Purpose-Driven Business Isn’t Always An Act of Charity

Purpose-Driven Business Isn’t Always An Act of Charity

Part 1: New purpose

Purpose-driven business isn’t always an act of charity

In Part 1, we explore three inspiring stories of corporate transformation — where business leaders have employed a higher purpose to increase both their impact and their bottom line.


How a 95-year-old chemical conglomerate became a world leader in water-saving technology

In 2019, an eight-month-long drought ravaged the state of California. Verdant green hills faded to brown; the earth was bone dry. At one point, more than 85 percent of the state was affected. It’s a trend that’s likely to worsen, and its damage will be far-reaching; soil health will deteriorate, fire seasons and biodiversity loss will intensify and vital agricultural industries across the state will see a steep downturn.

Underscoring all of this destruction is the ruinous reality of water scarcity. “If climate change is a shark, water is the teeth, and it’s the first thing you’re going to feel,” explains EcoLab CEO Douglas M. Baker, Jr. “Over the arc of history, California is going to run out of water. Unless they do something about it now.” So Baker held a finger to the wind and decided that if change needed to happen — and soon — then EcoLab wouldn’t be left tumbling in the dry breeze.

The 95-year-old chemical company certainly didn’t start out with this intention. In the early 2000s, when Baker became CEO, Ecolab was growing by 10 percent annually by focusing on its core business: selling industrial cleansers and food safety technology. “Our strategic plan was to sell more of what we had,” Baker remembers. But in the end, he and his team wanted to be world-leaders in business innovation, and that tried and tested formula — though lucrative — didn’t feel daring enough.

The real impulse for transformation took hold when EcoLab began talking to its customers; it turned out that bulk buyers of cleansers and food tech were also some of the most concerned about water scarcity. But they didn’t just take their customers’ words for it; according to Innosight, a strategy and innovation firm, if current trends continue, by 2030 around 70 percent of the world’s GDP may be located in “water-stressed regions” — California and Southern India chief amongst them.

When there is a marriage of economic and environmental benefits, you start to get big, big uptake.

With a certain urgency established, the first phase of their journey of reinvention was to refocus their vision and mission statement — moving from the somewhat ambiguous quest to “make the world a cleaner, safer and healthier place,” to the more specific goal of providing “clean water, safe food, abundant energy and a healthy environment.”

But they didn’t stop there. They also invested millions in developing technologies to decrease industrial water consumption, which now collectively save more than 200 billion gallons of water every year. Among the technologies they’ve rolled out is the ‘Water Risk Monetizer,’ an online tool that let’s businesses calculate the risk-adjusted price for the water they use. As service providers to some of the world’s biggest companies, they are reducing water wastage — and costs — for 42 out of the Fortune Top 50 companies.

“It’s action, not just good intentions, that changes the world,” Baker explains. “We need technology and innovation that is scalable and delivers economic benefits. When there is a marriage of economic and environmental benefits, you start to get big, big uptake.” And the uptake is big indeed;

since 2011, when EcoLab started concentrating on water-saving technologies, their market value has increased by more than US$46 billion, making it one of America’s most valuable corporations.


How a sprawling food and dairy empire is becoming the largest B Corp in the world

The B Corporation (or B Corp) movement was conceived on a simple premise: if we’re ever going to solve some of society’s biggest challenges, we need a new framework for doing business. B Corps are companies that officially pledge to balance profit with purpose, and commit to meeting a set of criteria on issues such as governance, treatment of workers, legal accountability and environmental impact. Until recently, the B Corp community was small — both in size (there are fewer than 3,300 certified companies globally), and scale (typically niche operations with less than a few hundred employees).

But that’s all changing. In 2015, Danone, the France-based yogurt empire with more than 100,000 employees and operations encircling the globe, began the intensely complicated process of certifying its entire $27 billion business as a B Corp — one subsidiary at a time. When in 2018 Danone’s North American business became certified, it was profiled by Harvard as the biggest B Corp in the world.

“It’s quite clear what I’m saying, I think, and we’ve been vocal about it,” says Danone’s charismatic and carefully-spoken CEO, Emmanuel Faber, in a recent piece for the digital news publication Quartz. “We do not consider the purpose of this company to be returning money to shareholders. There is a broader purpose.”

The road to complete certification is long and winding; to date, 30 percent of Danone’s operations have become B-Corp-certified, with the rest expected to follow over the next century. According to Quartz reporting, each and every one of the conglomerate’s subsidiaries must achieve a minimum score across several criteria, including: governance, which covers a company’s ethics and its mission; workers, including their wellbeing and career progression; community; environment; and customers. And once certified, it can’t drop the ball — to remain a B Corp, a company needs to be recertified by the same criteria every three years, forever.

The change will not come from the top down. It comes from the bottom up, and the sides in.

For Faber, a significant first step in transforming his empire was, quite simply, to ask for help. Rather than laying a blueprint over his organization like a self-inspired blanket, he opened a company-wide callout for volunteers, and with them created a task force of internal change makers who would lead the transformation from the ground up. On top of this, he made the unexpected move of gifting every one of his 100,000-strong workforce with a share of the company. Then, almost overnight, it was his turn to be surprised, with over 30,000 additional volunteers raising their hands to help in the mission of making their company more values-driven.

According to Lorna Davis, Danone’s ex-“chief manifesto catalyst,” a crucial component of their employee self-empowerment was deploying an office communications app, where people could connect, share successes and failings in a safe environment, and disrupt the hierarchical structure inherent in a traditional multinational like Danone. “If you’re going to do this journey,” Davis says, “you need to destabilize the classic power paradigm. Because the change will not come from the top down. It comes from the bottom up, and the sides in.”

But Faber doesn’t see all this as a corporate social responsibility initiative. “People are walking out on brands that they’ve been consuming for decades,” he told The Economist. Rather than responding to public scrutiny with reactive, incremental adjustments, he believes companies can become proactive, conscious vehicles for social change — and grow their customers and brand in the process.

“I don’t believe there can be any other goal for the market economy than social justice now,” he recently said while onstage with one of the co-founders of the B Corp movement. “We are a generation that knows this; we see it on the streets in Paris, New York, Nairobi and Delhi. If there is no social justice, nothing will stand — no economy, nothing.”


How an oil and gas provider transformed itself into one of the world’s most sustainable companies in less than a decade

A little over 10 years ago, DONG Energy — short-hand for Denmark Oil and Natural Gas — had its fingerprints on more than half of Denmark’s CO₂ emissions. Widely considered as an industry leader in coal-fired power plant development, the $154 billion fossil-fuel company drilled for oil and gas in the North Sea, sold power and gas to end-customers in Denmark and built and operated world-class coal plants.

Today, the company is all but unrecognizable to its past self. Not only has it been renamed Ørsted in recognition of legendary Danish scientist Hans Christian Ørsted, but it’s also managed to completely transform its business operations into one of the biggest sustainable corporate overhauls in modern history.

Within a decade, Ørsted transitioned from one of Europe’s most fossil-fuel-intensive companies to a world leader in offshore wind energy. In an unprecedented green transformation, they managed to reduce carbon emissions by a staggering 86 percent, and in return were officially recognized as the most sustainable company in the world this year by Corporate Knights’ Global 100 sustainability index.

Their turning point came in 2012, when DONG Energy slid into financial crisis as the price of natural gas plunged by 90 percent. The board hired ex-LEGO executive Henrik Poulsen as their new CEO and, pre-empting the global sustainability movement before it took hold, Poulsen recognized the moment as an opportunity for fundamental change. And so Ørsted was born.

“We saw the need to build an entirely new company,” Poulsen told Harvard Business Review. “It had to be a radical transformation; we needed to build a new core business and find new areas of sustainable growth. We looked at the shift to combat climate change, and we became one of the few companies to wholeheartedly make this profound decision, to be one of the first to go from black to green energy.”

A critical pillar of their extreme self-improvement was a “cost-out” program, designed to systematically reduce the price of offshore wind by simultaneously scaling it up. Critics called it mission impossible, but it worked. The company managed to cut the cost of offshore wind by more than 60 percent, proving, in the words of Chief Strategy & Sustainability Officer Jakob Bøss, “that offshore wind can be built cheaper, and at the same scale, as fossil fuel energy systems.” And all this while increasing the company’s annual profit by more than $3 billion since the transformation began.

We saw the need to build an entirely new company

From the inside, one of the biggest differences employees have felt since the company went from black to green is that “the world really listens to us now,” explains a leading figure from Ørsted’s internal transition team. “Back in the early 2000s, we were a little bit afraid of actually meeting the world. I remember once when we proposed to have an external environmental day where Greenpeace would come and open a dialogue with us — it took about five seconds for management to say no. Today, it’s the other way around. Today, our CEO stands in front of the world and tells the world how they should do it — and they listen.”


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