Shared Value: Create, Optimize, Protect. Repeat.
In 2011, Porter and Kramer pushed our thinking beyond corporate social responsibility by developing theory around Creating Shared Value (CSV). In their definition, “shared value … is about expanding the total pool of economic and social value,” and further, that “a business needs a successful community, not only to create demand for its products but also to provide critical public assets and a supportive environment. A community needs successful businesses to provide jobs for its citizens.” 1
Years later, with several leading companies pursuing CSV, and many more struggling to understand what it is, how to pursue it, and what value it delivers, one thing has become crystal clear: Creating Shared Value is complex—so the best first step may be to simplify.
Let’s look for guidance in one of the most successful sustainability innovations today: recycling. Recycling, and the “Reduce, Reuse, Recycle” mantra which guides it and gives it context, is just about status quo these days. If we take a step back from the complexity of CSV and borrow from recycling’s successful and simplified mantra, perhaps forward CSV progress will seem less daunting. For example, what if we boiled CSV down to a three-step mantra? Perhaps, something like “Create, Optimize, Protect,” and repeat.
Step 1 – Create
Ensure you are creating true Shared Value by pursuing effective stakeholder engagement to accurately understand what is needed, including financial and environmental, social, governance (ESG) considerations. Develop a comprehensive definition of value: what is of greatest benefit to some stakeholders, is not necessarily true for all.
Step 2 – Optimize
Develop a portfolio to demonstrate the value needs and investment opportunities identified in Step 1. Ensure that the portfolio also considers the important relationships and integration among investment opportunities. Applying scientific rigor and expertise, identify the investment opportunities within the portfolio that optimize your initial investment and maximize positive impact.
Step 3 – Protect
Protect shared value in much the same way that any other investment is protected: continuous measurement and evaluation. Several tools exist to ensure that ESG investments are understood, following the same ROI (return on investment) or NPV (net present value) metrics as traditional business-only focused investments. The International Finance Corporate Financial Valuation Tool or Sustainability ROI Workbook are two examples. When selecting your measurement tools, ensure that your approach to Shared Value continuous measurement is included in the same context or dashboard of other critical investment monitoring, for instance, operations, overall market context, etc.
And Repeat—Incorporate lessons learned, outcomes, and outputs, and begin again with Step 1.
CSV in three steps is, of course, a simplified model. In practice, each step may be a complex undertaking or fundamentally new perspective. But this is the essence of innovation. And, much like the example of recycling, when the benefits are clear and the mantra is simple, today’s innovations become tomorrow’s status quo for those with the foresight to evolve.