By John Holm, Senior Director, CAF America and Deirdre White
Over the past five years, the world of CSR has shifted. Where once “conscious capitalism,” “the triple bottom line,” and “blended value” were seen as the harbingers of a new era, today these flashy buzzwords and trendy themes representing “catalytic change” and a “seismic shift in social change” are increasingly received with cynicism from an audience demanding authenticity and transparency in the form of tangible social change.
In this context, the Creating Shared Value movement, an effort to unite the public, private, and social sectors for profound change has reached a pivotal point. Spearheaded by Michael Porter and his consulting firm, FSG, the movement will either reach transcendent success, or become the next buzzword, overpromising and underperforming on its intended mission.
For decades, C-suite executives, consulting firms, thought leaders, and leading academics have been trying to solve the precarious riddle that businesses can create real shareholder value while also solving real social problems. In the proper context, many view shared value as the answer to this challenging equation. Shared value, as defined by FSG, is the idea that business can create both profitable businesses and tangible social impact simultaneously.
Many companies are demonstrating that this can be achieved. At the fifth annual Shared Value Leadership Summit in New York earlier this month, business leaders in energy, finance, pharmaceuticals, fast-moving consumer goods, and countless other industries gathered to share stories of how they make shared value work for their businesses.
Sessions addressed a wide range of topics, including identifying and tackling social issues, solutions to youth unemployment, the role of the investor in shared value, and climate-smart agriculture. Many of the stories were truly inspiring, and most of them relied heavily on partnerships crossing the private, public, and social sectors. Lots of the right words were said and promptly tweeted: “growing inequality is a threat to business,” “complexity is not an excuse for complacency,” “the money I make should be equal to the value I bring to others,” and “values and models are shifting.”
It was hard to listen without feeling that the world is changing, that business is accepting that it must have a different role in society, for a better world, shepherded in by innovative partnerships among institutions committed to mutual benefit.
At the same time, as we participated and constantly debriefed over the course of the two days, we found ourselves increasingly questioning how real the idea of shared value is and how much potential it has to change the status quo. While it is unquestionably a good thing that some corporations are focused on creating social value in addition to business value, we found a disconnect between the right hand of a business conducting a shared value approach, while the left hand was engaged in the old model business practices, in many cases creating societal damage. For instance, how should a company that is seen as a shared value leader for its responsible sourcing and support for local farmers be judged for simultaneously advocating for privatization of water? Is it acceptable for the world’s biggest banks to claim shared value for their work in enhancing financial literacy while they slowly slip back into many of the practices that led to the 2008 economic collapse? If a large retailer is investing heavily in improving the quality of education in the communities surrounding its stores, should consumers overlook that it is not paying a living wage to its employees? Is it acceptable for the extractive industries to tout their shared value achievements in the health arena, while doing nothing to innovate on renewables?
The positive impact of improved solutions and honorable intentions of those who have bought into the importance of creating shared value is undeniable. However, as leaders in the social impact community, we are obliged to ask, “Is shared value enough?” Clearly, the answer is, “No, not as it currently stands.” In order to be truly effective, shared value must be intrinsic and integrated throughout the organizations which espouse it, lest it be seen as a way to detract attention from their less savory practices. Shared value needs to go deeper within the corporations that claim to be the best in class.
At the same time, the practice needs to go broader. While there is more buzz about shared value, and better understanding of what it is, the number of new entrants into the space seems rather anemic. The Summit participants—from business, nonprofits, and government—represent the very same organizations as last year and the year before. If each year it is still the same 75 or 100 companies that are developing shared value strategies, it won’t be possible to address the world’s most pressing challenges as comprehensively as is needed. The challenges are too big—and too urgent—for shared value to continue to be a boutique product.
Certainly, we were not the only two people who have these questions and thoughts, and the leaders of the Shared Value Initiative readily admit that these are some of the tough issues it needs to take on. No one expects the corporate world to change overnight—the achievements on the shared value front should be held up as examples of how the role of business in society is evolving. At the same time, if the shared value champions don’t start asking the tough questions, the initiative risks being perceived as “shared-value-washing,” which would be a loss for both business and society at large.
Image from Shared Value Leadership Summit 2015
Deirdre White is an internationally recognized leader in the field of economic development. As CEO of PYXERA Global, Deirdre spearheaded the growth of best practices in Global Pro Bono to benefit global corporations, local governments, and nonprofits worldwide. Widely cited for her thought leadership, Deirdre has been quoted in The Wall Street Journal, Bloomberg, Forbes, and Fast Company, and contributed to MarketWatch and Stanford Social Innovation Review. Previously, she served as a facilitator of the Employee Engagement Action Network at the Clinton Global Initiative and participated in Rockefeller Foundation’s Bellagio Initiative and the Johnson Foundation at Wingspread’s Leadership Forum for Global Citizen Diplomacy.