– The Problem
Companies for many years have been trapped in a capitalist system that is now under siege, postulating an outdated and narrow approach to creating value.
Slated for being a major cause of social, environmental and economic problems, they additionally have been criticized for overlooking the wellbeing of their employees, suppliers and customers.
Companies are being viewed as prospering at the expense of their community and trust has fallen to new lows with the depletion of natural resources and unsustainable practices. This is causing economic distress to the communities in which they produce and sell.
– The Opportunity
The term ‘Shared Value’ was first coined by Michael Porter and Mark Kramer in a Harvard Business review article (Jan/Feb 2011) and has gained in popularity as consumers’ expectations have changed mainstream discourse about the role companies should play in advancing and addressing social, environmental and global challenges.
Today there is an expectation that companies will expand their activities on, and investment in, issues that matter to their community. For many consumers, especially the millennial, a robust and transparent program of ‘shared value’ is a necessary condition before they are willing to engage or even buy.
Donating a proportion of profits creates measurable, identifiable, economic benefits for a company as well as having a measurable impact on social or environmental issues.
There is substantial evidence by numerous researchers that ‘shared value’ or similar concepts are essential to the overall success of companies. It’s about new business opportunities that create new markets, improve profitability and strengthening competitive positioning.
There area several similar concepts to Porter and Kramer concept of ‘shared value’. Reisach (2012) states that this concept dates back 2,350 years to Aristotle, within his concept of economics.
More recently Drucker (1984) stated that, ‘the proper ‘social responsibility’ of a business is to tame the dragon, that is to turn a social problem into an economic opportunity and economic benefit, into productive capacity, into human competence, into well paid jobs and into wealth’.
Emerson (2003) created the concept of ‘blended value’ which shows a correlation between economic, social and environmental performance.
Another example is by Hart (2010, p.4) in his book ‘Capitalism at the Crossroad’ where he claims that in building sustainable global enterprises, companies ‘need to move from social obligation to the opportunities provided from social and environmental issues.
In an article dated 23rd May, 2018 Andrew Brown wrote in Quid, that they had ‘searched up to 2 million public and private companies, and their search had returned more than 2,000 global startups whose products or services focused on at least one of the Sustainable Development Goals, such as Quality Education (goal 4), Affordable and Clean Energy (goal 7), and Sustainable Cities and Communities (goal 11)’.
The point of this empirical evidence is, that in the year 2019 society as a whole is tired of being taken advantage of by companies whose only ‘raison de vivre’ is profits without any responsibility and they are looking at who contributes back to society.
The establishment of a Benefits Corporation or B Corporation by governments has demonstrated the need for companies to be certified as proving social and environmental performance within their companies, aiding the community to make better informed decisions. The Advisory Network assists companies to become sustainable and certified, ask us what we can do for you.
The UN created a set of goals to enhance sustainability globally. Please see diagram below.
The Sustainable Development Goals
In 2015 countries adopted a set of goals set forth by the United Nations. Seventeen goals with specific targets, were created, to be achieved over the next 15 years.
The theme for 2018-19 is focused on ‘Transformation towards sustainable and resilient societies’, and what better way than collaboration with the UN, companies and governments to achieve this objective.