Why Brands are Getting Serious About Shared Value

In the decade since the idea first surfaced, creating shared value (CSV) has generated buy-in from the world’s most powerful brands, GE, IBM, Nestle, Walmart, Google. The concept isn’t novel: profit and social good are not mutually exclusive pursuits, and that businesses should embrace economic opportunities to solve social challenges. But execution still faces hurdles: as with Facebook, when brands present themselves as neutral parties and suggest their actions are driven by altruism, the public remain skeptical.

With consumers increasingly mistrustful of greenwashing, talking about sustainability and social responsibility in flawed ways can do more harm than good.

How then do brands implement CSV? How do we drive impact? And what do millennials and Generation Z really expect?

1. Find the Win-Win

Creating Shared Value views social impact and sustainability as a positive sum game, regarding socially oriented activities as an investment, rather than an expense. More often than not, CSV works well when a brand focuses on the social issues that affect the drivers of its competitiveness in the locations in which it operates.

Nestle did this with its dairy supply chains as early as 1960, offering free animal husbandry advice to farmers to help improve quality and productivity, providing steady incomes to rural communities, and generating beneficial synergies with suppliers and employees. Pharma companies like Novartis focus on rural healthcare.

For retail giants like Nike, Adidas, and Prada, it’s been product and packaging innovation. Prada signed a £42.9 million loan with banking group Crédit Agricole in 2019, with repayment terms conditional to meeting key targets around the sustainability of its products and operations. Efforts range from renewable energy, and waste reduction to phasing out virgin nylon in favour of Econyl, an infinitely recyclable yarn made from regenerated plastic waste. Nike released it’s eco-friendly Space Hippies earlier this year. The trainers are made from “space junk”: recycled plastic water bottles, t-shirts and yarn scraps. Space Hippie packaging makes a concession to the environment too — the labels are printed directly on a single repurposed cardboard box, rather than the usual double-box for shipping.

Skeptics and discerning Gen Z are quick to point: sustainability is now used to sell more when, in reality, the only way towards a truly sustainable economy is to consume and produce less.

But there’s reason to be optimistic. For one, Nike and Prada’s efforts are a test case for less wasteful manufacturing processes that reuse and reimagine waste we’re already generating — and hopefully this means gradually replacing current production with better, more circular economies across everything we consume.

2. Bond with Millennials over their quest for purpose

Survey after survey point to millennial and Gen Z attitudes towards social responsibility and their strong preference for employers and brands that have socially purposeful goals. More than 8 in 10 millennials (81%) expect companies to make a public commitment to good corporate citizenship. Over 84% of millennials seek employment that is socially responsible during their careers.

For Gen Zs, this quest for purpose goes further and embraces an active drive to demand and make change. Over 80% of Gen Zs feel they can have an impact on issues by using social media, so much so that 64% believe supporting issues online is more effective at making a difference than helping out in their local communities.

To reach out to millennials, Generation Z and Alphas, brand efforts must go well beyond corporate social responsibility and philanthropy to redesigning business models and hiring so that business and employee goals align with longer-term social ones.

Brands that succeed are taking measurable action: linking social impact and sustainable business practices to concrete financial rewards to engrain these values into the very functioning of the company.

3. Don’t wait for the crisis

While CSV does harness the enormous reach and know-how that companies like Google and Apple can bring to society’s needs, it doesn’t automatically fix the challenges of free-market capitalism.

In the absence of mandatory legislation, environmental and social impact analysis is often left entirely up to brands, with some like Adidas leading the way with clear and accurate reports, and others revealing next to nothing (until a public relations disaster strikes). When NGOs and third parties hold brands to account, consumers are quick to engage, and by then it’s probably too late. What’s clear however is that corporations will soon be held accountable by shareholders for environmental, social and governance (ESG) performance — if they aren’t already.

The good news is that around three-quarters of Gen Zs stand ready to support companies that care in a variety of ways. Including: sharing their positive opinion about a company doing good (85%), buying a product with a social or environmental benefit (84%) and learning what they can do to make a difference (84%). They’re as ready to volunteer, sign petitions and donate as they are to boycott a brand for poor accountability.

A 2018 study discovered that firms with better ESG records produced higher three-year returns, were more likely to become high-quality stocks, were less likely to have large price declines, and were less likely to go bankrupt. Win-win scenarios are entirely possible.

The market-winning brands of tomorrow are competing for a top spot in sustainability as with any other business metric.

If consumer attitudes are a signal for changes we’re seeing in the marketplace, there’s reason to be hopeful: brands can engage with this generation, find common ground, and change their business and the world for the better.