Three Harvard Business School professors, Michael Porter, George Serafeim, and Mark Kramer, make a powerful case that shared value is not created unless ESG factors are integrated into a business’s core strategy. In their words: We are entering a new stage of understanding . . . the linkage between investment performance and social impact. . . . Most corporate leaders view their sustainability efforts primarily as a way to enhance their reputations and attract socially aware consumers, employees, and investors. . . . The impact of social innovations on . . . economic-value creation is not fully understood or even considered. As a result, corporate executives . . . and investors alike are missing a powerful value driver. . . . The purpose of investing is to create a virtuous cycle by allocating capital to those companies that create the greatest societal returns both in returns for the owners and in improving the welfare of customers, employees, suppliers, and communities. . . . 

Questions 

1. Based on the above reading, what is shared value? 

2. To achieve shared value, ESG factors must be incorporated into a business’s core strategy and build on the company’s value proposition. Identify the two ways this can be accomplished. 

3. Give an illustration of each of the three levels at which the pursuit of shared value can affect strategy.