Last week the Co-operative Bank announced it is the latest New Zealand business, and the first New Zealand bank, to get ‘B Corp’ status.
This may not sound significant, however it’s a clear signal of how our world is changing. Business is increasingly about purpose as well as profit.
B Corp status acknowledges a business is not only committed to making profit for shareholders but is also mindful of its impact on our planet.
The Co-operative Bank joins a small but influential group of other New Zealand B Corps, including large companies like Kathmandu and small, nimble and forward-thinking businesses like Sharesies and Ethique.
If a product is offered with ‘green’ characteristics, the underlying business itself should reflect that ‘greenness’.
In the finance industry, the regulator, the Financial Markets Authority, has woken up to this new reality.
Greenwashing has been all too common in financial services.
It is not just about authenticity and consumer demand, the trend reflects the growing importance of ‘purpose’.
This shift may in part be from generational change.
But it is not only millennials, for many (or even most) people, a pay packet alone does not make a job or career satisfying.
Globally, the conversation has shifted away from shareholder primacy – a company’s duty to maximise profits for shareholders in any way that is legal - towards ‘stakeholder capitalism’.
This means considering the interests of staff, suppliers, communities, consumers and even the planet as well as shareholders.
Stakeholder capitalism is still capitalism, it is still about profit, with a focus on wider costs and benefits over a long-term horizon.
It actually makes smart business sense with ‘good’ companies generating greater customer loyalty and staff engagement.
Research has also shown that share prices of these companies can be better performing in the long-term and more resilient in market downturns.
Large global companies like Siemens, PayPal, Salesforce and Sony are on board with stakeholder capitalism.
But it’s exciting to see a new breed of local young entrepreneurs also leading.
Part Time Rangers is a New Zealand based RTD alcohol company donating 10 per cent of profits to animal conservation projects across the globe.
And to show profit and purpose can effectively combine, the Part Time Rangers business was recently sold to Brown-Forman Corporation, the US liquor giant that owns Jack Daniel’s whisky.
The ‘buy one give one’ model is another example of businesses operating with purpose.
Examples include Eat My Lunch (providing school lunches) and Dignity (sanitary products).
If you run, or are employed by a company, then you can encourage a change to greater business purpose.
It may mean aligning with a cause, reconfiguring a product to be more sustainable or even identifying a commercial solution to a local or global problem.
But the product offering is not enough, authenticity needs to go into the DNA of the business.
There is no point having the marketing department care about social responsibility without embedding the same values at the core of the rest of the business.
Profit is not a dirty word.
New Zealand savers need to generate great long-term returns from their KiwiSaver and other investment assets.
But it's better for everyone if we align business profit with other ‘P’ words like people, planet, principles and purpose.
John Berry is the Chief Executive at ethical fund manager and KiwiSaver provider Pathfinder Asset Management, which is part of Alvarium Wealth. Pathfinder is a certified B Corp. This piece was originally published by Stuff April 26, 2021.