A case for good business when purpose drives profit

There may be a backlash against ESG but that doesn't mean firms can't make money while helping others.

- Rajeev Peshawaria

A clean energy provider. A beverage educator. A healthcare innovator. These apparently unrelated businesses have two things in common: They are commercially successful, and their businesses are driven by meeting a social or environmental need. In other words, doing well by doing good.

Their success comes amid a backlash against ESG - the environmental, social and governance aspects of business that companies used to flaunt. That approach has come under fire of late and has been dismissed as a "woke" checklist or an expensive distraction from the bottom line. Yet, such narratives overlook the fact that when companies take purpose seriously, it gives them a competitive advantage.

A new wave of enterprises has shown that business models built around solving human and environmental challenges can generate both impact and strong financial returns. These companies have grown revenues, scaled impact, and created immense value for shareholders, stakeholders and society. Their track records show that purpose is a profitable business strategy.

There is a good reason for this. Successful businesses are all about identifying gaps in the market and filling them. Given that some of the biggest challenges that we face involve the health of the planet, ageing populations and widening inequality, these businesses have smartly identified where governments and other players have fallen short in these areas and plugged the gaps. Like other successful firms, they watch their costs and revenues, with the added bonus of helping people and the planet while remaining profitable.