Are You Ready for a World of Purpose-Led Companies?

Dec 2, 2019 8:30 AM ET
Blog

We’re reaching a tipping point in purpose-led companies, as governments, investors and consumers increasingly indicate that they prefer companies that address global problems through competitive and profitable strategies. But many companies have not yet awakened to that reality to rethink how they will compete effectively in this new world.

In May 2019, the French National Assembly ratified a new law (“Loi Pacte”) that established a new corporate statute: the “mission-driven corporation.” Inspired by similar developments in the U.S., starting with Maryland’s 2010 “Benefit Corporation” that spread in various forms to some 35 states, the statute makes company boards and executives accountable to both profit and societal objectives. It also protects them from making decisions that balance these objectives in cases when trade-offs exist, for example, between investing in more sustainable and profitable models in the long-term and maximizing short-term profits. To make this work, however, enhanced transparency is mandated: such companies must report on all objectives, and audit progress and results independently.

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