Business leaders say they want both purpose and profits. But what does that actually look like in day-to-day efforts?

Harvard Business School professor George Serafeim has ideas. As a leading authority on environmental, social and governance initiatives, and the author of the book Purpose + Profit: How Business Can Lift Up The World, the researcher said the assets of the future—ones that will drive an organization’s competitiveness for years to come—go beyond financial resources alone.


“It used to be about financial and physical capital, but increasingly, other types of resources are defining the competitiveness of organizations—human capital, natural capital, and social capital,” Serafeim said. The scholar’s research has shown that, when organizations are successfully able to diffuse their company purpose down to middle managers and individual contributors, the results are better financial performance and higher employee retention.

But how do you get started with ESG initiatives? And which ones should you prioritize first in your organization? In a fireside chat at From Day One’s recent virtual conference “Pulling in the Same Direction: Strengthening Employee Purpose Within Your Corporate Strategy,” Serafeim weighed in.

Expand Your Company’s Purpose

To identify meaningful ESG initiatives, Serafeim suggests thinking about how your company can create more positive impact as it grows.

“The reality is that the answer will be different for different companies,” he said. “If you have a transportation company, it will be about delivering safer, cleaner vehicles. If you have a health care company, it will be about access to healthcare and innovation—very different elements.” Serafeim also urged attendees to define KPIs early on in the process to create accountability across an organization, citing DE&I efforts as an example.

“In current research, we're finding that lots of organizations have gotten much better at hiring a diverse set of people,” he said. “But guess what? In many organizations, those people end up leaving. [Companies are] observing higher employee turnover because they’re not measuring the right things, and as a result there is no accountability inside the organization.”

How to Overcome Pushback on ESG Initiatives

When you advocate for more purposeful profits, you may encounter financial roadblocks, office politics, or both. In one chapter of Serafeim’s book, he recaps the challenges PepsiCo’s then CEO, Indra Nooyi, faced when pushing her “profits with purpose” initiative, which prioritized investing in healthy food and beverage offerings. Under Nooyi’s tenure, the PepsiCo stock price doubled—but in the short term, the lack of confidence in her campaign nearly ousted her as CEO.

Expanding on that anecdote, Serafeim emphasized that the phenomenon of “worse at first, then better later” applies to many types of organizational change.

“A fundamental uncertainty exists when you're engaging with environmental, social and governance issues,” Serafeim said. “The way you mitigate it is to first build an enormous amount of credibility inside the organization. Assemble a team of people inside the organization who have already a lot of credibility, [people who are] excellent at what they do and are masters of their craft. That gives quite a bit of social capital and trust that actually has a high probability of working.”

Serafeim also suggested working quickly at the start of an initiative, conducting various sprints and experiments to establish a small-scale blueprint for success. “You need to show some quick wins, that actually demonstrate the innovation process that you're trying to catalyze is already working,” Serafeim said. “Also convey the risks of not taking action and falling behind.”

As the hybrid workforce talent war unfolds, human resources professionals have become more strategic and central to the competitiveness of an organization. Serafeim encouraged attendees to keep human capital front and center, even as whispers of a recession continue to persist.

“In a downturn, investments that organizations make in their people and their processes are what will differentiate the leaders from the laggards,” he said. “It's truly affecting an organization’s ability to compete.”

Nick Wolny is a senior editor at NextAdvisor, in partnership with TIME. He has previously written for Fast Company, Fortune, Business Insider, Entrepreneur Magazine, and OUT Magazine, and was named a “40 under 40” by the Houston Business Journal in 2021.