Our M&A survey reveals that executives are building corporate purpose into their strategies, and starting to measure it's impact on long-term value creation.
olitical and social pressure on companies is rising. The need for corporates to show they are good members of society and are adding value to their people, customers and society has never been greater. Companies have been very good at reporting their financial contributions and providing a clear narrative around customer value. But now we are seeing meaningful movement toward reporting on investment in talent, including inclusiveness and remuneration, and wider social needs.
According to the EY Global Capital Confidence Barometer, respondents have, or are planning to adopt, a range of reporting that goes beyond the purely financial or focused solely on shareholders.
In fact, the best businesses are defined by more than their short-term profitability. They drive broad-based prosperity by creating value for shareholders, customers, employees and society alike. For example, investment in reskilling employees is clearly good for business. But it also benefits employees and equips them for a more successful career, whether within that company or beyond.
Society benefits too, since the economy grows more sustainably with a more highly skilled workforce. And when businesses can make a stronger case that they are creating long-term value for stakeholders across society, they foster trust with wider society. Companies therefore need to find a way to measure and communicate that fully encompassing and compelling long-term value narrative.
Only a small minority of companies have no plans to introduce broader reporting — unfortunately, they could find themselves on the wrong side of this increasingly important debate.