May 1, 2022

  The first question that emerges when we talk about sustainability is the question of “value”. Companies and business schools talk a lot about value, but what is value?   Value can mean a quantity or number, but in finance it is often used to determine the worth of an asset, a company, and its financial performance. Companies can be valued based on the amount of profit they generate per share, and the value of a good or service can be derived from its “exchange value” (a concept that dates back to Adam Smith). However, more recent debates have shifted away from Smith’s “value in exchange” to thinking more about “value in use”, as manufacturers move towards more service-based business models, with a stronger focus on the customer.   More recently, Michael Porter and Mark Kramer have written influentially about the concept of ‘shared value’, suggesting that economic value should be created in a way that also creates value for society by addressing its needs and challenges. In this way, sustainable value is the well-being, improvement, continuity and preservation of the individual (human life), company, society and the environment, in a way that meets the needs of the present without compromising generational equity.   So when we talk about sustainable value, it can be sustainable economic value which includes growth – profit, return on investment, financial resilience and long-term business viability and stability. Sustainable social value which includes poverty alleviation, social justice, equality, well-being, community development, long-term employment, secure and meaningful livelihoods, labour standards and practices, wages, code of conduct, career development, health and safety and diversity and also sustainable environmental value which encompasses the use of resources at a rate at which they can be renewed, ensuring that emissions and waste are at a level that can be safely metabolised by the environment, protecting biodiversity and creating positive benefits for the environment over time. We therefore need business models that can reconcile how a company can create and add value for its various stakeholders, while capturing value for itself. In this sense, companies must analyze block by block, how to predict how their actions will affect the value they create, taking into account the impacts on the various stakeholders. In other words, there is no point in selling a recycled product if we have activities and partners that are not concerned with sustainability (environmental, social, economic). Companies need to review the sustainability of the fit between their value proposition and the target audience. But also the way we reach the customer (our logistics are sustainable), our operations, resources, partners and suppliers. But to do this, it is necessary to manage network information. At the same time, all business relationships include not only formal contractual activities, but also informal exchanges of information and benefits. Identifying the entire value flow in a network can reveal opportunities for innovation and improvement. The challenge, then, is how to conceive and design the right future business model.