leaders

Sustainability professionals are uniquely positioned to lead this evolution. Many already act as internal stewards of purpose and as contributors to risk strategy. Extending that leadership to include purpose risk is a natural next step.

This means working with internal audit, enterprise risk, and strategy teams to:

Reframe materiality assessments through a purpose lens
Include purpose in ERM systems and policies
Train employees and leaders on how purpose influences decision-making
Update dashboards and reports to track purpose-related risks
Guide board conversations about purpose governance and oversight

These steps align with guidance in CPEP’s companion paper, Social Purpose Strategy: Bring Your Corporate Purpose to Life, which outlines how to embed purpose into strategy, operations, and business models.

By making purpose part of the risk vocabulary, sustainability leaders can uphold the company’s guiding ambition—and build more authentic, future-fit organizations.

Why This Matters Now

The long march to transform the old economy into a purpose economy is underway—one where businesses start, transition, grow and thrive by contributing to the long-term well-being of people and the planet through their core purpose. But to succeed, purpose must be more than a branding or culture initiative; it needs to be treated as a fundamental strategic and risk domain.

A company’s purpose must be credible, actionable, and defensible. That requires knowing where it might falter, and what it will take to stay on course. And as we’ve seen, the best way to manage those risks is to build even deeper purpose alignment—into strategy, operations, and relationships.

If your company has adopted a social purpose—or is considering doing so—this is the moment to ask: Are we managing the risks that come with it? Are we doing enough to ensure our purpose delivers on its promise?

Because today, the risk isn’t just falling short on ESG—it’s falling short on your reason for being.

Coro Strandberg

President
Strandberg Consulting

Coro Strandberg is President of Strandberg Consulting, which provides strategy advice to companies and industry associations that seek to integrate social and environmental considerations into their purpose, governance, operations and supply chains to create business value and societal benefit.