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The Power of Purpose in Driving Bottom-Line Business Outcomes

Why Valuing People and Planet Positions Businesses for Success in the 21st Century and Beyond

Encore Renewable Energy, a Certified B Corporation, works on renewable energy projects that create a brighter future for its clients and communities. This solar array, sited on an abandoned municipal gravel pit, provides power to residents of Stowe, Vermont. (Photo courtesy Encore Renewable Energy)

A new paradigm driven by purpose is steadily emerging in the business community. This spring, I attended an impact investing conference in Asheville, North Carolina. The conference was convened to draw together investors and business owners from a host of different, unrelated industries within the Certified B Corporation community to discuss the challenges and opportunities of growing 21st century businesses focused on purpose, mission and triple-bottom-line outcomes.

The conversation around utilizing business as a force for good in society requires a new lens through which businesses are evaluated — one in which their impact on all stakeholders, not just corporate shareholders, is considered. This stakeholder governance model encompasses employees, the communities in which we work, suppliers, future generations to come, and the environment, rather than the singular metric of shareholder value that attributes no value to social or environmental impacts.

As a sign of this momentum, a recent study by Morningstar found that nearly three-quarters of Americans have moderate to high interest in sustainable (aka impact) investing, and analysts are reporting that we may be entering what some call a golden age for measuring the financial and social returns on investments. This new era of purpose-driven business applies to all business owners and executive management teams, regardless of business background, philosophy, or political persuasion. The data clearly shows that purpose-led businesses are viewed as better long-term investments and have outperformed the S&P 500 by 10 times between 1996 and 2011.

Our company, Encore Renewable Energy, was founded with a philosophy driven by the power of creating an active sense of purpose, one in which we would create fulfilling and rewarding careers in which our team members are empowered and challenged, serve as true partners to the communities we work with, and help to drive the clean energy economy forward. However, for us it wasn’t enough to just be in the business of doing good.

Here are a few reasons why we and others in the B Corp community are operating under measurable performance standards and corporate governance structures that speak to stakeholder, rather than shareholder, primacy. We believe that a more purpose-driven, sustainable and equitable business culture is not only best for the planet and the people who inhabit it but also for the all-important bottom line (profit).

Certified B Corporations like Encore Renewable Energy meet the highest standards of positive impact on society and the environment. Learn what it means to be B Corp certified.

People: Enhancing Engagement

It is almost beyond cliché to say that a company’s people are its greatest asset. However, that cliché is incomplete without recognizing that it is actually the company’s people’s performance that is its greatest asset. And individual performance is directly correlated to employees’ health, happiness, security and engagement, so it should be important for businesses to recognize the value of providing good-paying jobs with healthy benefits, gender and racial equity, and a workplace culture that is anchored in purpose, thus allowing team members to feel as if they are working for something more than just a paycheck. As an example, a survey of more than 300 senior executives from large companies worldwide conducted by Bain & Company found that “inspired employees bring more discretionary energy to their work every day. As a result, they are 125% more productive than an employee who is merely satisfied.”

Your company’s work environment begins before your employees even set foot in the office. Many of our policies at Encore are focused on enhancing community engagement and our employees’ lives outside the office. Giving back is central to our company culture, and all staff are encouraged to volunteer and offered additional paid time off to do so. Our employees have leveraged this opportunity to mentor underprivileged children, support public health-related causes, assist with voter mobility/equality issues, and promote environmental causes. We support ongoing professional and educational development, which includes tuition reimbursement. In addition, we focus on the health and wellness of the whole employee and actively encourage team members to engage in healthy, stress-reducing activities such as meditation, yoga, and physical exercise.

The younger generations get this. A recent survey by Deloitte found that 87 percent of millennials believe that “the success of a business should be measured in terms of more than just its financial performance.” The survey also found that millennials believe businesses should put employees first and that they should have a solid foundation of trust and integrity. The sooner that the members of the older generations (such as myself!) recognize this, the better any business will be. It all speaks to higher rates of employee retention and performance.

Planet: Transitioning to Cleaner Energy

Here again, purpose-driven businesses are leading the way. Established, highly profitable companies such as Patagonia will no longer produce co-branded garments for companies that don’t share its environmental ethos.

Startups like Lime are using scooters to transform urban modes of transportation, resulting in the savings of hundreds of thousands of gallons of fossil fuel consumption and the equivalent of taking thousands of passenger vehicles off the road per year.

And, finally, an entire renewable energy industry has blossomed over the past decade and a half comprised of purpose-driven companies, large and small, that are working to transition the electrical generation system to a cleaner, more sustainable distributed generation model powered by renewable energy. The result is a better future environment, new investment opportunities and hundreds of thousands of well-paying jobs. In 2018, the private sector invested $56.7 billion in U.S. renewable energy and employed more than 240,000 Americans (more than four times the number of coal jobs and more than coal and natural gas production combined).

Profit: Investing in Performance

Simply stated, purpose drives engagement and engagement drives profit. A recent poll by Gallup found that the behaviors of highly engaged business units result in 21% greater profitability compared to less engaged business units. A study by Harvard Business Review, “The Business Case for Purpose,” found that companies that prioritize purpose in their day-to-day business endeavors were significantly better off in terms of growth, with 58% of those prioritizing purpose seeing greater than 10% annual growth over the past three years, with only 42% of companies not prioritizing purpose showing similar growth. Further, 42% of these “laggards” reported flat or declining revenue over the past three years while only 15% of those who prioritized purpose and mission showing similar declines in revenues over the same period.

It is also becoming apparent that the new business landscape involves fairness, compromise and a sense of rabid collaboration among trusted partners and counterparties as a means of achieving mutually beneficial outcomes, ultimately leading to repeatable business and thus scale, leading to greater profitability.

These data points support what I heard in Asheville and what we continue to hear from venture capitalists and private equity investors. They are investing money into mission- and purpose-driven brands not just for altruistic reasons, but with the expectation that they will outperform their competition and ultimately deliver higher returns on investment.

In the end, this is why Encore Renewable Energy is more than the 65 community-scale solar and energy storage projects that we have developed and installed or the roughly $80 million of economic activity that we have brought to the market. We like to think of ourselves as a collective of tenacious, committed professionals working collaboratively and constructively with others to deliver innovative solutions to help combat the growing climate crisis. And we have found that by embracing the power of purpose and communicating that philosophy to all stakeholders associated with our business and our projects, we have been able to deliver greater outcomes for our investors, our partners and the communities in which we operate, which will ultimately lead to additional business growth, scale and opportunity. And that seems like a win-win-win to me.

B the Change gathers and shares the voices from within the movement of people using business as a force for good and the community of Certified B Corporations. The opinions expressed do not necessarily reflect those of the nonprofit B Lab.


The Power of Purpose in Driving Better Bottom-Line Business Outcomes was originally published in B the Change on Medium, where people are continuing the conversation by highlighting and responding to this story.

Originally posted on B the Change - Medium by Chad Farrell.


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