Finance for Impact attended the ‘Creating Shared Value’ workshop organized by Prof Michael Porter and Mark Kramer at Harvard Business School (HBS) in Cambridge, USA.
Participants exchanged views and insights on how to build social purpose into the corporate mission. Michael Porter hinted that profits may not be equal; the profit from a company addressing societal needs through the business itself has a higher value that the one redistributed to shareholders only. ‘Shared value’ is based on strategies that simultaneously create value for the business and for society!
It has become clear that the long-term competitiveness of companies depends on social conditions, e.g. an educated and skilled workforce, sustainable use of natural resources, a flourishing local economy… Therefore, business has an essential role to play in solving social problems. Many senior executives and CEO from large corporates (Nestle, Intercorp, Yara International, Becton Dickinson, Walmart…) discussed their experience in designing business models that could meet societal needs and expand opportunities for all.
The HBS workshop also discussed current trends in ‘shared value’ investing, whose aim is to favor companies that build social innovation into the heart of corporate strategy. ‘Shared value’ companies may not satisfy all ethical investing concerns of socially responsible investors. Still, as argued by Mark Kramer, investors themselves create ‘shared value’ when they incentivize corporate leaders to address social issues at scale!
There is still a lot to be done, for sure, but the HSB workshop provided a tremendous amount of evidence showing that ‘shared value’ creates new value propositions and new opportunities for strategic positioning on societal needs.