September 13, 2019
Creating Shared Value (CSV) is a business concept introduced and expanded somewhere by 2011. Shared value is not social responsibility, philanthropy, or sustainability, but a new way for companies to achieve economic success. Shared value is a management strategy in which companies find business opportunities in social problems. CSV is often confused with the phrase “Corporate Social Responsibility (CSR)” or with the idea of redistributing wealth; rather shared value focuses company leaders on maximizing the competitive value of solving social problems in new customers and markets, cost savings, talent retention, and more. Majority companies are now building and rebuilding business models around social good, which sets them apart from the competition and augments their success. With the help of NGOs, governments, and other stakeholders, business has the power of scale to create real change on monumental social problems.
Companies can create shared value opportunities in three ways:
#1 Reconceiving Products and Markets
Companies can meet societal needs through better serving existing markets, accessing new ones, or lowering costs through innovation and addressing unserved or underserved customers.
#2 Redefining Productivity in the Value Chain
Companies can improve the quality, quantity, cost, and reliability of inputs and distribution and practices in the value chain to drive productivity via better utilizing resources, employees, and business partners; thus driving economic and social development.
#3 Enabling Local Cluster Development
Companies operate in consonance with their surroundings and thus should boost productivity, innovation, and growth via improving the available skills, supplier base, and supporting institutions.
It began as a bold idea to redefine capitalism and the role of the corporation in society and is turning now into a movement. This shift from corporate social responsibility to shared value represents a discontinuity in thinking. Thus, we can say that CSV is the practice of creating economic value in a way that also creates value for society by addressing its needs and challenges. It’s a strategy for developing the future market while also strengthening economies, the marketplace, communities, and corporate coffers. Shared value focuses companies on the right kind of profits—profits that create societal benefits rather than diminish them.
CSV acknowledges both the work that corporations need to do to reduce negative impacts on society as well as how they can be part of progress on global challenges. The global tide is turning in favor of integrated reporting, and accountants have a fundamental role to play. The objective of an integrated report is to expose how an organization creates value over time, taking into consideration that this process is influenced by the company’s external environment and relies on multiple resources.
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