By Noah Grundy
With 2021 marking 10 years of the global shared value movement, it’s a timely moment to consider: How quickly has business adopted this thinking? Which key issues has shared value helped to address? What have been the key challenges? And how does shared value need to evolve to flex to the future of business?
At the recent 2021 Shared Value Summit Asia Pacific – broadcast from Melbourne on 17 June – we were joined by shared value co-creator and Harvard professor Mark Kramer to tackle just these topics. And notably, he pointed out a critical role for Australian business.
“As one of the first regions to really understand the power and potential of shared value a decade ago, we need [Australia] to show the world what truly embracing shared value at a national level can look like.”
It was Mark Kramer and Michael Porter who kickstarted the shared value movement with their seminal article in 2011, Creating Shared Value, published in the Harvard Business Review.
“We… realised that what companies do through their business has a far greater impact on the world than what they do through their philanthropy,” Mark told the Summit’s audience of almost 500 corporates, and representatives from across government, community organisations and academia.
And the global economic figures speak for themselves – with two thirds of the 100 largest economic entities worldwide being companies, not countries.
In this context, the challenge—and opportunity—is to find profitable ways to solve social issues, and this requires fundamentally reshaping our “core business operations… which is the essence of shared value.”
Of course, after a decade of pursuing shared value, there is some cause for celebration—as companies increasingly see the social and economic value in addressing the issues that intersect with their core business.
“The idea Michael and I put forward a decade ago, that some of the greatest business opportunities were in solving the world’s social and environmental problems, seems to have borne fruit,” said Mark. “There is a growing body of evidence that [creating] social impact as a competitive strategy works.”
Perhaps the most significant shift, according to Mark, has been the growth of ethical investment strategies. “There are four times as many ESG funds today as there were ten years go,” he explained.
But, for all that has been achieved, Mark cautioned against accepting our gains on face value. Imperfect metrics make it difficult to measure progress—in part, because they enable companies to conceal harm, he added.
“The disclosures companies make about their ESG performance is voluntary, so they tend to leave out the bad news. For example, you see Facebook among the highest rated ESG companies, even though they are having a deeply detrimental effect on our society and our democracy.”
According to Mark, business is not where it needs to be, but the lessons of the last decade can inform even greater change moving forward. Core business models—first and foremost—must change, he said.
“Ten years ago, I hadn’t realised that most companies… are operating on business models that were developed decades, in some cases centuries, ago,” he said. “Those business models were developed with the idea that the only possible customers were affluent, developed market citizens, most of whom were white, and it turns out, that’s not most of the world.”
He added: “Companies are making small changes around the edges, but not systematically changing. We are now seeing the dire consequences of companies not taking the action we need to see… there is no time to waste.”
Shared Value APAC Summit was held on 17 June 2021 thanks to major sponsor AIA Australia and supporting sponsors IAG, NAB and PwC Australia.
Missed the 2021 Shared Value Summit APAC? Don’t fret! We’ve launched a first-ever on-demand ticket, to give you access to the Summit’s full program of keynotes, panel discussions and lightbulb presentations for the next three months. Find out more by visiting svsummitapac.org.