Articulating Purpose for Investors That Goes Beyond Financial Returns

Institutional investors are entering a new era in which they seek not only to generate financial returns but also to create greater social good. They recognize that capital can be used to unleash societal progress and impact. Without a clearly articulated authentic purpose, however, few organizations will capture that underlying excitement and realize the full potential of their societal impact.


Purpose is a central, organizing principle that guides employee actions at all levels of the company and provides an authentic foundation for strategy, culture, investment decisions, and societal impact. Unilever’s purpose-driven brands, for example, are growing 50% faster than the rest of the brands in the company’s portfolio, and they are delivering 60% of the company’s total growth. Additional research by BrightHouse of 25 large, public US companies in the consumer, technology, and financial-services sectors found that the companies with the strongest sense of purpose integrated across their operations showed the highest ten-year TSR.

Institutional investors have a similar opportunity to articulate a purpose that goes beyond financial returns. Rather than deploy a small portion of capital toward societal impact, investors can start by articulating an authentic purpose that manifests the firm’s reason for being and guides investment objectives. In so doing, they can express how those objectives create greater good in the world—two goals that mutually reinforce each other. (See the exhibit.) Purpose informs an institutional investor’s strategy for creating societal impact by providing guidance on where to concentrate resources. This allows the firm to focus on achieving the biggest impact in a sustainable way; over time, a sustained focus on the issue will only reinforce the investor’s purpose.

Through an authentic purpose, investment firms can also capture many other well-documented benefits, including better productivity, employee engagement, innovation, and a more compelling brand story.

Thus far, many institutional investors and pension funds have lagged in unearthing their own distinct purpose. Based on our analysis of a sample of institutional investors, many have defined a mission statement of sorts, but most of those declarations do not represent a true purpose. For example, some have defined their purpose in terms of generating the highest possible returns for the entities whose money they manage—a universally applicable premise for the work that all institutional investors do.

Photo by Diana Măceşanu on Unsplash

Find out more about how institutional investors are changing the investment game by reading our white paper: Institutional Investors Discover the Power of Purpose.

And look for more information about our thought leadership here at BrightHouse on the blog. Stay up-to-date by subscribing. And be sure to follow us on Twitter and LinkedIn for the latest insights on purpose. 

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