'The time has come': Leading corporates call for acceleration of 'purpose-first economy'

Economic recovery strategies should "catalyse the power" of so-called purpose-first businesses in order to grow this "critical" emerging sector and allow it to assume greater responsibility for tackling the climate emergency and other global challenges, an alliance of CEOs has said today.

An open letter signed by a group of leading CEOs - including the bosses of L'Oréal, Danone, Mastercard, Pearson, and Philips - argues that boosting the "purpose-first economy" would mitigate some of the need for "top-down government interventions" as economies recover from the Covid-19 crisis.

"This is essential, both for 'Building it Better' and for achieving the global 2030 agenda in the post Covid-19 world," the signatories argue. "The time has come to formalise this emerging fourth sector of the economy and take purpose-first business to scale."

'Purpose-first' or 'for-benefit' enterprises make up as much as one tenth of GDP in the US and Europe, according to the signatories, and as such already play a "significant role" in addressing global challenges.

The 15 signatories, who represent companies with a combined annual revenue of more than $100bn, have committed to ushering in a more "inclusive and sustainable economy" in the wake of the pandemic.

"We resolve to build an economic system that leaves no one behind, overcomes the structural barriers to equality and transparency and puts purpose first, so that our planet and society can thrive for generations to come," they said.

The bosses committed to support the growth of the purpose-first economy through "raising awareness and leveraging procurement, innovation, research, development, and investment to accelerate the growth of this critical sector".

They also set out a number of steps policymakers and businesses should adopt to transition to a "new economy" where a growing number of organisations work for the benefit of society.

As such, the leaders are calling on governments to help grow the purpose-first sector through a number of mechanisms, including targeted policy, financing, procurement, contracting, taxation, accountability measures and capacity building.

They are asking policymakers to take action to encourage other economic actors, from civil society, the private sector, philanthropy, academia and investors, to engage and expand the so-called 'fourth sector'.

The letter also calls for measures to spur the development of standards for assessing and accounting for social and environmental impacts of purpose-driven enterprises, such as valuation models, risk assessment, and ratings.

Furthermore, the group argues that policymakers should "design for a safe, educated, and healthy society" by supporting educational institutions to collaborate and access capital, talent and shared resources, all the while providing students, practitioners and policymakers with the tools they need for careers in the 'purpose-driven economy'.

CEOs from Ketchum, Natura & Co, the International Chamber of Commerce, and Interface also signed the letter.

The Net Zero Leadership Hub is brought to you in partnership with BT, as part of its support for the Net Zero Leadership Stream at the world's first Net Zero Festival this autumn. All the content on the Hub is fully editorially independent unless otherwise stated.

You can find out more about the Net Zero Festival and reserve your place here.