Full disclosure: I’ve been a big fan of Michael Porter and Mark Kramer since my days as a graduate business student. Lots of hours on group projects working on five forces analysis, you get the idea. So it was especially rewarding to read their recent Fortune article looking at the actions behind the Change the World list of leading companies who are doing well by doing good.
Porter’s and Kramer’s Creating Shared Value approach is “moving into the mainstream and growing exponentially. Companies that adopt shared-value thinking remain committed (as they should) to philanthropy and corporate social responsibility. But they’re moving beyond often-fuzzy notions like sustainability and corporate citizenship, and instead making measurable social impact central to how they compete.”
Sustainability as a fuzzy notion for business strategy?
I’m going to push back on that.
As the environmental NGO that spearheaded a first of its kind partnership with McDonalds over 25 years ago, Environmental Defense Fund (EDF) has partnered with hundreds of leading companies to address sustainability in specifically non-fuzzy ways. We do it by following the science and making sure that every EDF+Business project drives measurable environmental and business results.
Porter and Kramer single out EDF and our 10+ year partnership with Walmart. (Thank you, we’ve actually worked with 15 companies on the Fortune list!) The non-fuzzy win-win to this partnership is that EDF helped Walmart set a first of its kind goal for reducing its supply chain greenhouse gas emissions (GHG) by 20 million metric tons (MMT) by 2016. We helped design the stretch target and then stuck around for the tough middle miles of execution, forging solutions across their global supply chain to achieve that goal. The result? A reduction of 36.5 MMT of GHG emissions by the end of 2015.
EDF is also working with Walmart to eliminate chemicals of concern from health and beauty products on their shelves. The result? A reduction of 23 million pounds of chemicals out of products in 24 months.
This is just one example from our rich history of collaboration with leading companies. Our partnership with McDonald’s eliminated the Styrofoam clamshell packaging and over 300 million pounds of waste. Our partnership with FedEx created the first fleet of hybrid delivery trucks reducing emissions by 65%. Our work with Kohlberg Kravis Roberts (KKR) resulted in 27 KKR portfolio companies achieving nearly $1.2 billion in avoided costs and added revenue, while eliminating more than 2.3 million metric tons of greenhouse gas emissions, 27 million cubic meters of water use, and 6.3 million tons of waste through eco-efficiency efforts.
I could go on, but I think you get my point. Plus, unlike August 1, 1990 when we launched our work with McDonald’s, we’re no longer alone, our colleagues at BSR, Ceres, CI, TNC, WRI and WWF are leading complementary, collaborations with leaders across the economy and around the world. When business partners with an NGO like EDF, the results are anything but fuzzy.
With that said, the key themes in Porter and Kramer’s article are solid. Corporate leaders need to integrate societal, and in broader terms, the planet’s needs into their core strategies. Investors need to consider creating value for the planet as well as themselves when allocating capital resources. And businesses and NGOs need to work together to ensure that creating shared value is the strategic norm for the future.
Follow Tom Murray on Twitter: @tpmurray