Read the following statements and see if you can guess their origins:
– “Boldly grow the good in business and life.”
– “Financial security for Canadians and our communities.”
– “Empower a nation of dreamers and doers to build a better tomorrow for all.”
– “Provide a foundation upon which 21 million Canadians build their financial security in retirement.”
You’d be in good company if you thought these were mission statements from non-profit organizations. But you’d be wrong. They are, in fact, purpose statements of well-known Canadian financial institutions: a bank (BMO), an insurance company (Co-operators), a federal financial crown corporation (BDC), and an asset manager (CPPIB). Why is this significant? It reveals the beginnings of a profound shift in our economy from being driven by profit-only businesses to those led by purpose.
Increasingly, organizations are differentiating themselves and driving more value for their stakeholders by adopting and communicating their social purpose and how it contributes to creating a better world as well as how it can be good for their business.
This movement is already paying dividends for Canada, but it needs support to reach its potential. The pace of transition towards a truly purpose-led economy is too slow to unleash the resources of finance and business to help tackle our most pressing social and environmental challenges in a timely way.
But business and government working together can forge a different path. And the federal government has a significant role to play.
The federal government needs to take a more proactive leadership to embrace the “Purpose-first Economy”, an economy powered by the pursuit of long-term well-being for all in which business, and regulatory and financial systems foster an equitable, flourishing, resilient future for Canada and the world.
Solving this country’s challenges will require that all economic participants have a social purpose — including our financial leaders. To accelerate this, the federal government can and should adopt policy and regulatory measures to mobilize the financial sector to be a stronger force for good.
There are five key recommendations the federal government could make to help fast-track the “Purpose-first Economy” by activating the financial sector and jump-starting the transition to purposeful business.
1. Borrowing from the legal report, “Bringing Corporate Purpose into the Mainstream: Directions for Canadian Law”, the Minister of Finance should amend Public Accountability Statements legislation to require financial institutions (FIs) to disclose and define their purpose, their progress implementing it and the board’s role in oversight of it.
Currently, the legislation requires large financial institutions to outline their investment in Canadian society, economy and the environment. This proposal would require they also disclose progress on, and oversight of, their purpose, their meaningful reason to exist. This will not only stimulate the entire finance sector to become purpose-driven, a move many FIs are already taking, but will accelerate the transition to a purpose-first economy.
2. Drawing from our report on Purpose Policy Options for all Governments, the Ministers of Small Business, Export Promotion and International Trade, and Agriculture and Agri-Food should require BDC (Business Development Bank of Canada), EDC (Export Development Canada) and FCC (Farm Credit Canada) to ask their clients to provide information on their purpose and its definition and implementation plans, and offer support and incentives to those with a social purpose. Arguably, these Crown Corporations should know the purpose of their clients, given their capital is financing it.
3. The Minister of Finance should also:
a. Require federally regulated pension plans to disclose their purpose and progress towards achieving it and require them to determine the purpose of the companies they are investing in and directing their capital toward.
b. Convene the investment, banking, insurance and credit union sector to encourage them to support the start-up, transition and growth of social purpose businesses.
c. Engage her provincial and territorial counterparts to similarly use their influence with the finance sector.
The federal government has already taken positive steps to finance the growth of social purpose organizations, with its $755 million Social Finance Fund. We should build on this track record to scale this idea – and be the first jurisdiction in the world to propel a purpose-first economy.
The economy, investment and finance, and all businesses, should have a social purpose — to be purposeful and deliberate about their role in improving the world. The federal government can nudge them on this path, further positioning our financial sector to be future-fit and forward-looking.
If we can unlock the engine of the finance sector to create a better world, we can realize a sustainable and equitable future. Sector leaders have already taken action, but more can be done.
The federal government holds the keys to this potential. It should use them.
About the authors:
Michael McKnight is the President and CEO of the United Way British Columbia
Coro Strandberg is Chair of the Canadian Purpose Economy Project.