Corporate purpose
We are moving towards a global corporate purpose
Business Corporate social responsibility
The Iberdrola group is working on the preparation of a unique, genuine and significant corporate purpose, focused on its electricity business, in order to contribute to closer ties between the company and the public, society as a whole and its Stakeholders, all centred on an inspiring and shared idea.
What is the purpose of a company?
Having a corporate purpose these days is one of the major emerging business trends. Among the most widespread definitions of what a business purpose is we find the following:
- It is the principal "raison d'être" of a business (IMD).
- It is an aspirational reason for being, based on humanity and one which inspires a call to action (Beacon Institute).
The purpose is the cornerstone of any business project, it exceeds the concept of Mission (what the company does) and Vision (what the company wants to be), and clearly expresses why and for what a company exists and what is its contribution to society.
Arriving at the definition of a good purpose requires a process of very deep internal reflection, which moreover needs to embrace at all times the expectations of the various Stakeholders (employees, shareholders, customers, suppliers, communities in which the company operates, etc.) and of society as a whole.
Bearing all these things in mind, the corporate purpose becomes the expression of the company's identity, of its long-term vision, its commitment to the future with society and its contribution to the major challenges that we face together. It is, therefore, an inspiring and aspirational principal for the company, that forms the backbone of its strategy and activity.
Simon Sinek, author of the Golden Circle theory, maintains that a business will achieve greater individuality and influence in all its activities if it always questions why it does what it does, i.e. its purpose. Sinek is adamant about the importance of communicating this purpose with clarity and emotion to keep the Stakeholders in touch with the company.
SEE INFOGRAPHIC: The Golden Circle: the key is the why [PDF] External link, opens in new window.
Why a purpose?
Recent research reveals that a corporate purpose makes a clear contribution to five essential aspects of businesses:
STRATEGIC CLARITY: it constitutes a reference framework for long-term decision-making.
INNOVATION: it inspires people to look for new solutions based on the organisation's priorities.
TRANSFORMATION: it drives the organisation to change in order to achieve it.
TRASCENDENCE: it establishes ties surrounding the universal desire to contribute towards something greater.
ALLIANCES: it helps to create bridges and encourage the creation of alliances.
Furthermore, current social trends and movements indicate the need to have a clear purpose:
- Greater expectations of society with regard to businesses.
- Growing demand for companies with a purpose from certain groups such as investors, new consumers and the younger generation.
- A strong collaborative movement, a consequence of the extent of the challenges that society is facing.
At Iberdrola group we are not removed from this reality and we are working on the preparation of our future corporate purpose, which will be in line with the creation of shared value, social dividend, and Corporate Social Responsibility, as well as with the UN 17 Sustainable Development Goals.
