What is Shared Value

Changing the Way Business is Done

Shared value is a concept described by Professor Michael E. Porter of Harvard Business School and Mark Kramer, co-founder and a managing director of FSG, in their 2011 seminal Harvard Business Review article, Creating Shared Value. They define shared value as “policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal and economic progress.”

As companies strive to tackle the world’s most pressing social problems and advance equitable outcomes, we believe that shared value has an important role to play. In Centering Equity in Corporate Purpose we share the belief that shared value can be a powerful tool but only when applied intentionally as part of a comprehensive portfolio of complementary practices, including advocacy, corporate philanthropy, and policy or process changes that may represent a net cost to the company in order to build power within communities and effectively deliver more equitable outcomes for society as a whole.

Whether it is addressing protracted social issues, such as access to medicines, employment opportunities for self-determination, or improved agricultural techniques, or if it is targeting environmental opportunities, such as new uses for recycled plastics, zero deforestation practices, or renewable energy sources, shared value practices offer companies new ways to innovate, compete, and create a business environment that is sustainable. It also allows them to do so at scale while it significantly addresses social and environmental challenges. While the roles of government and civil society are critical in addressing societal issues, their resources are dwarfed when compared to those of the private sector. If private sector resources can be more effectively leveraged to simultaneously improve societal and business needs, the impact on our social and environmental challenges and opportunities could be significant and positively change the lives of many people on this planet.

Essential Reading

  • The Ecosystem of Shared Value

    Companies must collaborate to capture the economic benefits of social progress.
  • Where ESG Fails

    Despite countless studies, there has never been conclusive evidence that socially responsible screens deliver alpha. A better model exists: shared value.