The intersection of purpose and profit: Embracing shared value

Businesses can do well by doing good. This idea isn’t just a lofty ideal; it’s a proven business strategy. Studies show that businesses actively involved in community-oriented initiatives see a significant increase in customer loyalty. Project ROI found that companies committed to social responsibility boast a 6% higher market value and enjoy 20% more revenue than those neglecting social purpose¹. Moreover, a study by Deloitte showed that these companies grow three times faster on average than their competitors while also achieving higher workforce and customer satisfaction²​. 

The rise of the purpose economy highlights a crucial reality: a company’s success is intimately linked to the health and prosperity of its community. Enter the concept of shared value. Unlike traditional corporate social responsibility (CSR), shared value weaves social good directly into the fabric of business operations. This approach generates economic wealth and creates a lasting positive impact on society. By embracing shared value, businesses are not just contributing to the community but redefining business success.

Understanding shared value

Harvard Business School professors Michael E. Porter and Mark R. Kramer popularized the concept of shared value in their 2011 Harvard Business Review article, “Creating Shared Value.” They argued that businesses can generate economic value by identifying and addressing social problems that intersect with their business. This approach shifts the perception of social issues from being external costs to integral opportunities for growth and innovation³.

Historically, CSR emerged as a response to growing public awareness and criticism of the negative impacts of business activities on society and the environment. CSR initiatives often focus on compliance, ethical standards, and philanthropy. The primary goal is improving a company’s public image, mitigating risks, and fulfilling ethical obligations. While CSR is generally about how businesses spend their profits on social good, it often remains disconnected from the core business strategy. In contrast, shared value recognizes that social and environmental challenges can create business opportunities. 

Here are the key differences between CSR and shared value to help clarify the distinctions.

Integration vs. Peripheral activities

CSR: Often operates on the periphery of the business, focusing on charitable activities and compliance.

Shared value: Integrates social improvement into the core business strategy, aligning social progress with economic success.

Reactive vs. Proactive

CSR: Typically reactive, addressing social issues as they arise to mitigate negative impacts.

Shared value: Proactively identifying and capitalizing on opportunities to address social issues aligning with business objectives.

Cost vs. Investment

CSR: Viewed as a cost center aimed at reducing harm.

Shared value: Seen as an investment that drives growth, innovation, and competitive advantage.

Case study: Plastic Bank

Plastic Bank exemplifies the concept of shared value. The social fintech identifies vulnerable coastlines suffering from plastic pollution and poverty. It empowers local entrepreneurs to establish collection branches where community members exchange gathered plastic for additional income and social benefits. These social benefits include health, work and life insurance, digital connectivity, grocery vouchers, school supplies, and fintech services. Plastic Bank’s model transforms waste management into a viable business opportunity that addresses environmental and social issues.

Shared value thus represents a transformative approach that redefines the role of businesses in society. It fosters a more sustainable and inclusive economic model in which businesses thrive by contributing to societal well-being, demonstrating that economic and social progress can go hand-in-hand.

The impact of shared value

Shared value offers numerous benefits beyond traditional business metrics. Here are some key economic and social benefits⁴:

Innovation

Shared value fosters innovation by inspiring businesses to develop products and services that meet societal needs. This strategy pushes companies to create accessible solutions to underserved communities and effectively address real-world problems.

Increased operational efficiency

Examining each phase of their value chain – from production to distribution – allows companies to identify opportunities for improvement, such as conserving energy and reducing plastic footprint. These improvements benefit the environment and lower operational costs, resulting in a more sustainable and efficient business ecosystem.

Local community development

Shared value initiatives empower businesses to invest in local infrastructure, education, and skills development. Fostering stronger local clusters enables companies to develop a skilled workforce, stimulate entrepreneurship, and enhance overall community well-being. This approach supports local economies and builds a more resilient and interconnected business environment.

Promoting collaborations

Shared value thrives on collaboration. Businesses are encouraged to forge partnerships with NGOs, governmental agencies, and local organizations. These collaborations amplify the impact of shared value initiatives, leveraging collective expertise and resources to tackle larger societal challenges. In this context, partnerships are not just alliances but powerful engines of positive transformation​.

Implementing shared value

Now that it is clear that shared value is a win-win strategy for businesses and communities, you might wonder how to implement it effectively. One practical solution to consider is the Plastic Bank’s Impact Subscription.

Plastic Bank’s Impact Subscription provides businesses with a tangible way to support environmental sustainability and social equity, integrating shared value into their core strategies. By subscribing, companies commit to collecting a predetermined amount of plastic bottles by community members. These members exchange collected plastic for money and social benefits at Plastic Bank branches, creating pathways out of poverty while contributing to environmental sustainability.

Upon subscribing, businesses select their desired level of impact and gain access to a Professional Impact Account. This account includes marketing toolkits, impact certificates, quick pay top-ups, a customized Impact Page, storytelling templates, and exclusive updates. The subscription renews automatically every 30 days, ensuring continuous support for collection communities and seamless updates to the subscriber’s Impact Page, which publicly showcases the business’s dedication to making the world a better place.

Engaging with Plastic Bank through the Impact Subscription enhances brand loyalty and improves corporate reputation, distinguishing businesses in a competitive marketplace. Ready to make a difference? Discover how Plastic Bank can help align your business goals with sustainable practices. Visit plasticbank.com and start your journey towards creating shared value for your company and the planet.

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1. Steve Rochlin et. al, “Defining the Competitive and Financial Advantages of Corporate Responsibility and Sustainability,” Project ROI, http://www.babson.edu/media/babson/site-assets/content-assets/academics/centers-and-institutes/the-lewis-institute/project-roi/Project-ROI-Report.pdf 
2. Diana O’Brien et. al. “Purpose is everything,” Deloitte, October 15, 2019, https://www2.deloitte.com/us/en/insights/topics/marketing-and-sales-operations/global-marketing-trends/2020/purpose-driven-companies.html 
3. Michael Porter and Mark Kramer, “Creating Shared Value,” Harvard Business Review, 2011, https://hbr.org/2011/01/the-big-idea-creating-shared-value 
4. “What is shared value? Everything you need to know,” Bewsys, October 4, 2023, https://www.bewsys.com/resources/what-is-shared-value-everything-you-need-to-know