Idea in Brief

The Imperative

Creating shared value—pursuing financial success in a way that also benefits society—has become increasingly important to companies as they look for new economic opportunities and seek to regain the public’s trust.

The Barriers

Companies don’t operate in isolation. Each exists within an ecosystem where societal conditions may curtail markets and restrict productivity. Government policies and cultural norms present further limitations.

The Way Forward

Businesses must initiate “collective impact” efforts that involve all the players in their ecosystems. Five elements are needed: a common agenda, a shared measurement system, mutually reinforcing activities, constant communication, and dedicated “backbone” support from one or more independent organizations.

In the past, companies rarely perceived themselves as agents of social change. Yet the connection between social progress and business success is increasingly clear. Consider these examples: The first large-scale program to diagnose and treat HIV/AIDS in South Africa was introduced by the global mining company Anglo American to protect its workforce and reduce absenteeism. The €76 billion Italian energy company Enel now generates 45% of its power from renewable and carbon-neutral energy sources, preventing 92 million tons of CO2 emissions annually. And MasterCard has brought mobile-banking technology to more than 200 million people in developing countries who previously lacked access to financial services.

A version of this article appeared in the October 2016 issue (pp.80–89) of Harvard Business Review.