“From Shareholder Value to Shared Value” WorkshopDecember 10, 2014
December 10, 2014 – Against the backdrop of recent global developments, more companies are beginning to consider how to strategically integrate social impact with their core business to differentiate themselves to customers, employers, investors, suppliers, and their communities. Eden co-hosted the session “From Shareholder Value to Shared Value” with the CFA Society Singapore and the University of Chicago Booth School of Business, to explore how Social Innovation can be the most effective pathway to shared value.
By addressing how conventional ways companies have the potential for much greater social impact, Eden explored real case studies of how shared value companies have successfully achieved sustainable competitive advantage against traditional companies via social innovation. We presented evidence from the S&P 500, to demonstrate tangible financial returns on Social Innovation. With a practical framework and toolkit, this session aimed to gauge interest and gather perspectives of financial analysts in how they too might consider the real shared value of companies and in so doing influence the way CEOs drive value in their organizations.
Eden firstly presented the case for shared value with quantitative analysis of various financial indicators among socially-innovative companies on the S&P 500. We discovered that over time, consumer product companies, for instance, attain higher average profits and return on equity than companies who only focus on ‘classical’ Corporate Social Responsibility (CSR) or traditional companies that do not engage explicitly in socially responsible initiatives. Interestingly, the compounded annual growth rate of the market capitalization of Socially Innovative companies was found to be lower than both CSR-focused and traditional companies, which may indicate that the stock market fails to capture the real value created by socially innovative initiatives that would subsequently lead to greater returns.
We presented a framework of Social Innovation models that drive value in five areas: (i) Securing dependable sources of supply; (ii) Developing new markets; (iii) Innovating new products; (iv) Enhancing market access; and (v) Building brand. In each of these areas, Eden presented an actual client case and economic model where companies have earned higher profits by lowering costs, commanding a premium, or selling in greater volumes over time. We supplemented the case studies with toolkits, for participants to operationalize these frameworks in their own organizations.
Participants then reflected on Eden’s approach and methodology evidencing the returns on Social Innovation, and brainstormed on how financial analysts can contribute to a community support the Social Innovation movement. This event marked a start to our journey advocating for the financial value of Social Innovation and its relevance to the capital markets.
Eden is looking for co-creators to contribute to its journey researching evidence-based Social Innovation Business Models. Please contact us at email@example.com to discuss how you can get involved in this community.