Aligning purpose and performance

While for decades psychologists have increased awareness about the importance of a ‘meaningful life’, only very recently have we seen the issue of profit and purpose gain more widespread recognition.

Let’s be clear: purpose is not just pure philanthropy. Research shows that people who find meaning in their work are more committed and work harder.

I firmly believe the most inspirational purposes to be those that allow an organisation and its people to appreciate the impact they have on their direct environment. We are fortunate that our industry offers multiple routes to positively influence our immediate communities, cities, countries and, ultimately, planet.

Investing in housing is a clear example of where the purpose of ‘making the world a better place’ and creating value can be aligned.

Fifty-five per cent of the global population live in urban areas and there is no sign of this trend abating, with the World Bank forecasting this rising to 68% by 2050. Rapid urbanisation brings challenges, not just from accelerated demand for affordable housing but also from an increasingly demanding customer base that accepts densification but expects more services and a sense of belonging, despite us being more connected than ever.

In key global cities, individual private investors can no longer satisfy residential demand and the market now requires a mature and professional rental market with new supply delivered through large-scale institutional ownership.

We must measure the economic and social impact of such investments and it is the ability to successfully balance these two factors that is key to ensuring new supply is delivered.

For instance, an affordable housing programme needs to deliver an economic total return and satisfy demand for living space from all demographics, while avoiding ‘ghettoisation’. This is particularly so in the highest-demand areas where a greater diversity of tenures that combines build-to-rent with affordable housing needs to be delivered. The overriding aim must be to help generate social connections, community and culture among residents.

Innovative construction techniques and technology increasingly facilitate the delivery of affordable housing and improve environmental performance, while densification to reduce land cost per unit can ensure financial and social goals are achieved, as long as good design and the requirement for ample public spaces are not compromised. More and more public and private initiatives are adopting this holistic approach and the ‘Reinventing Paris’ project is an exemplar case in point.

People rightly search for purpose but performance must be a prerequisite. Our industry affords multiple ways to address these local and global challenges and serve a greater purpose, while providing a sustainable financial performance. Housing is but one example. To fulfil our potential we require explicit purpose, much longer-term thinking and much broader contextualisation of the contribution we as corporations and employees can make.

Amal Del Monaco is head of sector specialists at AXA IM – Real Assets