Review into FTSE100 annual reports finds that M&S lacks purpose statement

According to new research from Given, the award-winning consultancy for purpose-driven businesses, has found that of the 100 businesses listed within the FTSE100, three key players fail to provide a purpose statement – including leading British retailer M&S.

Of the 97 businesses that do contain purpose statements, when reviewed against Given’s framework, many lack credibility and are not actionable or clear.

The deep dive also found that the most common words used across FTSE 100 purpose statements include the words ‘Better’, ‘People’, ‘World’, ‘Create’, ‘Customers’ and ‘Sustainable’ demonstrating focus areas for the UK’s largest companies.

The qualitative review compared the 100 purpose statements of the 100 listed companies in 2022-23 Annual Reports and Accounts against Given’s framework for articulating powerful purpose statements, which states that purpose statements must be:

1. Credible – it needs to connect a company’s  unique capabilities with real world issues that the business can help fix
2. Inspiring – it needs to be a simple and motivating idea about the role the business plays in the world
3. Actionable – it needs to be tangible and provide direction for decision making

Given defines purpose as a management approach that creates business value by profitably solving the problems of people and the planet, which, done right, drives business performance, sustainable growth and long-term societal impact.

Companies without purpose statements

The deep dive into the purpose behind the UK’s largest companies found that three FTSE100 businesses didn’t have an evident purpose statement at all, including Marks and Spencer Group, Flutter Entertainment and Pershing Square Holdings.

While having a purpose statement is not a required regulation, the Financial Reporting Council’s UK Corporate Governance Code recommends that a Board should set out a company’s purpose and that Executive remuneration should align with that purpose.

Becky Willan, CEO and Co-founder of Given comments: “Lacking a clear purpose statement makes it much harder for executive teams to set an effective long-term strategy that responds to the societal and environmental challenges we face. When a business doesn’t have a purpose statement, it is ultimately missing a key part of business strategy.”

Purpose statements that fall short

When reviewed against best practice, the research found that many businesses fall short in delivering credible, inspiring and actionable statements such as RS Group’s “Making amazing happen for a better world” which lacks credibility because it has no connection to the business’ operations, and Burberry’s “Creativity opens spaces” which is an example of a purpose statement that would be impossible for someone in finance, HR, or another function to make actionable and use to make a decision differently.

Becky continues, “A credible purpose statement needs to do three things; drive with business priorities, resonate with the employee experience and meet expectations of external stakeholders.

“A good purpose statement should have active language acknowledging transformation and action, demonstrations of who and how they are helping and a clear link to the sector the business belongs to. Without this, the business is making limited impact on the business, or on society.”

Contrasting these generic statements, the FTSE100 deep dive did reveal multiple examples of good purpose statements that reinforce credibility, including Hikma Pharmaceuticals’s “Putting better health within reach, every day” and United Utilities Group’s “Provide great water for a stronger, greener and healthier North West” which both demonstrated a clear tie to their industry and a tangible action for the business.

Prioritising profit over purpose

The analysis found that of the FTSE100 businesses with a purpose statement, over 12% of those statements are focused on “profit” or “returns”, such as B&M European Value Retail’s statement of “To deliver great value to our customers so that they keep returning to our stores time and time again”.

Becky said, “Maximising profit isn’t a purpose, and businesses that have limited their purpose to that intent are falling into the trap of short-term thinking, not long-term value creation.

Positively, the research showed appetite from executive teams to align their communications with their purpose statements across the board, with 58% of chairman and 57% of CEO statements mentioning purpose, demonstrating a consistent signal that purpose is important and that it drives value across their business. Additionally, seven companies mention their purpose statement over 15 times throughout their report, continually harping back to their purpose.

Becky continues, “We want this review to shine a light on the need for businesses to define their purpose and act upon it. You have to have a powerful purpose statement that provides clarity and focus about the role you play in the world. And you have to actively live it – ensuring that purpose drives strategy, shapes choices and decision making and is experienced through your culture.

“Looking at the UK’s largest companies reveals that businesses are missing out on the opportunities from defining and delivering a powerful purpose. Too many businesses have purpose statements that lack credibility and aren’t inspiring or actionable. When it comes to be a purpose driven business, defining a powerful purpose statement should be considered the starting gun not the finishing line, but too many businesses are falling at the blocks.”