The society in which the businesses operate cannot be completely ignored. Firms need to look for opportunities in the manner they can uplift the society. Apart from creating employment opportunities for the individuals living in the peripheral areas, firms need to think on formulating clear business strategy to create shared value. They
have to unleash their power to create a strong impact on the society
and work on tackling the common global issues. Opportunities do not remain static but constantly keeps on changing with the advancement of technology and with the changing dynamics of the highly interlinked economies. It must be a win-win situation for both - firm and stakeholder and not the win-lose relationship.
Over exploitation of natural resource by the firms is a major topic in discussion these days. Especially the companies which are into direct association with the use of environmental resources like mining firms (which leave a major impact on the environment in the areas of their operation) have to work substantially on creating value for the society at large. The leadership in these industries have to engage their employees by providing clear direction in achieving ethical & sustainable objectives along with the core business activities. A good example of creating shared value can be Rio Tinto (a British-Australian firm active in mining business), which defines a parallel target of creating project positive impact for every project it works on. It tries to identify the opportunities available on the social-economic front before proceeding for the project and holistically works on the same.
Measuring the impact of firm's actions becomes an important parameter in evaluating the impact of shared value. As the concept of creating shared value is still its infancy, the complete framework for measurement of social impact on the economic business is evolving. But firms have started accepting the ideology that there lies a congruence between the improvement in productivity of the firms and creating shared value for the society. More the firms start thinking of the innovative ways to make the societies progress, the more they benefit and thus, the more they become more productive in the value chain. Sustainability standards have also increased awareness among the corporates of their impact on society and thus have triggered meaningful improvements in social and environmental performance. For eg.: Recent energy price spikes have challenged everyone to think in terms of higher efficiencies in energy utilization and has thus brought a wave of revolution in this energy efficiency market. It has helped the companies reduce their energy costs and also created new employment opportunities for the society.
The Global Reporting Initiative (GRI) has laid down voluntary reporting standards on ESG (environment, society and governance) and many Fortune-500 organizations are already part of this reporting network. Many corporates like Siemens are already working proactively on sustainability front and are promoting same by conducting sustainability awareness programmes. The success of companies in future shall be linked to their evaluation on social, environmental performance along with the financial aspects. These firms will have an integrated strategy to target financial goals and simultaneously create value for the society and its stakeholders. Taking consistent, persistent and focused action is always easier said than done. The challenge that still remains is daunting and task is tough and the firms have to really delve into it to make it a success !
Over exploitation of natural resource by the firms is a major topic in discussion these days. Especially the companies which are into direct association with the use of environmental resources like mining firms (which leave a major impact on the environment in the areas of their operation) have to work substantially on creating value for the society at large. The leadership in these industries have to engage their employees by providing clear direction in achieving ethical & sustainable objectives along with the core business activities. A good example of creating shared value can be Rio Tinto (a British-Australian firm active in mining business), which defines a parallel target of creating project positive impact for every project it works on. It tries to identify the opportunities available on the social-economic front before proceeding for the project and holistically works on the same.
Measuring the impact of firm's actions becomes an important parameter in evaluating the impact of shared value. As the concept of creating shared value is still its infancy, the complete framework for measurement of social impact on the economic business is evolving. But firms have started accepting the ideology that there lies a congruence between the improvement in productivity of the firms and creating shared value for the society. More the firms start thinking of the innovative ways to make the societies progress, the more they benefit and thus, the more they become more productive in the value chain. Sustainability standards have also increased awareness among the corporates of their impact on society and thus have triggered meaningful improvements in social and environmental performance. For eg.: Recent energy price spikes have challenged everyone to think in terms of higher efficiencies in energy utilization and has thus brought a wave of revolution in this energy efficiency market. It has helped the companies reduce their energy costs and also created new employment opportunities for the society.
The Global Reporting Initiative (GRI) has laid down voluntary reporting standards on ESG (environment, society and governance) and many Fortune-500 organizations are already part of this reporting network. Many corporates like Siemens are already working proactively on sustainability front and are promoting same by conducting sustainability awareness programmes. The success of companies in future shall be linked to their evaluation on social, environmental performance along with the financial aspects. These firms will have an integrated strategy to target financial goals and simultaneously create value for the society and its stakeholders. Taking consistent, persistent and focused action is always easier said than done. The challenge that still remains is daunting and task is tough and the firms have to really delve into it to make it a success !
Abishek Mittal
Shared Value is the thing businesses must understand to the core and this is the only way going forward to carry the community along with the business growth.
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