Business leaders are starting to see the value in addressing global challenges—and not just for PR reasons. We're talking tangible revenue in new markets, customers, and innovation. At last month’s World Economic Forum in Davos, Switzerland, CEOs across the board discussed how their companies should take more responsibility for the greater good. And many—including leaders at Walmart, Unilever, and Mahindra—actively advocated for it.
Whether it was due to increased demand from customers and employees alike or the growing urgency to preserve our planet, the growing shared value trend took the world stage at #WEF16. In a PwC survey leading up to Davos, 76% of chief executives defined business success by more than financial profit, while 52% believe creating value for wider stakeholders helps profitability. In the same survey, half of CEOs now see climate change as a threat to their companies’ long-term growth—a question what wasn’t even asked in last year’s survey.
As business shifts its mindset towards finding profitable, innovative ways to solve global challenges, society is slowly warming up the private sector taking a stronger role. This year’s Edelman Trust Barometer reports that, when compared to all other institutions, business gained the most trust among the general population in 2016. Even NGOs understand that social innovation is “moving from kumbaya to boardroom,” as PATH CEO and Davos speaker Steve Davis says. International NGOs like PATH are increasingly partnering with the private sector on global development work; and recognize that business has the adequate resources to make significant, long-term progress in climate, health, and economic development.
A shared value approach provides the incentive—and competitive edge—to make that change, as the leaders of Pearson, Nestlé, Chevron, Anglo American, Novo Nordisk and others discussed at our side meeting in Davos. The corporate leaders in the room echoed that customers—especially millennials—are hankering for this mindset shift. Pearson’s Michael Barber commented, “The ‘show me’ generation demands that business must demonstrate its impact on social outcomes.” Sarah Hoyt, an observer, noted that “Transparency is Key” was a common theme among companies present.
This mindset shift is going to require entire systems to change. "Innovating new products isn’t enough,” as FSG’s Marc Pfitzer put it, “It’s scaling that matters.” At the upcoming Shared Value Leadership Summit, we’ll dedicate the entire second day to collective action—how companies, nonprofits, governments, and other actors can work together to really make this concept work. We’re convening leaders from across sectors—World Bank, UN Global Compact, CVS, Toyota, GE, and more—to give inspiring keynotes and help attendees brainstorm real steps forward in breakout innovation labs.
However in order for this to work and scale, business leaders in huge corporations need to be fully bought in. And if the Davos discussions are any indication, that mindset shift is translating to action. I’ll leave you with the WEF panel comments (at 42:00 below) of Anand Mahindra, chairman of Indian multinational conglomerate Mahindra—a $17 billion dollar company: “We want to drive positive change in whatever we do. Essentially we're doing shared value businesses,” he said, “Raising quality of life is the biggest business opportunity going.”