Value creation is the goal of all companies, but corporate value creation is not always aligned with value creation for the environment & society as a whole.
Companies have always created societal and economic value in the course of doing business. They provide people with goods and services, contribute taxes to the economy, and create jobs and wealth. In so doing, companies play a significant role in helping to lift billions of people out of poverty.
However, in the course of doing business, some companies also draw on natural resources and can generate negative externalities. Businesses operations are increasingly scrutinised
A company’s creation, or reduction, of societal value increasingly has a direct impact on the drivers of its corporate value, namely revenues, costs and risk. It is the phenomenon that we at KPMG describe as ‘the disappearing disconnect’ between corporate and societal value creation.
To do well in today’s business environment, businesses increasingly have to measure, understand and proactively manage the value you create, and to mitigate negative impacts on society, the environment, and shareholders. That is because what was ‘external’ is rapidly being internalised, whether through regulation, changing market dynamics including resource shortages, or more frequent and impactful stakeholder pressure.
In recent years, methodologies to measure an organisation’s impacts – both positive and negative –have become much more sophisticated. A growing trend is to express all economic, social and environmental impacts in a common financial metric; doing this can generate productive conversations in the boardroom and management meetings and help to change thinking and action within organisations.
