What is holding purpose-driven business back?
This discussion paper explores what is slowing the growth of purpose-driven businesses and their ability to contribute positively to society and the environment. It identifies four key challenges—Identification, Incorporation, Investment, and Impact Measurement—that collectively form the systemic foundations limiting the potential impact of purpose-driven enterprises.
In this paper we describe a shift among business leaders towards acknowledging the role of enterprises in solving social and environmental issues. However, it highlights that existing systemic structures often hinder rather than support businesses striving for positive social and environmental impact.
The investigation draw from a comprehensive review of past studies and consultations with stakeholders from various sectors, identifies four core challenges known as the "four I's."
Identification: The first challenge highlights the difficulty in recognizing purpose-driven businesses, with only 10% of the public finding it easy to identify them. This lack of clarity undermines the potential benefits as consumers, employees, and investors struggle to align with such enterprises.
Incorporation: The second challenge underscores the legal ambiguity surrounding the establishment of purpose-driven companies, leaving their stated missions vulnerable to various influences.
Investment: The third challenge reveals the struggle for purpose-driven companies to secure investment aligned with their values, as a mere one percent of private investment in the UK came from impact funds last year.
Impact measurement: The fourth challenge exposes the complexity of proving and communicating positive societal and environmental impact, presenting significant barriers and overhead for purpose-driven businesses.
In this report we aim to address these challenges by working collaboratively to propose systemic reforms aimed at removing obstacles and fostering an environment where purpose-driven businesses can thrive.
The forthcoming package of reforms, slated for release in early 2021, is envisioned as a step towards creating a more supportive system for businesses seeking to balance profit with positive societal and environmental contributions.
Lead author(s): Mary Pizzey, Ed Boyd, Harry Brown
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