The conversation started with a discussion about Larry Fink’s (CEO of Black Rock) 2019 letter to the CEOs titled ‘purpose and profit.’ Rachel spoke of the slow yet growing appetite in the Hong Kong region for communicating purpose and profit. Strong communication can only be achieved when companies have a strong internal articulation of their purpose and know how it impacts their business and society. Before communicating, many organisations need to spend time understanding their core expertise and how that can be developed to add value to business and society.
Shared value offers a tangible method and framework for organisations to uncover their purpose and build new products and services around this.
Shared value is a management theory originally launched by Michael Porter and Mark Kramer in 2011 who contended that the next wave of capitalist growth and innovation will come when social issues are connected to core business strategy.
1. A compelling narrative forms when corporate assets align to a common cause
A compelling, purposeful narrative occurs when core corporate assets like philanthropy, corporate social responsibility programs and shared value initiatives work together to solve a common cause. Genevieve shared how BASF have used their corporate purpose of ‘creating chemistry for a sustainable future’ as the foundation for their core business activities including managing the value chain, supporting employees, customers and communities. Their global giving is also aligned to the sustainable development goals and their corporate social responsibility programs provide science and environmental education programs for students. See more about BASF here.
Genevieve discussing BASF’s sustainability and purpose framework.
2. Shared value delivers both social impact and profit
Shared value creates a sustainable way for business to achieve its purpose by delivering social value and business impact. Merging the two goals together creates a new internal narrative for discussing success. Looking beyond purpose helps to drive new forms of innovation. Martina discussed how Nestle’s view is to understand where they can create the most value and make the most difference. The social impact opportunities are always front and centre in communication which provide tangible examples of their purpose including nutrition, rural development and water.
Nestle’s approach to creating shared value.
3. The strongest examples source both quantitative and qualitative data
When shared value initiatives are implemented well, they provide material social/environmental and business impact metrics as well as stories from consumers or beneficiaries of the initiative. Although, metrics and measurement was consistently discussed as one of the most challenging aspects when creating shared value. People make decisions with their head and heart, so it is important that communication of profit and purpose highlights both in a considered way.
Rachel spoke about the importance of sourcing the ‘intangibles’ of human stories and how the impact of purpose-led initiatives change people, society and the environment in a positive way.
4. Empowered consumers’ standards are changing
Genevieve shared that consumers no longer just want a cheap product. They want to know where it comes from, where it goes and what the overall impact is. Not to mention their expectations are still for a cheap and good quality product. The rise of instant information and the ’empowered consumer’ is pressuring business to deliver products that tick all the boxes. A recent article in the South China Morning Post highlighted that globally, investing with a conscience has grown 17 per cent a year and, today, around US$20 trillion – a quarter of the assets under management worldwide. The role that business plays to minimise modern day slavery is huge and Asian companies are beginning to understand that doing good and being profitable are not mutually exclusive.
More companies are coming to realise their existence does not have to revolve solely around maximising profits and expanding their business. There is an emerging trend among companies based in Asia for integrating the idea of doing something for the greater good into their corporate DNA.
South China Morning Post- How socially responsible investing can help end modern slavery, By Matthew Friedman (link here)
5. Partnerships are powerful to drive change
In the broader business environment, there are partners from other sectors who can provide new perspectives and ways of working to help businesses grow their expertise in social change. Understanding the role of NFPs, Academics, Startups and others to enhance a business’ capacity to drive social change is critical.
Discussing the power of partnerships to deliver on the sustainable development goals.
The Sustainable Development Goals are a great example of a common framework and language that can be used to communicate with partners and more broadly about the desired social change.
Overall, it was a great night with an actively engaged audience! I am looking forward to seeing how profit and purpose continue to be created and communicated in Hong Kong.
How can purpose lead to profit? Check out Planet B’s previous blog about building the business case for social innovation and purpose here.