The Purposeful Firm: The Rise of Purpose Alongside Profit

The Purposeful Firm: The Rise of Purpose Alongside Profit

[ Music ] The Ted business model that is revolutionizing
how the corporate world is structured is the purposeful firm. Companies are no longer focused just on
short-term profitability; they have a wide set of stakeholders that includes their own
employees, their customers, regulators, the broader community, their country’s
goals in determining what they do. In a proprietary survey of
companies around the world, we found that 2 out of 5 companies globally
and over 50% of German companies said that they’re focused on a purpose
broader than short-term profit making. That has very significant implications
for the decisions those companies make and the returns they generate for investors. The global Fortune 500 today spent three times
as much on corporate social responsibility than the combined development
aid spending of UNDP and UNICEF. ESG-oriented investors will also have to think
about the right next generation approach to ESG. Investors need to think not about all the ESG
factors in every company but only about the ones that are material for that particular sector. At PGIM, we believe these changes in corporate
structures will have profound implications for how institutional investors
build and protect their portfolios. [ Music ]

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About the Author: Oren Garnes

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