In short, shared value is about relationships between organisations and people. By its nature, it dictates that organisations cannot work in isolation – it implies that multiple parties are involved, and that everyone sees the positive benefits of it. Essentially, it is contingent upon two-way, inclusive relationships in order to deliver success.
Creating Shared Value (or ‘CSV’) has been gathering popularity since it was first coined in 2011, much like its “predecessor” CSR in the 1960s, and which today is institutionalised in the business ethos of companies. CSV, however, positions social prosperity and economic success not as mutually exclusive, but mutually dependent. The competitiveness of a company and the welfare of the communities it operates in can be realised by embedding CSV into the core strategy of any organisation.
Businesses have a collective responsibility to create shared value wherever they can, and it is there the biggest opportunities lie. In order to make it work and be beneficial for all, the CSV approach has to be more than a simple, causal relationship between supplier and buyer. Instead, the CSV approach needs to stabilise and bring sustainable benefits to communities, companies, and customers. Unsurprisingly, relationships are central to all three aspects.
Private sector aims and public goals must align
The main goal of CSV is to benefit greater society. Growing economies, marketplaces and communities are in the mutual long-term interest of all. And in particular, working in unstable, underdeveloped regions is a clear indication by businesses that they are committed to nurturing new economic opportunities for local communities. The private sector can develop and refine on-the-ground, market-based solutions to help meet some of the challenges faced in such local communities globally.
Tapping into expertise, on-the-ground local knowledge, cultural perspectives and ideas outside a company can enrich shared value. CSV is about leveraging the best expertise, creating a broader positive impact and value that one actor alone could not achieve. Local and international partners, NGOs, cooperatives and businesses all working together directly result in broader positive impacts with social, environmental and economic benefits.
Strong relationships must stand the test of time
CSV is not a short-term pursuit, safeguarding global supply chains for the future industry is a long-term interest. Sustained efforts are essential for businesses see the benefits of investing in CSV. While formalised programs and public commitments made by businesses can provide strong, initial foundations, it is essential to invest in continuous improvement and capacity-building across the supply chain.
CSV offers companies a way to think differently about their vision, strategy, partners, and implementation and importantly can be part of a larger solution. But if CSV is to fulfil its potential as a relevant framework and an authentic business goal in reshaping relationships with society, it is the responsibility of corporate leadership to make it work. Future leaders will need to make a conscious effort to evolve the concept to create genuine shared value for the long term.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.
