Business: Part of the Problem? No, Part of the Solution

Now is the time for us to find collaborative ways to shape, form and work together, share ideas and solutions and form partnerships to create the kind of world, and the kind of opportunities, that future generations deserve.
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The financial crisis has prompted many to question the role of business in society. While there are many different ideas and definitions out there, for me, what it means to be in business today is the same as it always has been.

With so much technological change, social change and economic development globally, that might sound like a strange thing to say. But if you look beyond this to the original purpose of business or economic activity in general, and why it came to be in the first place, this has fundamentally remained unchanged.

Economic activity used to be perceived as a positive force in society. Entrepreneurs brought products and services to communities that enhanced their lives, created jobs and brought economic stability and prosperity. They offered a means to a better future and gave people hope and inspiration. And the growth of business was testament to the value they created for people and society.

So I find it strange that so much of the modern debate about business and economic activity stems from the premise that the sole aim of business is to make a profit and do harm. Of course, there are always exceptions, but to view economic activity per se this way is totally erroneous.

To my mind, the global debt crisis was in many ways a values crisis. Too many people and businesses had been seduced by or pressured into delivering on short-term egoistic targets and there was a general shift in thinking towards "me-now" instead of "us-tomorrow."

This short-termism eroded much of the trust between companies and society and rebuilding this needs to be a priority for business leaders. It will require a combination of holistic thinking, long-term goals and strong and clear values, based on "respect": respect for people, cultures, the environment, the next generations and the future of the world we live in. In other words, leaders need to demonstrate their respect by going back to the basic role of business -- value creation for society as a whole with a long-term perspective.

Those that fail to do this will end up alienating themselves from society, and that is a risk we should not take. It's important not to forget that it is society that grants us the permission to be in business and allows us to succeed.

There are various schools of thought on what the future of corporate social responsibility should look like. Harvard Business School professors Michael Porter and Mark Kramer have called for companies to take the lead in bringing business and society back together, calling it 'Creating Shared Value.'

This concept places societal issues at the core of a company's strategy, stating that for a business to be successful over the long term, it must create value for shareholders and at the same time for society. I absolutely agree with this. I don't think this is new especially, but restating, reinforcing what the "homo economicus" should always have been doing.

Ten years ago, we worked extensively with Michael and Mark to test this concept in the context of our own business in Latin America. And today, Creating Shared Value has been fully integrated into all our global businesses and, what I have seen, time and again and in every part of our business, is that what is good for society is ultimately good for business too. Creating Shared Value is all about the "how" we go about our business.

A Creating Shared Value approach can bring growth and increased revenues; improve the efficiency of operations to lower costs and stimulate responsible use of scarce resources; reduce supply chain risks and can help to build trust and reputation. All things that deliver clear shareholder value, as well as having a positive societal impact at the same time.

A significant part of our role in society has to do with shaping the future. When thinking about future generations, all of us -- governments and businesses, as well as private individuals -- have to ask "Are we part of the problem or part of the solution?"

In my view, adopting a Creating Shared Value approach definitely puts a company in the "part of the solution" camp -- with an emphasis on "part," as no one person, company or government official has all the answers -- or all the resources -- to effectively address all of today's global issues.

We are living in challenging and difficult times. Issues such as climate change, youth unemployment and under- and over-nutrition are significant in every region of the world. And, for too many, the problems of poverty, access to safe water and sanitation, access to healthcare and the lack of opportunity to earn a decent wage in decent conditions persist. We should not forget, a lot has been done, we have gone a long way, but so much more has to be done -- together.

Now is the time for us to find collaborative ways to shape, form and work together, share ideas and solutions and form partnerships to create the kind of world, and the kind of opportunities, that future generations deserve. Trust, strong values and transparency must be the cornerstones of these collaborations.

There are an amazing number of opportunities around us; it would be irresponsible of us to fail to see them and not do everything possible to be an essential part of making lasting change for the better!

This blog post is part of a series produced for the Nestlé Creating Shared Value Forum, co-organized with UNCTAD on Oct. 9 in Switzerland. For more information about the Forum or to follow the event live, click here.

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