Leading with purpose:
The business case for values-based leadership with Prof. Florian Lüdeke-Freund
Leadership today is a high-wire act. Every decision is watched, dissected and — if it misses the mark — publicly torched. Social media magnifies mistakes. Activists, employees and investors demand more than profits; they want purpose.
Still, not every boardroom buys in. Some leaders push short-term wins, prioritising financial performance over their principles. ESCP professor Florian Lüdeke-Freund, a leading voice in corporate sustainability, explains the importance of changing these attitudes.
What is values-based leadership?
“Values-based leadership involves integrating ethical principles into the core strategies of a company, ensuring that all actions align with these guiding values,” he says.
Lüdeke-Freund believes the days of performative mission statements and empty corporate slogans are soon to be over. “Leadership now demands something real,” he says. “Integrity is non-negotiable. Say one thing, do another and expect employees, customers and investors to walk.
Transparency is equally important. Every decision, every misstep, is amplified in seconds. There’s nowhere to hide.”
Sustainability, inclusivity and innovation are also important for companies today. Lüdeke-Freund puts it bluntly: “Leading in 2025 is not only about money — it is about doing it the right way,” he says. “The best leaders focus on sustainability, inclusivity and innovation because that’s what keeps businesses relevant and trusted."
Benefits of values-based leadership
So, forget the spreadsheets for a second. Lüdeke-Freund says the real impact of values-based leadership is felt in the energy of an organisation. When employees trust leadership, he says they often work harder, stay longer and push boundaries.
In terms of other stakeholders, he notes that consumers are not just buying products anymore; they are buying into brands that align with their principles. A 2025 Harris Poll shows that upwards of 40% of Americans are putting their money where their values are, shifting their spending to match their beliefs. Nearly a quarter have even ditched their go-to stores over political stances.
Investors are shifting, too, moving money toward companies that prioritise ethics and sustainability. By 2026, ESG assets under management are expected to hit $33.9 trillion, PwC notes, nearly doubling from $18.4 trillion in 2021, with a steady 12.9% annual growth rate.
The pattern is clear: values-driven businesses can, and often do, outperform peers. “A robust value system enhances brand reputation, attracts loyal customers and motivates employees, all of which contribute to sustained profitability,” says Lüdeke-Freund.
Strengthening leadership accountability
The real test of leadership comes when the pressure is on, of course. Market downturns, shareholder demands and economic uncertainty can push companies to cut corners — whether it’s skimping on ethical sourcing, slashing labour costs, exploiting regulatory loopholes or putting short-term profits above long-term sustainability.
That’s where values either hold firm or collapse, Lüdeke-Freund says: “By creating a culture of openness and accountability, leaders can make tough calls under pressure without compromising their ethical standards.” That means full transparency, even when the news isn’t good. It also means making hard calls in alignment with long-term principles rather than short-term convenience. “The companies that get this right tend to build resilience,” Lüdeke-Freund notes. “The ones that cave often struggle to regain credibility.”
Encouraging ethical decision-making
None of this is easy, though. The hardest part is not declaring your values — it’s sticking to them when the stakes are high. Balancing profit and ethics is a constant tightrope walk. Shareholders want results. Competitors cut corners and get ahead. Internal pushback is inevitable.
“Balancing profit margins with ethical considerations and overcoming resistance to change are significant hurdles in maintaining a values-based approach,” Lüdeke-Freund acknowledges. Winning the balance between profit and ethics means baking sustainability, fair wages and transparency into the business model rather than treating them as afterthoughts, he says.
Proving with hard data that ethical practices drive retention and brand loyalty, using transparency to build trust and push back against resistance, advocating for industry-wide standards that force competitors to play fair, and, most importantly, holding the line when cutting corners seems like the easier, more profitable choice, also helps, he adds.
Ensuring long-term business success
The evidence is stacking up: businesses that prioritise their values are outperforming peers. Consumers are shifting their spending to brands that align with their beliefs, investors are pouring money into ESG-driven funds, and employees are looking for workplaces that reflect their values.
Lüdeke-Freund argues that this trend is only going to accelerate. “Embracing values-based leadership is not merely a moral imperative but a strategic advantage,” he says. Companies that embed integrity, inclusivity and sustainability into their operations are proving more resilient in times of crisis and more competitive in the long run, he believes.
Yet, challenges remain. Balancing financial pressures with ethical commitments is not always straightforward, and resistance to change — both internally and externally — can slow progress. However, Lüdeke-Freund notes that organisations which integrate values into their core business strategy, rather than treating them as optional, are best positioned for long-term success.
As leadership continues to evolve, the expectation is clear: businesses can no longer afford to treat values as an afterthought.
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