We researched how different sectors use purpose and gain value from it. Here’s what we found.
Doing it right
Healthcare is one of the few sectors where every brand has a purpose. Most of them speak directly to a world, social or human need. Brands like GSK, AstraZeneca and Novo Nordisk frequently rank in the index’s top 20, but businesses in this sector still have the biggest gap between their words and their actions. While all brands commit to meeting a social need, not all of them show progress towards achieving it.
The Healthcare sector as a whole sets out a clear, meaningful reason for being. But, at an individual level, many of the brands’ purposes do little to help them stand out from the competition. The businesses in this sector need to do more to show the impact they’re making on the real world.
The takeout: Prove you’re making many lives better, demonstrate positive momentum in terms of access and effectiveness of its products, and you’ll add huge credibility to your purpose and brand as a whole.
The future's unclear
Right now, retail is in a precarious state. 2017 was a tough year for the sector, with household names like Toys R Us filing for bankruptcy, more stores closing than during the 2008 financial crisis and Amazon increasing its hold on the only part of the retail sector that's growing – e-retail.
There are six retail brands in our index but, despite improving on 2016 scores, the sector still ranks below average across every section in our assessment. Purpose could help; but few brands are making the most of it. Kingfisher and Ikea stand out from the rest – they’re talking about the intrinsic relationship between sustainability and the future of the sector, and going beyond words to show progress through powerful KPIs and targets. The question is how will other brands define their own position?
The takeout: Take a proactive, purposeful approach to help strengthen your brand in these times of disruption and uncertainty for the retail sector.
For the third time in a row, basic materials brands have scored far below average on their behaviour scores. Opportunities for employees to get involved in purpose-related activities were particularly scarce across the brands we looked at – only BASF and Arcelor Mittal show good evidence of involving their people in their purpose. There’s a continued lack of leaders engaging with purpose – something that’s essential to bringing it to life across a business. And there’s a huge missed employee engagement opportunity – using purpose properly can enhance productivity, performance and retention and decrease absenteeism.
The takeout: Focus on how you can use your purpose to shape your actions. This will help you create a positive impact on the world as well as improving recruitment and engagement.
A subtle improvement
This sector’s overall score has improved slightly – even though Philips, the sector’s previous top performer by a wide margin, was reassigned to healthcare. And, once again, brands across the sector have done particularly well in their purpose-related targets, KPIs and strategy scores. This is largely thanks to their ability to make purpose part of their short and long-term targets and performance metrics – Schneider Electric is doing this particularly well. As pressure increases on manufacturing and industrials – globally and locally – continuing to embrace purpose could help this sector weather the storm.
The takeout: Concentrate on how you communicate your purpose activities externally – this can help you manage your reputation, control the narrative and mitigate public and political pressure.
Room to grow
The utilities sector has improved since our last index, but still scores below average against most sections. The improved scores are probably down to the fact that smaller, and often purpose-driven, competitors are putting increasing pressure on established brands. Businesses like SSE and Iberdrola are looking to re-position themselves with consumers – using purpose to help stand out from the competition. And while the sector itself has relatively engaging purpose communications, their purpose statements themselves tend to be functional and uninspiring.
The takeout: Become more fit for purpose next time by aligning your purpose with things like values and recruitment messaging – this will help you make purpose part of your brand's culture and behaviours, not just external communications.
A missed opportunity
Since the start of Fit For Purpose, the oil and gas sector has scored significantly worse than any other sector across every section. Over the last few years we’ve seen a growing focus on sustainability and the role of businesses in society, with major initiatives like the Paris Climate Agreement signalling powerful change. But there has been little change in scores since 2016, suggesting brands are still using the same purpose actions, targets, strategies and communications. This year only two oil and gas companies, Total and Enel, made our Top 100 out of the ten we assessed, and neither made the Top 50. This is a sector that sells a product the modern world needs to function, but they’re missing the mark on a major global trend – sustainability. Alternative energy is starting to threaten their long-established positions, which will only make the fight for talent and consumers more competitive.
The takeout: Use the seismic shift towards sustainability as an opportunity to become more purposeful – sustainability may well be the new battleground in the fight to survive now crude oil prices seem to be stabilising.
On the right track
Within this sector, the companies that make the threshold for consideration do extremely well. But there are only two of them: British Land and Unibail-Rodamco. This leaves us with two big questions: where are the rest of the real estate companies and why don't they have purpose?
British Land and Unibail-Rodamco clearly understand that purpose is not just a communications exercise. The way both brands have embedded purpose into their strategy and metrics demonstrates that they’re serious about creating value beyond profit. So, what does this mean for the rest of the sector? Both of these brands have set a high standard, but they're also paving the way for everyone else.
The takeout: Purpose can become a competitive advantage – as it has for British Land. Done well, purpose demonstrates vision, ambition and long-term value creation. Make yours a focal point of key business conversations and use it to help you sell a sustainable future to investors (beyond short-term uncertainties).
Clients come first
Brands in this sector traditionally focus on external communications, so it’s no surprise that their communication and connectedness scores have grown considerably since 2015. We’re also seeing that support services brands that effectively communicate their purpose internally – where change and action begins – tend to perform higher than others. Employee advocacy in particular is something that brands should focus on. Employees who connect with a brand's purpose are often more committed and can help build a great brand reputation.
The takeout: Align your purpose and internal behaviour to continue to improve your scores and communicate externally even more effectively. And remember, employee-driven outreach can be as impactful as (or even greater than) external campaigns.
Still a long way to go
Tech, media and telecomms probably has the most work to do as a sector. Although we have strong performers like Pearson, SAP and Microsoft leading the way, almost a third of the companies in the sector don't have a purpose or clear social intent. Notable companies without defined purposes include Alphabet, Apple and Amazon – some of the largest, most powerful companies in the world. Though they try to articulate why they exist, there isn't a single compelling statement that does this – which is why they're not in our index. Throughout our Fit for Purpose research over the past three years, this sector has struggled to present purpose clearly and embed it across their business strategies, related targets and KPIs. This is particularly disappointing given many of the companies in this sector are global giants and could use purpose to drive social and environmental change.
The takeout: Use purpose to focus your efforts and strategy – your powerful brands with the potential to deliver huge positive impacts. Society expects it. Purpose can help.
Middle of the road
This sector has average scores across the board, but its overall score is brought up significantly by the highest scorers, like Lloyds Banking Group – the only bank to make it into the Top 10. And there were a significant number without a purpose, so they don’t quality for our index. It seems that not all banks are recognising the value of purpose, creating a competitive advantage for those that do. Communications is a particularly strong area for the banks we looked at. But, beyond talking about purpose, there was little evidence of purposeful activity.
The takeout: Bring purpose into your strategic decisions – a bold move that’s fundamental if you want to use purpose meaningfully and effectively. For now, only Lloyds is getting this right.
This remains one of the highest scoring sectors in the index, with six companies making it into the Top 10. These companies generally score well across the board but are particularly strong in communications. Purposeful performance is a key area for improvement for these brands. Placing more focus on how purpose shapes their activities – from business models to strategic goals – would help these companies get the most out of it. Royal Philips does a good job of this, tying purpose to sustainability on their website.
The takeout: As consumer demand for company accountability continues to grow, show commitment to purpose across your business activities to build credibility and protect your reputation.
A step in the right direction
This sector remains one of the weakest performers but things are moving in the right direction. The sector as a whole was the only one to improve their score from 2016. Much like banking, the financial services sector is strongest in communications. AXA's 'Restless for a Reason' campaign is a great example here – launched in 2017, it offers an engaging and informative insight into what drives the business: a hunger for exploration, innovation and finding new solutions.
Beyond talking about purpose well, there’s little evidence of purposeful activity. Aviva's website is an exception, with a section explaining their 'good thinking' approach that brings investment returns through an integration of their purpose into their sustainability strategy.
This link between purpose and sustainability was seen across the companies we reviewed, reflecting the growing interest in responsible investment practices that make use of sustainability data to inform investment decisions.
The takeout: Narrow the gap between words and actions to make the most of purpose. It will help you meet a growing demand for responsibility and tell meaningful stories to boost your brand.