Rethinking corporate purpose in the Caribbean

In the Caribbean, from boardrooms to executive suites and among staff and stakeholders, there is a widely held belief that a firm's primary purpose is perceived to be generating profit for the owners.

For many, this is also the primary objection for firms to seriously integrate strategies generating sustainable impacts that help to achieve the sustainable development goals (SDGs) and to contribute to sustainable development – other than in a vaguely stated vision, and more recently, corporate purpose statements.

This perspective, deeply ingrained in corporate culture, is seen as the natural order of business operations.

However, a growing number of companies are challenging this notion, striving to redefine their purpose to encompass responsible and sustainable value-generation that benefits all stakeholders, including the natural environment.

This shift towards a broader, more inclusive understanding of corporate purpose is not just a moral imperative but a strategic necessity for long-term success and resilience.

Misconception of maximising profit

The traditional belief that the ultimate goal of a company is to maximise profit is increasingly being scrutinised.

This narrow focus on short-term gains often overlooks the broader impacts of business operations on society and the environment, as well as the actual foundations on which the income of the firm rests – income from customers based on all the value generated for them.

A more enlightened approach recognises that true value-creation for customers extends beyond transactional consumption.

It encompasses a holistic view of the company's impact on the customers and all other relevant stakeholders, as well as the natural environment.

Companies can achieve sustainable profit maximisation by innovating across the entire value chain and focusing on the fundamentals of creating value.

This approach aligns with the insights from a recently published BSI PAS808 executive briefing, which emphasises the importance of redefining organisational purpose to contribute optimally to the long-term well-being of people and the planet.

Rethinking purpose of the firm

The prevailing misconception that the sole purpose of a firm is profit-generation is being challenged by a new paradigm.

Many companies are beginning to articulate a purpose that starts from the role of the firm to generate a positive impact on society and the environment in such a way that it also generates competitive and sustainable financial returns.

However, there remains a gap between the articulated commitments and actual practices. Many firms only have objectives, strategies and targets for financial results.

A review of their board papers, organisational strategies, board and executive behaviour, and published annual reports clearly demonstrates this.

This disconnect highlights the need for a fundamental shift in how companies perceive their roles in society.

The recently published BSI PAS808 executive briefing on Purpose-driven Organisations: World-Views, Principles and Behaviours for Delivering Sustainability, provides a framework for understanding what it means to be a purpose-driven organisation, emphasising the need for businesses to align their operations with the goal of enhancing the long-term wellbeing of all stakeholders.

Aligning governance,management with purpose

For companies to embody their stated purpose, it is essential to align governance and management practices with this broader vision.

The guidance provided by the national standards for governance in TT, St Lucia and Jamaica.

ISO 37000 Governance of Organisations – Guidance and the SDG Impact Standards for Enterprises offer a roadmap for companies to integrate their purpose into their strategic decision-making processes.

By defining all dimensions of value creation, and establishing clear objectives and strategic outcomes, companies can ensure coherence between their purpose and operations. This not only enhances the company's ability to meet the expectations of its customers and other stakeholders, but also contributes to higher profit margins through innovation and committed personnel.

Core practices for maximising value

To maximise value, companies should engage in practices guided by standards such as ISO 37000 and the SDG Impact Standards.

These include defining a meaningful purpose that resonates with all stakeholders and embedding impact into the company's strategy and operations.

By measuring and managing impact and ensuring transparency and accountability, companies can contribute effectively to the SDGs and generate more value for all stakeholders.

These standards guide organisations in making impactful decisions that are commercially viable and that contribute positively to sustainable development, covering strategy, management approach, transparency and governance. They encourage businesses to identify and manage their impacts on society and the environment, promoting transparency and stakeholder engagement in the process.

Generating value that contributes to sustainable development is a complex process.

The role of standards in this domain is to simplify the complex and to provide practical guidance that results in credible, auditable value.

Most companies have begun to think and start measuring some aspects related to the environmental, social, and governance (ESG) dimensions as demanded by investors and evolving regulations. Companies that want to maximise value-generation, including financial returns, are well advised to focus on the fundamentals of value-generation rather than simply reacting and starting to measure without a clear plan.

Call to action for C'bean companies

Caribbean companies have a unique opportunity to lead the way in redefining corporate purpose.

By embracing the guidance provided by BSI PAS808, ISO 37000, and the SDG Impact Standards, companies in the region can transition from a narrow focus on profit to a broader commitment to sustainable value-creation.

This shift not only benefits the companies themselves but also contributes to the well-being of their stakeholders and the natural environment.

It is time for Caribbean companies to move beyond the traditional profit-centric model and embrace a purpose that aligns with the urgent needs of people and the planet.

The journey towards redefining corporate purpose is a challenging but necessary one. Caribbean companies that embrace this shift will not only enhance their resilience and long-term success, but also play a crucial role in addressing the pressing social and environmental challenges facing the region and the world.

Dr Axel Kravatzky is managing partner of TT-based Syntegra-360 Ltd, vice-chair of ISO/TC309 Governance of Organizations and president of EUROCHAMTT.

He enables companies to flourish through integrated governance, certified management systems and transformational leadership.