What Corporate Leaders Need to Know About Their Company’s Impact on Society

Any business affects social conditions for better or worse. It’s unavoidable.

Increasing the positives or decreasing the negatives either creates more economic value (creating shared value) or destroys it (creating a trade-off between achieving social and business results).

Particularly in countries where legislation or consumers reward the positives and impose costs on the negatives, a company that creates the most shared value and is most efficient in its trade-off efforts, will out-compete its peers in the long-term.

It will also contribute to the collective goal of sustainable development, which in itself will ensure the long-term viability of all business activity.

Any business should seek to maximize its social value and drive its social costs to zero, while maintaining competitive economic returns.

This means corporate leaders should know at least 5 things about their business:

1. Where are we creating or destroying the most social value?
2. Where can we create the most positive social change?
3. What would be the relative value to the business of driving these changes?
4. How can shared value and trade-off objectives be balanced over the shorter- and longer-term?
5. Can we influence how legislation or consumers reward our efforts in specific operating contexts?

A company that can answer these questions is bound to attract the sharpest investors, the best talent, and the most passionate consumers who will do their share to reinforce the societal purpose of the company.