10 years of shared value: Have we come far enough?
21 June 2021 at 5:07 pm
“Companies are making small changes around the edges, but not systematically changing”
While the world has begun to accept the idea of business playing a part to address social issues profitably, the corporate community must move at a far greater pace to see real change happen, the co-creator of shared value says.
In the opening address for the 2021 Shared Value Summit Asia Pacific on Thursday, Mark Kramer said that he was both “immensely encouraged, and deeply discouraged” by the state of shared value and corporate responsibility.
This year’s summit marks 10 years since shared value was first coined by Kramer and Michael Porter in a Harvard Business Review article.
Kramer said that in that time, he had witnessed a significant shift in businesses’ attitudes to how they could deal with social issues.
“These days, eliminating poverty is a business issue, and racial equality is a business issue,” he said.
He also noted the growth in interest around ESG targets as a positive development, but said accountability around the impact of these targets was murky.
“$51 billion net new dollars went into ESG in 2020, double the year before, which is great,” he said.
“[But] because the disclosings about ESG ratings are still voluntary, it’s hard to know what the impact really is.”
Outdated models are holding back change
Kramer said that one of the major learnings he’s had since the creation of shared value was that most companies are still operating on business models developed decades ago, rendering sustainability or community benefit targets useless.
“These models assume the only customers are developed market citizens, who are white,” he said.
“This just isn’t true, and if your business model is developed for that narrow slice of the world then it’s not going to work for the rest of the world.”
He said that the majority of corporations were skirting around the edge of big change, which in a time when the world was faced with such enormous challenges, wasn’t enough.
“Companies are making small changes around the edges, but not systematically changing,” he said.
“We are now seeing the dire consequences of companies not taking the action we need to see… there is no time to waste.”
A hopeful future
While Kramer’s address was a poignant reminder of how far there is to go, he said that there were learnings the business world could take on board to see shared value reach its full potential.
These included ensuring company CEOs were willing to take risks, and increasing cross-sector collaboration for broader impact.
“There are things that everyone can do to create shared value, but if a CEO isn’t behind this then it won’t happen,” he said.
“There are times when doing the right thing is less profitable, but the way around that is by an industry working together to make a change so that one company doesn’t suffer, and we need to see more of this happen.”