Can a Corporate Purpose Impact Your Bottom Line?


The world stage is set for shake-up in 2020 as purposeful business becomes the new norm. Amid a range of challenges in the 21st century, the “profits-first” mentality is no longer adequate. The introduction of new technologies is not only affecting the pace of change, but significantly changing the problems we face. As a result, the business-as-usual approach is slipping away, and more and more companies are accepting that sustainable development can no longer be left to government regulators and policy makers. Instead of focusing on one interest group in society (shareholders), boardroom agendas in 2020 are increasingly focused on ethics and sustainability as a way of unlocking business growth in the next decade. It is no longer a question of why to change, but what to change, how and when.

Of course, sustainable development is not a new topic - the term was first popularized in 1987 in Our Common Future, published by the World Commission for Environment and Development (WCED). But, it took over 20-years for businesses to show proactive efforts to balance their need for economic development with social equity and environmental protection.

It wasn't until last year, that CEOs from some of the largest US-based corporations set out to redefine the purpose of business. In August 2019, over 150 CEO's committed in a signed declaration to deliver value to customers, invest in employees, deal fairly and ethically with suppliers, support their communities and generate long-term value for shareholders. Shortly afterwards the UK Institute of Directors (IoD) followed suit. In November 2019 they launched a Manifesto on Corporate Governance which calls for companies to adopt business purpose clauses, a public service corporation, a code of business conduct, mandatory training for directors and a corporate governance commission.

This turn of events was driven partly by the undeniable reality that corporations have been the cause of some unsustainable conditions, but also the realization that they have the resources required to address the problems. As more and more companies are striving for development that meets the needs of the present without compromising the ability of future generations, a corporate purpose has been hitting boardroom agendas.

Beyond a mission statement, a corporate purpose reflects the transition from 'ego' to 'eco' and from 'materialistic' to 'humanistic' as it forces companies to look at the real impact it is having on the world and think differently about what their company does, and why. And these companies are being rewarded in unexpected ways. While society benefits, the companies themselves are also discovering the mediating role that a corporate purpose has on their bottom line. According to new research by Kantar Consulting, companies with a high sense of purpose have seen their brand valuation increase by 175% over 12 months compared with 86% and 70% for brands with a low sense of purpose.

But it's what happens after the formation of a corporate purpose that matters most. After all, it's easy for many well-intentioned corporate purposes to sit on a shelf as business goes on as usual. One company that can be looked upon as a role model for proactively implementing and maintaining their corporate purpose is Yokogawa Electric Corporation. Founded in 1915, the company has held strong reign on sustainability values since inception, proving that its benefits are multi-faceted. This has been demonstrated through customer partnerships that span decades, deep local community ties across the countries it operates, and effective human resource interaction that transcends national and ethnic borders.

Yokogawa credits its century-old philosophy to founder Dr. Tamisuke Yokogawa for their ability to stand the test of time, and continually grow their bottom line. The founder's principles prioritized quality, spirit and contribution to society over profits.

As a company, our goal is to contribute to society through broad-ranging activities in the areas of measurement, control, and information. Individually, we aim to combine good citizenship with the courage to innovate.

The Yokogawa Philosophy

Despite the company evolving and rapidly growing over the past 100 years, it has remained steadfast to its founder's words. Yokogawa continued its contributions to society with Transformation 2020 (TF2020), a business plan that kicked off in 2018 with a focus on the renewable energy business, and a long-term goal to introduce digital transformation to businesses.

“Through energetic and open business management, let's leave no one behind as we work with our stakeholders to make the world a better place for future generations. - That is my firm intention.”

- Hitoshi Nara
President and Chief Executive Officer of Yokogawa

Three goals capture the company's intention to evolve its business and bring positive impact to the environment, society, and economy by the year 2050.

In Yokogawa's roadmap to 2050, the company identifies businesses across energy, bio-economy and health-related industries, and introduces solutions that can improve productivity and efficiency. Transformation takes place as a result of reduced resource consumption and improved safety records, thereby allowing Yokogawa to realize both societal and environment goals.

The time to act is now

Sustainability may have once been considered a publicity gimmick, but today it is mission critical. This was evidenced at Davos 2020 where businesses, governments and civil society met for the 50th Annual Meeting of the World Economic Forum. The theme 'Stakeholders for a Cohesive and Sustainable world' took center stage as the key focus on everyone's agenda was how to make a positive impact on the global economy. Britain's Prince Charles led by example when he announced the launch of the Sustainable Markets Initiative, which aims to find ways to rapidly decarbonize the global economy by achieving a balance of natural, social, human and financial capital. As he declared, global warming and climate change “are the greatest threats humanity has ever faced.” This clarion call was echoed by other Davos 2020 speakers, including former US Vice President Al Gore and UN Secretary-General Antonio Guterres. Davos 2019 saw similarly impassioned speeches urging immediate action from the prime ministers of Japan, New Zealand, and the Netherlands - so it is clear the sustainability agenda is continuing to gather strong momentum.

The challenge ahead won't be an easy one. Achieving sustainability will require a collective and colossal effort from business leaders to evolve economic models. But, in the words of Prince Charles, “the time to act is now.”

The success helmed by Yokogawa over their 100-year history, not only demonstrates the intrinsic value of a corporate purpose, but also that profitability and sustainability don't need to be an either-or decision - they can be mutually reinforcing. As Yokogawa has shown, and leaders at the World Economic Forum have urged, sustainability requires an engrained and holistic top-down effort. Sure, holding every participant of the value chain accountable is no easy feat, but it's clear the results will be widespread, and purpose not only profit should be the way forward.

This page was paid for by Yokogawa Electric Corporation. The editorial staff of CNBC had no role in the creation of this page.