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Strong corporate purpose correlates with improved financial results, study finds

  • Content: Article
  • Date: 21 December 2020

Quantifying Corporate Purpose During COVID-19

A new study by Chief Executives for Corporate Purpose (CECP) and Fortuna Advisors found that high-purpose brands will double their market value more than four times faster than low-purpose brands and will create much higher levels of total shareholder returns.

The study represents an early attempt to explore the impact a cohesive, multi-stakeholder corporate purpose has on the financial performance of a company. Using BERA's innovative Brand Accelerator that measures corporate purpose by looking at a range of metrics – including employer brand, societal commitment, and inclusivity.

‘Corporate purpose and stakeholder capitalism involve companies thinking coherently in a structured fashion about their stakeholders,’ Brian Tomlinson, director of research at CECP’s CEO Investor Forum. ‘This is a strategic and prioritization exercise to say which stakeholders are key to success and creating value for the long term.’

The research also shows that companies that are included in both Fortune’s World’s Most Admired Companies list and The Just 100 list from Forbes delivered a median total shareholder return 41.5 percent higher than the median of the S&P 500.

The researchers wanted to understand how a crisis would affect the benefits of articulating a clear corporate purpose. To do this, they examined the performance of high-purpose and low-purpose companies before and during the Covid-19 pandemic, between mid-February and mid-April 2020.  

Read the full Corporate Secretary article.