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Beyond ESG:
Purpose as the Next Frontier in Investing

Investors now see purpose as a KPI for resilience: Purpose-led companies can better navigate disruption and retain stakeholder confidence in uncertain times.

The investment world is evolving, and a new frontier is emerging — one that moves beyond environmental, social and governance (ESG) metrics to embrace purpose as the new “G” in ESG, and a core driver of long-term value. While ESG has helped bring critical issues to the surface, it has become clear that it’s not enough. Purpose is now stepping in to fill the gap — signaling a profound shift in how capital is allocated and how businesses are expected to operate.

At the forefront of this shift is the Canadian Purpose Economy Project — a national initiative accelerating the adoption of social purpose in business and finance. It is helping reimagine the role of capital in society, mobilizing leaders and shaping new standards that embed purpose at the heart of economic decision-making.

During a recent “Purpose Lens: Transforming Investment Practices in Canada” fireside chat — moderated by Millani CEO Milla Craig, a trusted voice in ESG investing, and hosted by Impact United Academy’s Richard Muller — one insight rang clear: Investors and companies are navigating an inflection point. ESG frameworks, though valuable, tend to be reactive — overly focused on risk mitigation and often disconnected from a company’s core strategy. Social purpose, by contrast, is proactive: It articulates the reason a company exists — beyond profit and aligns operations, products, services and governance — with a broader societal ambition.

Why purpose now?

A growing number of investors are recognizing that purpose-led companies may outperform over the long term. An integrated social purpose has been shown to foster innovation, attract and retain talent, build trust with stakeholders, and anticipate societal expectations. This is not about philanthropy or marketing — it’s about business strategy.

Traditional investment approaches often miss this dimension. ESG has become a compliance exercise for many firms, reduced to box-ticking and reporting. But today’s investors increasingly want to know:

  • What problem is your company solving for society?

  • What future are you helping to build?

These are the questions that purpose answers.

Reframing risk and value

Purpose also shifts how we understand risk. A company that ignores its social and environmental impacts may face regulatory, reputational and operational risks. But more fundamentally, if a business lacks a compelling societal purpose, it risks becoming irrelevant.

This forward-looking view is changing what counts as material. Investors are beginning to see purpose as a leading indicator of performance and resilience. A company grounded in purpose is more likely to successfully navigate disruption, pivot toward opportunity and retain stakeholder confidence when the landscape shifts.

Fiduciary duty reimagined

Purpose isn’t only relevant to companies — investors themselves have a role to play. Fiduciary duty is evolving from narrow interpretations focused on short-term financial returns to broader conceptions that encompass long-term, shared value creation; intergenerational equity and systems-level thinking.

In this view, investing in purpose-led companies is not optional — it is central to fulfilling fiduciary responsibility in a complex, interconnected world. Asset owners and managers are being called to steward capital in ways that shape a better future.

What investors can do now

The shift to purpose investing is still in its early stages. But forward-thinking investors are already:

  • Asking new questions: Moving beyond ESG scores to explore whether a company has a clearly defined and embedded social purpose.

  • Supporting disclosure: Advocating for purpose transparency and integrated reporting that connects purpose to strategy, governance and performance.

  • Engaging boards: Urging directors to govern for purpose, not just profit, and to link executive pay and oversight to purpose-driven outcomes.

  • Allocating capital: Prioritizing investments in companies that are purpose-led and purpose-fit for a changing world.

Looking ahead

A purpose economy is emerging — one where companies are engines of societal progress and investors are partners in building a better future. But leading in this space will require courage, clarity and commitment from all parts of the investment system.

Purpose is not a trend — it is a strategic imperative. For investors seeking to manage risk, capture opportunity and create lasting value, purpose is the next frontier.