Profit: The New Corporate Motivation To Do Good
Shared value expert Mark R. Kramer responds to a column in the New York Times.
Eduardo Porter’s July 16 column in The New York Times, “Motivating Corporations to Do Good,” offers an outdated view in suggesting that corporations cannot be expected to take a leading role in addressing the world’s problems. The unrelenting pressure to maximize shareholder returns, he argues, outweighs the good intentions behind corporate philanthropy and corporate social responsibility.
What Mr. Porter has missed, however, is the growing realization by leading companies around the world that solving social and environmental problems is no longer just about good intentions, but is an increasingly important source of profits and competitive advantage. He cites Novo Nordisk and Unilever as examples of companies that seem to approach social engagement differently—and he is right. But the list doesn’t stop there.
When GE pins its growth on new energy saving products, Novartis brings medicine to millions of new customers in rural Indian villages, Walmart commits to eliminating waste and purchasing only sustainably caught fish, Pearson decides to test the efficacy of their educational products, and Nestlé reduces the fat, salt and sugar content while increasing the nutritional value of their food products, these companies aren’t acting on good intentions alone. They are seeing bottom line returns that reward their shareholders from launching new products and markets, increasing productivity in their value chains, and strengthening the industry clusters in regions where they operate. As the noted corporate strategist Prof. Michael E. Porter and I wrote in Harvard Business Review, they are creating shared value. And around the world, more and more companies are incorporating shared value into their core business strategies, some even taking a social purpose as their company’s central competitive position...