“PURPOSE-driven entrepreneurship,” is a term that refers to the starting of businesses that provide inventive solutions to prominent human challenges in a way that encompasses an ethical or altruistic mandate.
According to South Africa’s 2020 Global Entrepreneurship Monitor (GEM) Report, compiled by the University of Stellenbosch Business School, purpose-driven entrepreneurship is on the rise, taking hold at a grassroots level.
The authors of the GEM Report noted that this is an encouraging sign of a collective will for future business sustainability.
COVID-19 has activated a global sense of consciousness around the fact that it is not solely the role of the public sector to make the world a more sustainable place.
The global challenges posed by the pandemic have served to accelerate this trend, with more entrepreneurs realising that they have a pivotal role to play in ensuring the business sector contributes towards a better future for the generations of tomorrow. The business landscape is changing, and with it, we’re seeing a change in consumerism. Purpose, or “impact”, can be the key to unlocking success in this new era, for the following reasons:
Better Investment Prospects
ESG (Environmental, Social, Governance) policies are becoming increasingly important to investors. Modern-age investors are equally concerned with profit-making as they are with “impact-making.”
This has been marked by a decided move from short-term outcomes, to looking at how businesses will impact the environment and society in the long run.
All things considered, ESG investments add an extra factor to the risk/ return equation, with “impact” now being a significant determining factor of whether a business attracts and retains investment. This movement is indicative not only of a change in how profit-making is viewed, but also of the global state of affairs – in a world shaken by the onset of the pandemic (compounded by the harsh realities of social injustice and environmental degradation), business needs to benefit the planet and our communities if we are to effect real change.
More Appeal to the New Consumer
The twentieth-century consumer is “conscious” in the sense that they consider the impact that their buying decisions make on the environment and global communities. In a study conducted by Nielsen, 81% of global respondents felt strongly that companies should help improve the environment.
At first, Millennials and members of Gen-Z were believed to be the catalysts of this change, but it has become apparent that older generations have also come on-board. What is of particular relevance is that emerging market consumers in regions like Africa and Latin America show even higher levels of expectation for companies to be at the forefront of the global move towards a more sustainable world.
Attraction of Better Talent
The recent Workplace Culture Report conducted by LinkedIn found that just under 90% of employees aged between 22 and 37 would accept a lower salary to work at a company whose mission and values align with their own.
This figure is indicative of another trend: an increasing number of people are being drawn to purpose-driven companies, over companies who have no stance on ESG issues.
At a time when offering competitive salaries may be a challenge due to the global economic downturn, promoting a focus on sustainability as a company’s unique selling point to potential talent may help attract people with a long-term mindset and higher level of commitment to fulfil their roles.
Better Mentorship Potential
Business leaders and established executives across various industries are waking up to the importance of “giving back” in the form of mentoring an emerging business owner or entrepreneur.
This emergence of “heart-centered” business is in turn giving rise to a generation of businesses that are motivated by a need to make a positive impact on the world and their surrounding communities - and mentors who are actively seeking opportunities to “pay it forward” to companies who share their passion and vision for the future.
Ben Bierman is a managing director at Business Partners Limited.
BUSINESS REPORT ONLINE