Sustainable Shared Value: Business driven sustainable economic growth with a moral compass

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Businesses exist to serve shareholders and staff. However, can businesses add value to society and their local communities?

In the 21st Century the world faces social, environmental, and financial challenges of unprecedented magnitude and complexity. So, with these many and varied social issues that need addressed, does this mean that businesses should exist to serve society?

Many would argue that “there is only one social responsibility of business, to use its resources and engage in activities designed to increase its profits” or more simply “the business of business is business”.

In recent years however, this somewhat myopic view of shareholder value has changed and it is becoming increasingly clear that there is a convergence of interests occurring among large global corporates and they are connecting business success with social progress.

This report by Roger Warnock examines the principles of business driven, sustainable economic growth with a moral compass.

The Paradigm Shift – Rationale for Change

Businesses 200 years ago would have been established with economic and social objectives (i.e. Cadburys), but by the end of the 20th Century companies mainly focused on shareholder value as opposed to the “triple bottom line” (social, environmental and financial).

However, many organisations are driving change (i.e. BITC) advising on new innovative strategies around CSR and “starting the Shared Value conversation”. This new conversation has three objectives:

  1. Raise awareness of the concept of Shared Value.
  2. Develop a specific Shared Value pathway – the six imperatives pathway.
  3. Argue the case that Shared Value should be considered as a core methodology to be supported by Government.

Shared Value – A Brief Overview

Shared Value can be defined as policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. Shared Value creation focuses on identifying and expanding the connections between societal and economic progress.

How Shared Value Differs from Classic CSR

Creating Shared Value (CSV) should supercede CSR in guiding investments of companies in their communities. CSR focuses mostly on reputation and only a limited connection to the business. CSV is integral to a company’s profitability and competitiveness position. It leverages the unique resources and expertise of the company to create economic value by creating social value.

The Six Imperatives Framework: Shared Value Pathway

What’s in the Toolbox?

It is evident that some of the building blocks are already developed and can be utilised to create a Shared Value platform: CSR Support, Corporate Social Innovation, Advocacy and Cross Sectoral Collaboration, Socially Conscious Business and Foresight, Innovation and Research.

Final Thoughts: Identifying the Right Kind of Profit

Not all profit is equal: Profits involving a social purpose represent a higher form of capitalism and one that will enable society to advance more rapidly while allowing companies to grow even more. Shared Value focuses on the right kind of profits – profits that create societal benefits rather than diminish them.