“It would be extraordinary if the 100 largest companies in the world would really embrace the idea of Creating Shared Value, because their power to solve social problems is tremendous”.
This statement belongs to Mark Kramer, founder and director general of the consultant FSG that studies global social impacts. His idea of Creating Shared Value (CSV) is revolutionising large global companies and how they do business.
We met him at a workshop organised at Enel from October 17 to 19, and discussed this new business model, which we adopted a few years ago and is taking us along the path towards a new way of conceiving and applying sustainable development.
“Creating shared value means looking for business opportunities in solving social issues, pursuing financial success also creating benefits for society”
Global ambassador of sustainable development
Kramer’s work with the FSG allows him to become acquainted with corporations, governments and international institutions and establish a dialogue with them.
The great amount of expertise and facts that he gathers around the world become the object of studies, publications and lessons at the Harvard Kennedy School and Harvard Business School.
He earned his role as a ‘global ambassador’ of a sustainable business model on the ground, by asking the same challenging question to CEOs, heads of governments and citizens. And finding a single answer that is changing the way of doing business.
“Is it possible to make profits without ignoring the well-being of consumers, the depletion of natural resources, the economic distress of local communities?”
A mindset shift
The article Creating Shared Value that Kramer wrote in 2011 for the Harvard Business Review together with Michael E. Porter was built on a direct and almost brutal statement: “The capitalist system is under siege”.
The article was the result of work that started 15 years ago. A real alarm for large global corporations, which the two professors often saw as trapped in old business models and short-term visions.
Combining common good and profit is not an impossible achievement, but rather the result of a mindset shift.
“Companies should stop thinking that social problems are marginal to the business, in the hands of NGOs, charitable foundations or relegated to Corporate Social Responsibility”
The examples reported by the father of CSV all revolve around the simple but revolutionary idea of seeking business opportunities in solving social problems.
Business at the service of common good
The problems and needs that characterise contemporary society originate from the interweaving of various factors and are the sum of the actions of many players who often consider themselves isolated from their surroundings.
“The interdependence between the success of business and that of society is a fact”
Kramer believes that sustainable development requires “identifying social problems and understanding what skills and resources companies can apply to solve them, achieving an innovative and profitable business model”.
“The solutions adopted over the last decades to solve social problems have not worked. Institutions and policies are often paralysed by ideological divides”.
Environmental protection, fighting poverty, access to education, hunger are ongoing needs. "We should start realising that businesses have a much greater impact on social problems than charitable foundations and NGOs".
When problems become opportunities
The close relationship between social progress and corporate success is increasingly clear. For companies it is a new opportunity, not a problem.
For Kramer "Enel is an extremely interesting study case. An example of CSV for its efforts in the development of renewables, its ideas around electric mobility, smart grids, digitisation: all things that can fundamentally change how we use energy in the world".
“Thanks to Creating Shared Value we presently generate 45% of our energy from renewable and carbon-neutral sources, avoiding 92 million tonnes of CO2 emissions per year”
We produce and sell energy profiting from this activity, while granting free access to electricity to hundreds of thousands of people around the world.
We work together with NGOs and public institutions so that our presence involves not only clean energy generation, but also an opportunity for education, employment, health and development.
For us creating shared value means opening up to change in order to be at the centre of it and working daily to find the new paths necessary to build sustainable development for the benefit of all.