May 23, 2013
"We have to understand that without profit there's nothing, but with profit there's magic!"
— Harvard Business School professor and Shared Value proponent Michael Porter
"Shared value is capitalism, full stop," Professor Michael Porter told the audience at the 3rd Annual Global Shared Value Leadership Summit attended by GBCHealth Membership Vice President Pam Bolton in Cambridge, Massachusetts, USA. Shared value—defined by Porter as integrating societal issues and challenges into economic value creation—is rapidly gaining ground among companies in many industries, he said. “And,” Porter added, “it’s magic. The magic of capitalism is that we can scale. And it's self-sustaining.” In other words, unlike more traditional corporate social responsibility efforts, shared value initiatives can grow in size and sustain themselves, precisely because they create business value as well as social benefit. Porter added that some stakeholders still believe economic success is inconsistent with social benefit, but he countered that view by telling the invitation-only gathering of companies and their partners, “It's MORE worthy to do this profitably because you can do more of it!”
GBCHealth member FSG hosted the summit and has now created the Shared Value Initiative, a global community of practice among leading companies, civil society, and government organizations to drive adoption and implementation of shared value strategies.
Porter was joined on stage by Nestlé Chairman Peter Brabeck-Letmathe and the two spoke on the role of executive leadership in driving shared value through a company’s core business. Brabeck, who has worked at Nestlé his entire career with many assignments in Latin America and other parts of the developing world, is a staunch advocate of a shared value approach, calling it “in some ways a traditional approach to business, [which] seemed to get lost in the 80s and 90s” when short-term thinking became more dominant. Brabeck called short-term perspectives the enemy of shared value. He offered an optimistic perspective, noting that “There really are a growing number of investors [today] who are willing to take shared value into account in their decisions.” He clarified that Nestlé does pursue more conventional corporate social responsibility (CSR) as well, but estimated that the company now spends 80 percent on shared value initiatives and only 20 percent through its foundation.
The summit also featured a panel discussion moderated by Harvard Professor Jane Nelson in which GBCHealth member BD (Becton, Dickinson and Company) chairman, CEO and president Vincent Forlenza joined Neal Keny-Guyer, CEO of Mercy Corps, and Judith Rodin, President of the Rockefeller Foundation, in discussing cross-sectoral partnerships and shared value implementation. Forlenza described the 1990s transformation in which shared value “became the foundation for all the work we've done since then.” One of the core elements in shared value creation involves investing to improve the local business environment. These investments may entail Improving skills, strengthening the local supplier base, getting involved to strengthen the regulatory environment or simply supporting institutions in communities in which a company operates. Forlenza explained how his company’s investment in local infrastructure development in Africa also accelerated its business success with products such as single-use injection devices and diagnostic tests to help health care providers assess how well HIV patients are doing on their antiretroviral (ARV) treatment.
Materials from the summit, including Michael E. Porter's presentation slides, the digital attendee list, and a speech from Nestlé Chair Peter Brabeck-Letmathe, are available by joining the Shared Value Initiative Community. GBCHealth will post links to video of selected summit sessions over the next two months.