How can investors tell if a company leadership is truly purpose-led?

In July 2017 I met the Director of Corporate Governance at a major global investor to discuss how Blueprint engages with a number of large companies. He was encouraging and said he liked the framing of Blueprints principles. In particular, he thought that companies who seriously embark on becoming purpose-led in this way are more likely to deliver long-term sustainable performance and mitigate risk.

He then asked a disarmingly simple question: How as an investor do you tell if a company leadership is truly serious about becoming purpose-led or is just using purpose language to re-clothe what they are doing anyway? It was a great question, and I said I didn’t know. I asked if he might be willing to explore that if we got a few people together.

A few months later, I met Quintin Price, who had until a couple of years ago been Global Head of Active Strategies at BlackRock. Now a free agent, he had taken a keen personal interest in our work and offered to help in a pro- bono capacity. Together Quintin and I convened a meeting to which we invited ten senior stewardship investors, including the one I’d met back last July. The exam question, over three hours, was to come up with 8-10 simple questions an investor might ask a CEO or company chair. It was a fascinating conversation, and we have now just published the outcome.

We see this as a contribution alongside the work of many others who are seeking to improve the quality of dialogue between investors and company management.

We hope it gets used. But for me what stands out aside from the quality of their work was the generous willingness of senior and very busy investors to take a morning out to meet with their peers and a charity on something together that could be used to encourage deeper conversations with companies about more than the money. That manifest generosity of spirit says a lot and belies the common assumptions too often made about motivation in business.

If you are interested to read the questions, you can download the document here. There is also an FT article - Asset managers agree on 8 questions to put to companies