28 July 2020

Corporate Purpose during the Coronavirus pandemic

GILES RAFFERTY, Corporate Communications and Media Advisor, writing for the Winter 2020 Issue of Listed@ASX.

What does the Coronavirus pandemic and the ‘new normal’, that is expected to emerge in its wake, mean for a Company’s purpose? As the pandemic surges across the globe many senior corporate leaders will, rightly, view the immediate purpose of the company where they work to be one of survival. It is a hard truth and a stark reality that many companies will not emerge into the ‘new normal’. So when facing an existential threat of the magnitude of the Coronavirus pandemic does a company’s purpose act as a helpful guide or distracting hindrance?

Corporate Purpose a mainstream consideration

There can be little doubt that in the years leading up to the Coronavirus Pandemic, Corporate Purpose was becoming a mainstream consideration for companies. In February 2019 the ASX Corporate Governance Council, in the 4th edition of the Corporate Governance Principles and Recommendations, made it clear that Boards had responsibility for linking a company’s Purpose to its strategic goals.

Principal 3 states a listed entity should instil a culture of acting lawfully, ethically and responsibly. While recommendation 3.1 goes further and says the Board should approve an entity’s statement of values and those values should link the company’s Purpose to its strategic goals. Company directors approving a statement of values is just the first step. Principle 3 also says the Board is responsible for making sure senior executives inculcate the values across the business and are seen to constantly reinforce them in their interactions with staff. Senior leaders need to set ‘the tone from the top’.

In August of 2019, The Business Roundtable (BRT) an American association whose members are the CEOs of some of the world’s largest companies, changed its purpose statement. For over 20 years, the BRT’s purpose statement had been – “the paramount duty of management and of boards of directors is to the corporation’s stockholders” – it now has the following concept at its heart, “while each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.”

Coronavirus – the ultimate stress test of a company’s commitment to stakeholders

The emergence of the coronavirus is fundamentally testing the idea of being committed to all stakeholders. And there have been  many examples of companies rising to meet that challenge. In Australia, at the big end of town, we’ve seen the two major supermarkets, Coles and Woolworths, making extraordinary efforts to respond to the needs of their stakeholders. There is no doubt ‘just in time’ inventory management, which works so well in a business-as-usual context, was overwhelmed by coronavirus panic buying, leading to disruption in the supply of vital products and bare supermarket shelves. In response the supermarkets:

  • placed limits on the numbers of in-demand items that each shopper could buy to try to maximise availability
  • introduced special opening times to allow easier access for the elderly and less able
  • changed trading hours to allow for more extensive cleaning and replenishment of stock
  • increased head count to meet the extra demands created by the coronavirus

Coles’ purpose statement is to ‘sustainably feed all Australians to help them lead healthier, happier lives’ with the aim of creating jobs, supporting suppliers and making a positive difference in our local communities over the long term. Woolworths Group purpose is, ‘we create better experiences together for a better tomorrow’ for their customers, team, communities and shareholders. There is a direct read across from the decisions both companies have made  and continue to make in response to the Coronavirus pandemic, and their purpose statements. They are living their purpose.

Embracing the Coronavirus challenge

And it is not just the big end of town. Independent Sydney Brewer, Young Henry’s, pivoted to making hand sanitiser at its draught beer brewery. The market for draught beer effectively shut down, over night, when bars were closed to prevent large social gatherings promoting the spread of coronavirus. At Young Henry’s company continued to generate sales from packaged beers so the pivot to hand sanitiser was not so much a last ditch attempt to save the business, but rather a way to protect the jobs of some staff by providing a vital product that was in short supply to the general public. They also supplied sanitiser to charitable organisations such as Do Good, which is supporting women that are victims of domestic violence, so that Do Good could sell the sanitiser to raise funds. Young Henry’s does not have a published corporate purpose statement but it does operate by the maxim to ‘serve the people’, and again they are living up to that maxim.

There have been many other examples across ASX listed companies where businesses either pivoted to offer products to help the battle against coronavirus or  ramped up production of a critical product. Pro-Pac Packaging Limited added extra shifts to meet surging demand for the plastic bottles it makes, which can be filled with hand sanitiser. ASX listed medical device company ResMed Inc more than tripled its output of ventilators, a critical piece of health care equipment used to save the lives of patients suffering from severe coronavirus infections. The reason ResMed gives for its existence as a business is ‘to make every breath another chance for positive change.’

Getting it right with purpose led decisions

The challenges linked to the coronavirus pandemic are only just beginning and its full impact will take months, if not years, to be fully realised. The first priority for the leaders of any business must be navigating the economic disruption caused by the restrictions introduced to manage the health impact of the virus. Projects around formalising the Board’s understanding of a business’s corporate purpose and how that links to its values and strategic goals will have to wait. But that does not mean a company’s purpose does not have an important role to play at this time.

Every company was set up for a reason, a purpose, and whether implicitly understood or explicitly expressed that purpose aligns the behaviours and decision making that underpins the culture of those companies. There is a growing body of evidence[1][2][3] that suggests a company that gets its culture right is a company that will deliver long term, sustainable financial returns. A company that gets its culture right is also one that will enjoy long term reputational enhancement.

This coronavirus pandemic is presenting extreme and immediate challenges that create an opportunity for leaders to permanently influence the reputations of the businesses they run and their own personal standing. Making the right decision, when so many of the inputs are unknown, when there is no way to forecast what comes next, is hard. A good approach is to sense check if the decisions being made are aligned with your businesses purpose. If they are, they are likely to be the right ones.

[1] https://www.spglobal.com/en/research-insights/articles/the-esg-advantage-exploring-links-to-corporate-financial-performance

[2] https://www.robeco.com/en/insights/2019/01/the-link-between-esg-and-performance.html

[3] https://www.mckinsey.com/business-functions/sustainability/our-insights/more-than-values-the-value-based-sustainability-reporting-that-investors-want

28 May 2020

Designs on Annual Reporting

GILES RAFFERTY, Corporate Communications. It is time to think about Annual Reports and then to think again. While an Annual Report must include content required by the Corporations Act and the ASX listing rules,that doesn’t mean we should limit our thinking to just meeting that objective. It is right and proper for the compulsory materials, […]

Read More
30 January 2020

Time to confront climate change

GILES RAFFERTY, Corporate Communications and Media Advisor Every Government, company and shareholder must confront climate change according to Larry Fink, CEO and Chairman of BlackRock, the world’s largest asset manager. In his annual letter to CEO’s, Mr Fink says a rapidly growing awareness amongst investment market participants of the risks climate change poses to economic […]

Read More
30 January 2020

Communicating in a crisis

GEOFF MICHELS, Senior Adviser, Corporate Communications One month in to 2020 and news headlines have been dominated by the bushfire crisis while the business pages have been reporting on the Australian retailing crises which has seen big brands literally shutting up shops, including the shock withdrawal of Kaufland from the Australian market. The crises in […]

Read More
29 June 2019

Leading with Purpose

GILES RAFFERTY, Corporate Communications and Media Advisor We are fast approaching the first reporting season under the 4thedition of the ASX Corporate Governance Principles and Recommendations. An aspect of the new Principles and Recommendations, which we wrote about in our March 28th ‘Purpose for the Board’ blog, is the elevation of responsibility for linking a company’s […]

Read More
1 May 2019

The importance of good design

GOOD DESIGN is the difference between telling someone and showing them. It can be the difference between informing your audience or convincing them. A carefully composed image, an effectively executed graphic concept or a thoughtfully constructed layout can convert worthy content into memorable messages. We sat down with Campbell van Venrooy, a graphic designer with […]

Read More
28 March 2019

Purpose for the Board

GILES RAFFERTY, Corporate Communications and Media Advisor A listed company’s Purpose is now, very much, a matter for Board consideration. The latest edition of the ASX’s Corporate Governance Principles and Recommendations makes it clear the Board is responsible for linking a company’s Purpose to its strategic goals. Principle 3 states a listed entity should instil a […]

Read More
31 January 2019

The importance of being purposeful

A well understood and expressed corporate purpose drives long term value. This is why purpose, as a driver of profitability, was a central theme of the 2019 letter from Larry Fink, CEO of Blackrock, the world’s largest investment manager, to the Board’s and senior managers of companies Blackrock has holdings in. It has also been the […]

Read More
28 February 2018

Doing it on Purpose

Giles Rafferty, Corporate Communications Doing it on Purpose Having a Corporate Purpose must be one of the oldest, latest things. There is good degree of noise around the concept of ‘Corporate Purpose’ and it may feel like it has become a buzz word, but it is much more than that and always has been. A […]

Read More
25 January 2018

Video: No longer a nice to have

Giles Rafferty, Corporate Communications Video is a critical part of the communication mix. Video engages an audience visually, aurally and emotionally. If a picture paints a thousand words, then a minute of video paints 1.5 million! There are some *mathematics that underpin this assertion but the point of such a statement is to focus attention […]

Read More
6 November 2017

Communicating in a Crisis

Geoff Michels, Senior Corporate Communications Adviser A crisis is an event or a series of events that adversely affects the health or well-being of employees, the environment, a community or the wider public, the integrity of a product or the reputation of an organisation.  A crisis can be operational (fire, an accident) or non-operational (workplace discrimination, […]

Read More
1 August 2017

The Evolving Board Role in Determining Corporate Culture

Philippa Ellis, Governance & Investor Relations Not a day seems to go by without some headline homing in on yet another corporate scandal with its genesis often attributed to a lax or loose corporate culture. In Australia it has most recently focused on the wealth management and life insurances divisions of the major banks. ASIC […]

Read More
1 August 2017

The Annual Report and the importance of storytelling

Philippa Ellis, Governance & Investor Relations “Stories are the most powerful communication tool we have bar none” according to Andy Goodman of The Goodman Centre. We all carry stories in our heads (pre-conceptions) that strongly influence the way we view the world. These stories cause our mind to be closed to alternative viewpoints even when […]

Read More
10 April 2017

Presentation Techniques for Senior Executives

Geoff Michels, Senior Adviser – Corporate Communications At FIRST Advisers we are frequently asked to coach senior business executives or managers on presentation techniques.  Generally it’s about coming across well at an AGM, or at a roadshow event or in presenting to audiences large and small.  There is also a significant demand for advice and […]

Read More
3 November 2016

Why Aligning your Corporate and IR Strategies Matters

VICTORIA GEDDES, ECECUTIVE DIRECTOR Nov 3, 2016 The starting point in the development of a company’s IR strategy is to understand the Corporate Strategy. Closely allied to this is an audit, for wont of a better word, of how this strategy is talked about within the company and communicated to external stakeholders. It is surprisingly […]

Read More
5 August 2016

Results should craft a convincing story

DAVID WHITTAKER, SENIOR INVESTOR RELATIONS ADVISER A recent survey presented at the National Investor Relations Institute (NIRI) conference in San Diego in June highlighted how giving investors useful qualitative information when presenting your company’s financial results can make all the difference to how well the numbers are received. The institutional investors surveyed by Edelman emphasised […]

Read More
5 July 2016

Short Attacks: The new wolf pack

VICTORIA GEDDES, ECECUTIVE DIRECTOR Those who have been on the receiving end of a short attack describe the process as akin to being at war, or being pursued by a pack of wolves, with the company’s very destruction their opponent’s goal. A short or bear attack, to make the distinction clear, is not the same […]

Read More
27 May 2016

Follow FIRST Advisers at the World’s Premier Investor Relations Conference

FIRST Advisers will be in San Diego next month at the premier global conference for investor relations professionals, staged by the US National Investor Relations Institute (NIRI). We will be posting live updates from our Twitter account and filing a post conference wrap up on this blog. The NIRI conference often provides a leading indicator for […]

Read More
12 November 2015

Why someone on the outside should draft that press release

FIRST Advisers Corporate Communications Some see it as axiomatic that the people within a company are best placed to draft a press release or other piece of external communication. After all, who better to write the news than those on the inside: the people who were responsible for it, were there from the beginning and […]

Read More
17 December 2014

The Value of Proactive PR

Outside major announcements like profit results or product launches, many companies find it hard to keep the media interested in what they are doing, especially with the attention span of the traditional media narrowing as journalist numbers fall and publication sizes shrink. It’s true that most companies don’t have significant announcements to make week-to-week or […]

Read More

Archives