A Guide to Shared Value Measurement: Blending Economic and Social Benefits
After co-presenting a masterclass in Sydney earlier this year, Andrew Hamilton and I created a resource for shared value measurement – the topic that everyone wanted to talk more about.
The Measurement Task and Its Challenges
As a relatively new lens used for corporate innovation, dimensioning the measurement of creating shared value (CSV) is challenging because it straddles economic, social and environmental value creation. There are many interested stakeholder groups, none more so than company management, because measurement helps inform the decision of where to allocate resources.
There will be many stakeholder groups that also have interest in measurement, such as business and not-for-profit partners, regulators, advocacy groups, investors, financiers, employees and the community at large, and the type of data they are seeking will differ between them.
What is meant by ‘Value’?
Value, whether economic, social or environmental, is defined as benefits relative to cost and not benefits alone. In other words:
- Companies will be seeking an attractive return on investment (ROI) in economic terms. In some cases, they may be willing to accept a lower level of return or a longer time to reach break-even point, however a fundamental tenet of CSV is that it is underpinned by an attractive commercial return and / or a meaningful and measurable boost to a company’s competitive advantage.
- Social and environmental returns should be attractive relative to the cost of producing them so that the most efficient and effective means are sought out by project partners.
Creating shared value is predicated on the fact that societal needs – not just economic needs – define markets, and therefore it follows that societal issues may generate high internal costs for companies or present new product or market opportunities. There are two criteria for creating shared value:
- An economic benefit for the company in question; and
- A positive and measurable societal benefit.
What needs to be reported?
This criteria is quite broad and creating shared value does not have an agreed methodology or approach to reporting on outcomes. Porter & Kramer appear to be comfortable with this level of openness as it is really for the company, its key business partners and stakeholders to agree on what needs to be measured and how it is reported.
… you can download the full resource and continue reading, with further topics areas:
- Inputs, Activities, Outputs, Outcomes and Impacts!
- Measurement Frameworks
- Instructive Case Studies
- Key Papers and Resources
Enjoy your reading, and I welcome any questions or views on the methodology. You can also download your own guide to getting started using the form at the footer of this page.
Phil Preston is an expert in creating commercially smart and socially good business strategies. He’s a professional speaker, facilitator and advisor to blue chip companies, NGOs and government. You can make contact or visit his website.
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