Beyond Purpose 2.0

Reading time: ~10 min

The great purpose shake-up, 2026 edition

By Kim Cramer PhD and Alexander Koene

In 2020, purpose was the boardroom buzzword. In 2026 it's an audit requirement.

The whole story lives between those two sentences. Five years ago we asked, out loud, how to make meaning bigger than a seasonal campaign. By now lawmakers have answered for us. CSRD isn't a suggestion. Climate damage isn't a forecast. Talent staying without meaning isn't an assumption anymore.

Welcome to Beyond Purpose 2.0. Not an update; you can see it as a settlement.

I. The call for purpose: from boardroom to statute book

In 2020 the demand came from CEOs, employees and customers. In 2026 the lawmaker wrote it down. No longer an opinion. A measuring stick.

From profit to value

The shareholder first doctrine isn't a law of nature. It's a choice, made by Milton Friedman in a 1970 NYT essay and then sustained for decades as if economics weren't human work. By now, Nobel laureate Oliver Hart (Harvard) and Luigi Zingales (Chicago Booth) have pulled the foundation out from under the doctrine itself: even from a purely shareholder perspective, profit maximization that ignores societal costs is suboptimal. Colin Mayer (Saïd Business School, Oxford) developed that thinking in Prosperity (2018); Rebecca Henderson (Harvard Business School) followed in Reimagining Capitalism in a World on Fire (2020). Anyone still arguing today that profit maximization is a company's only duty is pretending Larry Fink at BlackRock never wrote a CEO letter (2018, and another five since).

A quick look back.

Purpose wasn't invented at a TED talk. In the nineteenth century, companies built factory towns, schools and pension funds; partly out of self-interest, partly because it was simply expected. Only with the rise of neoliberalism in the seventies did pure profit maximization become the default. What we see now isn't a trend; it's a correction to a temporary experiment.

Profit is fuel, not the finish line.

The academic definition is short: an organization solves problems for people and planet in a way that stays commercially viable. Profit belongs in the equation. Without it there's no staying power, and without staying power no impact that survives quarter five.

Purpose is now business

The business case is by now solid enough to be boring. Take that as a compliment.

II. The purpose paradox: where it actually hurts

Aspiration and governance need to point the same way. Otherwise the mask slips. And that's precisely where most of them do.

The discomfort of executive pay

Since the eighties, outsized salaries and bonuses have become the standard repertoire of shareholder logic. This isn't a marginal governance discussion anymore. It's an ethical minefield where the top wins and everyone else pays.

• The pay gap. Between 1978 and 2021, CEO compensation rose 1,460% while the typical worker's pay went up 18% (Economic Policy Institute, 2022).
• The cost of inauthenticity. Stakeholder talk on a shareholder-only reward engine doesn't read as principle. It reads as theater.
• The effectiveness myth. Research shows extreme incentives at the top don't automatically produce better performance or more ethical behavior (Pepper & Gore, 2015, Journal of Management). Harvard legal scholars Lucian Bebchuk and Roberto Tallarita call the stakeholder promise illusory as long as compensation structures don't shift along with it.

If purpose is real, this can't be a footnote. A stakeholder story on a shareholder-only engine is physically impossible. Purpose requires governance redesign; not as appendix, but as engine block.

Purpose-washing, woke-washing and the 2026 headwind

The temptation to use purpose as a topcoat is huge. That's purpose-washing: claiming it without doing it.

Woke-washing is a sharper version: corporate value extraction from the struggle for recognition of historically oppressed groups, while the company's own value chain or culture quietly says the opposite.

The backlash (2026 update).

Since 2023, a politically driven anti-ESG and anti-woke movement has intensified, especially in the US. Companies that speak up publicly face boycotts and board-level trouble. The predictable result: leaders go quieter. Not because they stop internally, but because they prefer silence until the work stands. The shake-up is exactly that: less flag, more foundation.

The financial penalty.

Organizations that misuse purpose underperform over the long run. Inauthenticity is expensive.

III. Lawmakers step in: purpose becomes mandatory

What used to be an academic debate is now an audit. Regulation sets the floor; culture decides what's built on top.

The shift you need to make is simple:

• From compliance: tick the box, move on.
• To adherence: purpose built into choices, systems and behavior.

Legal frameworks alone are too blunt for real ethics. History is full of scandals that stayed formally within the rules and were morally untenable.

CSRD: the 2025 turning point

The European Corporate Sustainability Reporting Directive, phased in from 2024, is the biggest shift since 2020. CSRD pushes purpose into the foundation of organizations; yes, including the ones that don't particularly like the idea.

• Double materiality. Report on your impact on society, and on how societal issues affect your financial performance. Not one of the two. Both.
• External audit. Sustainability reports get verified. Greenwashing isn't a reputation problem anymore; it's a legal and financial risk.

Inauthentic purpose simply becomes too expensive. And that, paradoxically, is liberating. The end of the theater is the start of the work.

IV. Purpose in practice: 7 lessons, 2026 update

In 2020 we shared seven lessons. In 2026 they aren't best practices anymore; they're entry requirements. The auditor's reading along. The goal: from limited (purpose as a communication layer) to full (the whole organization producing evidence). From story to behavior.

1. Explore, don't roll out. Start at the top, and don't carve purpose in stone. Invite people to build it with you, and accept that the first version won't be the last.
2. Map collectively. Bring in as many voices as possible. Avoid fake harmony. Use frameworks like the SDGs as shared language to make themes discussable.
3. Let it mature. Developing purpose in weeks is like growing a tree quickly for a photo shoot. Months, not weeks. Sometimes longer.
4. Visualize. Text alone is too thin. Images, video and physical space make purpose felt. A slide with bullets doesn't count.
5. Validate inside and out. Test with employees, customers, partners, investors. Purpose that only works internally collapses externally.
6. Activate leadership. Real work begins after the wording is locked. Role modeling at the top is your fastest credibility builder; and the costliest to skip.
7. Don't advertise yet (the hard 2026 update). Marketing wants to go public. Hold them back until core processes have changed. In the CSRD era: speak only when an auditor can verify it.

V. Conclusion: do, don't proclaim

The push for a new economy can't be silenced. Organizations with a clear purpose are becoming the norm. The question isn't whether you join. It's how deeply you're willing to dig.

Not by pointing at problems, but by doing the work: making choices, having the difficult conversations, and putting back in order the systems that no longer work for people. That's where the creative space opens. That's where meaning becomes credible again.

What leadership requires now:

• Less control, more tolerance for ambiguity.
• Less certainty, more listening to the people doing the work.
• Less flag, more foundation.

Because purpose doesn't belong to leadership alone. Purpose belongs to everyone who carries the work.

Trust, commitment and creativity keep people aboard. The question isn't whether purpose makes the agenda anymore; it's which decision tomorrow will back it up.

Last updated: April 2026

Sources

• Bebchuk, L. & Tallarita, R. (2020). The Illusory Promise of Stakeholder Governance. Cornell Law Review, 106, 91-178. Harvard Law School.
• Cassar, L. & Meier, S. (2018). Nonmonetary Incentives and the Implications of Work as a Source of Meaning. Journal of Economic Perspectives, 32(3), 215-238. Columbia Business School.
• Eccles, R. G., Ioannou, I. & Serafeim, G. (2014). The Impact of Corporate Sustainability on Organizational Processes and Performance. Management Science, 60(11), 2835-2857. Harvard Business School / London Business School.
• Economic Policy Institute (2022). CEO pay has skyrocketed 1,460% since 1978.
• Edmans, A. (2011). Does the stock market fully value intangibles? Employee satisfaction and equity prices. Journal of Financial Economics, 101(3), 621-640. London Business School.
• European Commission (2022). Corporate Sustainability Reporting Directive (CSRD).
• Friedman, M. (1970). The Social Responsibility of Business is to Increase its Profits. New York Times Magazine, September 13.
• Gartenberg, C., Prat, A. & Serafeim, G. (2019). Corporate Purpose and Financial Performance. Organization Science, 30(1), 1-18. Wharton / Columbia / Harvard Business School.
• Hart, O. & Zingales, L. (2017). Companies Should Maximize Shareholder Welfare Not Market Value. Journal of Law, Finance, and Accounting, 2(2), 247-275. Harvard / Chicago Booth.
• Henderson, R. (2020). Reimagining Capitalism in a World on Fire. Public Affairs / Harvard Business School.
• Mayer, C. (2018). Prosperity: Better Business Makes the Greater Good. Oxford University Press / Saïd Business School, University of Oxford.
• Pepper, A. & Gore, J. (2015). Behavioral Agency Theory: New Foundations for Theorizing About Executive Compensation. Journal of Management, 41(4), 1045-1068. London School of Economics.