By Dr. Gulen Hashmi, Glasgow Caledonian University.
According to a recent “Sustainable Signals” survey by the Morgan Stanley Institute (2025), which polled over 300 private and public companies in North America, Europe and APAC between March and April 2025, sustainability is seen as a long-term value creation tool by 88% of companies. Similarly, a Deutche Bank study confirms that companies that embed sustainability into their strategy see profit increases of up to 20% while a McKinsey & Company survey shows that implementing sustainability practices can reduce operational costs by up to 30%.
Indeed, forward-thinking companies these days view business as an engine of societal progress. Creating Shared Value (CSV) is one such concept, which is centred on the notion that societal contributions of businesses are not limited to creating employment, paying taxes or entering new markets, namely creating economic value. The concept of CSV, first coined by Porter & Kramer (2011), revolves around increasing the size of the pie for all, rather than reallocating the given. This means searching opportunities to integrate business value creation with societal progress (social value). But how can businesses create business value and societal value simultaneously? How can CSV, as a value creation strategy, contribute positively to business and society?
To answer these questions, we must first consider what value is. Within the notion of CSV, “value” refers to the beneficial outputs and outcomes of business activities. These include improved financial revenues, improved environmental impact and improved social impact.
Businesses can implement CSV by becoming a lever to enhance environmental, social and economic well-being. This is achieved through activities at three levels:
The shared value opportunities at each level differs by company, industry and geography, depending on how a company’s particular business and strategy intersect with sustainability challenges.
The “Reconceiving products and markets” level involves targeting unmet needs, mainly posed by societal or sustainability challenges, and is concerned with Key Performance Indicators (KPIs) that focus on revenue growth, market share and profitability that arise from the economic, social and environmental benefits delivered by a business’s products and services. Some examples of social value or outputs that can be measured on this level include improved education, reduced carbon footprint or improved employee or supplier wellbeing. Intel’s Education Transformation strategy is a good example on this CSV level. The company focuses on improving student outcomes while also increasing sales of classroom technology.
The “Redefining productivity in the value chain” level revolves around increasing efficiencies of internal operations, namely productivity and risk reductions, and is concerned with KPIs related to improving costs, input access, quality and productivity. These are achieved through better resource utilization, investment in employees, environmental improvements, supplier capabilities and other areas. Some examples of social outputs that can be measured on this level include reduced water use, reduced energy use, reduced raw materials, improved employee incomes and improved job skills. InterContinental Hotels Group is a good example demonstrating this level of CSV. The hotel company tested dozens of options for reducing water, waste and energy to lower its environmental footprint through its Green Engage program while also driving down hotel operating costs.
While these two levels of CSV directly speak to business model innovation, the third “Enabling cluster development” level rests on going beyond the sustainable business model. It includes renewing business-community relationships and investing in the external business ecosystem to further enhance economic value creation. At this level, a business considers KPIs related to improving community investments and strengthening local infrastructure, local suppliers and local institutions. Some measurable social value outputs on this level include improved education, improved health, increased job creation and improved incomes. Nestle, for instance, excels in enabling cluster development by training and assisting smallholder farmers to foster rural development while ensuring a reliable supply of high-quality raw materials. The company embeds CSV firmly in holistic management thinking across all business sectors, thus seeking better ways to collaborate and secure collective action. Nestle’s ten corporate business principles demonstrate the areas where they strive to implement CSV holistically: water; agriculture and rural development; nutrition, health and wellness, respectively.
While CSV measurement is still in its infancy, leading companies are pilot-testing and employing the CSV strategy to unlock new value from measurement. Novo Nordisk, a global healthcare company with leading expertise in diabetes care, demonstrates the power of measuring shared value through its “Blueprint for China” shared value strategy in the Chinese insulin market. The company’s CSV strategy has resulted in improvement in total patient life years while increasing its market share in the second largest insulin market in the world. Similarly, Coca-Cola’s Coletivo initiative in Brazil creates shared value by promoting and measuring youth employment and increasing the employability of low-income youth while reinforcing the company’s retail distribution channels and brand strength to increase local product sales.
Unlike the various and fragmented company reporting efforts, which so far lack conclusive evidence of the connection between a company’s performance on social issues and the creation of economic value, CSV measurement establishes a direct linkage between financial outcomes and social outcomes. Moreover, it does not rely on statistical correlations or estimated monetary values of social and environmental outcomes. It, therefore, provides investors with a very useful direct line of sight between business performance and social outputs.