The concept of shared value – where business helps solve societal problems and increases profits at the same time – has been well received, but not by everyone. John Elkington, for example, is concerned that it elbows aside the sustainability agenda. I disagree with his concern, and believe we will embrace shared value as the vital and missing link between our current model of capitalism and a sustainable future.
Shared value is disruptive
Shared value is a disruptive concept because the pursuit of financial returns doesn’t always sit well with social value and community outcomes; it’s a bit like mixing oil with water.
Michael Porter and Mark Kramer gained traction with their Harvard paper entitled Creating Shared Value in 2011. They asserted that corporations can gain financial benefits from treating their stakeholders, such as suppliers, governments and communities, as partners instead of adversaries. In other words, manage your stakeholders well and the profits will follow.
In doing so, a business potentially mobilises all of its assets for social impact, compared to more prevalent corporate responsibility practices that are hamstrung by budget allocations.
John Elkington, who in 1994 coined the term “triple bottom line” as a way of more formally recognising the environmental and social impacts of business, has raised concerns about the apparent miracle cure that shared value represents. He is also worried that sustainability is being scooped up and dumped in “the bucket of history”.
Who is right and who is wrong? In the heat of the moment – and the disruption that comes with new ideas – it seems we have fallen into the trap of comparing apples with oranges.