Technique 4 minutes, 1 second read Mark Johnson, Editor, Just.Marketing
It’s a heart-warming story. In 2019, Triodos Bank invested in more than 500 projects focused on the sustainable energy sector and the organic farms in which it invests produced 31 million meals.
Since 1980, the bank has pursued an ethical approach to banking that Zoe Sear, Head of Marketing and Communications at the bank, describes as: “People and purpose before profit.”
That said, in 2019, the bank also reported profits of more than £34 million and 11% growth on its balance sheet.
For some senior business leaders, the idea that stakeholder-driven businesses are also profitable is unproven. But Triodos is a case that is backed up by a growing body of evidence that purpose and profit are far from mutually exclusive, and what’s more, purpose may help companies recover faster after the pandemic.
The evidence mounts
In 2016, PwC found that 79% of business leaders believed that purpose was central to business success and a company’s existence. In 2017, 91% of executives and employees told Deloitte that their company had a strong sense of purpose and a strong track record of financial performance.
Then the mother of all business crises struck. And, contrary to cynical expectations, in times of crisis, companies with a purpose fared better financially.
The S&P 500 ESG (Environmental, Social, and Governance) index, which tracks large US companies with high ESG ratings, outperformed the conventional S&P 500 index in the first four months of 2020 – just as the crisis took hold.
So with this in mind, shouldn’t senior marketers be encouraging management to consider purpose as a serious business driver?
The barriers, or the “three fears”
For marketers keen to do this, there may be some barriers to overcome first, according to Steve Fuller, Co-Founder, The House.
His agency works exclusively with purpose-driven companies and argues that purpose clearly drives performance. But he also believes that company leaders working in non-purpose driven firms are reluctant to change because of what he calls, “The three fears.”
“They are: It’s not financially viable; it won’t allow me to show my creativity or expertise; is my heart in it – am I brave enough?” says Steve.
But the question arises: will post-covid consumers tolerate brands that exist without a purpose at their core?
Ben Hayman, Chief Client Officer, Given says that any companies looking for a purpose will need to find one that is authentic.
Ben says, “Consumers won't always choose to buy a brand simply because it is more purpose-led, but they may avoid or cancel one for not living up to the standards it communicates. For example when Oatly, a brand that had been quick to see the value of purpose-led messaging in its marketing, announced its newest investor was the Trump-linked Blackstone Group, consumers flooded to Twitter ‘cancelling’ the brand. The damage is unlikely to be long lasting, but demonstrates even the poster brands for purpose are under scrutiny.”
Steve agrees, saying, “One in two people are now belief-driven consumers – they now either boycott or ban products on planet and people issues.
“Companies need to do the hard yards around research, asking: what is my target audience’s cause? What permission or right do I have to be part of that issue? The good news is that the UN Development Goals include 17 issues so you don’t need a huge amount of research as they’re already there.”
Ian Hughes, CEO and Founder of Consumer Intelligence, a data and intelligence company working in the financial services sector, says, purpose could have a role in rebuilding trust after the pandemic.
“We’re not in a world where purpose is important but there’s a shift going on and purpose could fit in there. People want to trust brands, vaccines and politicians. We’re going from a low base so that’s good news for a lot of businesses,” says Ian.
Marketing when society is in flux
In the post-covid recovery, in which society, it is planned, will ‘build back better’, stakeholder-driven companies may find a firmer footing in that ‘better society’.
Zoe says of Triodos, which aired its first TV ad just before Christmas (see main image), “Our mission is to help create a society that protects and promotes quality of life and human dignity. We want to make money work for positive societal and cultural change. We want finance to change and we want to change finance.”
The biggest challenge for marketing that mission, she says, is education and awareness.
“With only three per cent unprompted awareness in the UK, we have to focus higher up the traditional marketing funnel,” she says.
One of the bank’s biggest marketing assets for this has been the customer stories that show the impact of its investments.
In the post-covid recovery, it may well be that these are the stories that consumers most want to hear. Only time will tell whether they want to take part in the story too.