This is the year for businesses to find their purpose in life

One year ago, BlackRock chief executive Larry Fink called on businesses to define their societal purpose, sending a message to the corporate world that working towards profit alone was no longer good enough.

Last week, Fink’s push towards purpose was in the papers again, when a hacker concocted an elaborate hoax in the form of a spoof letter, seemingly from the BlackRock boss, which was issued to a number of media outlets. The letter warned companies to take more action over climate change or risk being dropped by the world’s largest investment house.

While Blackrock was quick to highlight that this was a hoax, it quite rightly put the issue of societal purpose and ethics back on the agenda.

Since Fink’s original (and genuine) intervention, ethics and purpose have become a driving business strategy for companies everywhere. Being ethical is no longer a behind-the-scenes activity relegated to a footnote in the annual report – it’s a c-suite issue.

So who in the industry is prioritising societal purpose, and what impact is that having?

First, let’s take a look at Starling Bank and Barclays. Both banks have voluntarily introduced gambling blockers, to help ensure that payments cannot be made to gambling sites.

This is an excellent example of businesses stepping up and essentially filling the gaps that exist in current policy. These financial institutions have decided that they don’t have time to wait for policy, so are leading by example to meet the sentiment of both investors and users.

Then there’s Patagonia, the outdoor clothing brand, which takes its ethics to a whole new level.

From its Worn Wear programme which encourages customers to have garments repaired by its team rather than buy new, to ploughing 10 per cent of its profits into small-scale environmental campaigns, Patagonia puts its purpose at the heart of its business.

This ethos has helped the business weather recessions and has proved to be an incredibly powerful way to attract and retain talent.

Those are ordinary companies, but being purpose-driven is also creating new business models, such as benefit corporations – or ‘’B-Corps”. These are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.

Hundreds of global businesses have taken this path, from crowdfunding site Kickstarter, to social media management platform Hootsuite, to beloved ice cream makers Ben & Jerry’s.

And let’s not forget the fintech sector, where many fintechs are helping to improve financial inclusion and equality.

Companies like Arabesque are using self-learning artificial intelligence quant models to assess the performance and sustainability of globally listed companies, while others like Tribe Impact Capital and Tickr offer ethical investments based on the UN sustainable development goals, without compromising profit.

Conversely, the cost of not meeting ethical expectations is all too apparent. Just look at what happened to Facebook.

With the Cambridge Analytica data scandal, the world saw how Facebook had lost sight of its purpose and broken the implicit value proposition to its users.

And for those readers controlling the purse strings who may wonder whether this kind of “fluffy stuff” actually impacts the bottom line, note that Facebook’s share price was brutally torpedoed during that period, plummeting from £$185 to $165 in a week. It is now lulling at around $150.

Businesses which care about their ethics and social purpose can literally make the world a better place for the human race. But if that sounds too sycophantic and you want to talk figures, consider the consumer.

A vast majority – 92 per cent – of millennials are reported to be more likely to purchase products from an ethical business. It’s a win-win. Businesses that display a societal purpose and communicate that to external audiences will see clear financial benefits.

Nor is it conceited for a business to proudly communicate its purpose to a wide audience. The more we hear about companies taking an ethical stance, the more we’ll start to see other organisations taking a proactive approach.

While we can’t condone the actions of the hacker who created the hoax letter from Fink, they have put the topic centre stage again at a crucial moment in time.

This is the year for business to take a stance. Don’t wait – define the ethics of your firm, take the lead, and don’t find yourself on the back foot. If policy isn’t moving fast enough for you, do it yourself.

Purpose not only makes business sense. It is now a business necessity.