“Corporations are not responsible for all the world’s problems, nor do they have the resources to solve them all. Each company can identify the particular set of societal problems that it is best equipped to help resolve and from which it can gain the greatest competitive benefit. Addressing social issues by creating shared value will lead to self-sustaining solutions that do not depend on private or government subsidies. When a well-run business applies its vast resources, expertise, and management talent to problems that it understands and in which it has a stake, it can have a greater impact on social good than any other institution or philanthropic organization.”

 

Michael E. Porter and Mark R. Kramer ²¹

“To address some issues involves ‘taking the corporate hat off’ and understanding that there are always winners and losers and that sometimes it is your company that may lose something but in the wider interest. Openness to accepting any potential negative impact is hard.”
 

Mark Moody-Stuart
 

In spite of the success of the market in lifting millions of people in emerging countries out of poverty, we believe that the current frameworks in which it operates are leading to unsustainable outcomes.

There is little point in having a vested interest in a global system that cannot endure. This would be a vested interest in failure.

However, we believe that the market remains the most powerful proven means of stimulating innovation and achieving solutions that meet immediate consumer needs, although these solutions are not necessarily in line with long-term sustainability.

In order to meet the wider needs of society and the environment, in the short-term at least, appropriate frameworks need to be set for the market. Otherwise, it will fail to meet many of society’s most critical needs. Many people will continue to be left out while others are exploited and there is a continuing raid on nature’s resources.

Some guiding pressures are placed on the market by the public, NGOs and shareholders - for example through the choices made by consumers, the demands of campaigning groups and the preferences of investors.

However, in many cases, there are still serious failures and gaps in the frameworks of law and regulation needed to deal with major global issues.

In such cases, the full creative potential of the market can only be realised if governments - supported by companies and others - put in place effective frameworks of regulation and incentives in the short-term. These are essential for companies to be able to compete on equal terms and to deliver new and innovative goods and services.

It is therefore in the interest of global companies to be proactive and work in partnership with civil society, policy makers and others to help international organisations and governments create the frameworks necessary to strengthen and guide the market.

Companies can then invest in innovation with confidence and continue to generate wealth by taking up the vast opportunities offered by the changing world. They can use their global presence, power and expertise to deliver practical solutions such as developing low-carbon power, ensuring decent working conditions and creating products specifically designed for low-income consumers.

Providing returns to investors and ensuring the future health of the environment and society are not at odds with each other. We believe long-term profit and shareholder value are essential but they can best be secured if they are the reward for delivering the goods and services that society wants in a manner that retains the support of society.

This requires companies to win trust, behave responsibly and to anticipate and respond quickly to the changing expectations of society, for example on climate change.

We therefore believe that the purpose of tomorrow's global company can best be defined as:

"To provide ever better goods and services in a way that is profitable, ethical and respects the environment, individuals and the communities in which it operates."