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Inside the Index: How the FTSE100 defines purpose

Becky Willan

29 / 02 / 2024

The FTSE100 index is home to some of the world's biggest businesses, many operating at the cutting edge of their discipline. But are they purpose-driven? Are they leveraging purpose as a catalyst for growth?

There’s a world of difference between being a business with a purpose statement and being a purpose-driven business. Ensuring that purpose is lived, truly embedded top-down and bottom-up, is a core component of making purpose a powerful business idea.

If you’re working to define or better define your purpose, the best test of a purpose statement is whether it’s clear how to put it into practice. And the more you live it within the organisation, the more powerful it becomes.

So, if a powerful purpose statement is just the start of the journey to becoming a truly-purpose driven business, how are they showing up in the UK’s largest organisations?

To find out, we reviewed the FTSE100 Index’s 2022-23 Annual Report and Accounts. By assessing mentions of ‘purpose’ we can take stock of the big picture and assess which businesses have powerful purpose statements, and which don’t. 

We assessed the purpose statements of the FTSE100 companies against Given's framework for powerful purpose statements, and here's what we found:

Credible

A powerful purpose must connect a company’s unique capabilities with real-world challenges. It also needs to convey the unique positive contribution the business can make to society. The purpose statements of many FTSE100 businesses lack credibility when reviewed against best practice.

Inspiring

A purpose needs a simple, relevant idea – bigger than a business or category. It should inspire and motivate internal and external stakeholders. Not only did we find that many FTSE100 businesses had a purpose that lacked ambition, but many more have purpose statements that are exclusively and explicitly aimed at making as much money and selling as many things as possible. Maximising profit isn’t a purpose and businesses that have limited their purpose to that intent fall into the trap of short-term thinking, not long-term value creation. 

Actionable

A purpose statement must be tangible and provide direction about making a positive impact. It is only actionable if the purpose can be applied and used in making decisions. For many FTSE100 businesses, when reviewed against best practices, their purpose statements could be more actionable. Many of the purpose statements need clarity on the impact they’re trying to have on the world beyond simply business as usual.

Did you know?

57% of the FTSE100 companies mentioned purpose in their CEO statements 58% of the FTSE100 companies mentioned purpose in their Chairman statements 17% of the FTSE100 companies mentioned purpose in their Risk Registers

While the purpose statement itself and the Annual Report and Accounts aren’t enough to assess how well purpose embeds within a business, we want to celebrate the six companies that mentioned purpose across three of those previously mentioned sections: Sage Group PLC, Tesco PLC, Legal and General PLC, Lloyds Banking Group PLC, Phoenix Group Holdings PLC, Rio Tinto PLC.