How can the concept of shared value be applied to cities? Harvard management guru Michael Porter spells it out
By Astrid Zweynert
HONG KONG, Sept 22 (Thomson Reuters Foundation) - Companies can play an important role in improving city life if they pursue programmes to benefit workers as much as profit margins, Harvard Business School Professor Michael Porter said on Thursday.
The impact of businesses on cities has become more pressing as more than half of the world's population already live in urban settlements, a number forecast to rise to 70 percent by 2050, with the fastest growth expected in Asia and Africa.
"Cities are complex animals with many, many dimensions and challenges," Porter told the Thomson Reuters Foundation in an interview on the sidelines of the "Philanthropy for Better Cities Forum" in Hong Kong.
Porter said the rapid growth of cities required a business-like approach to providing efficient transport, sustainable housing, a good quality of life and better health for citizens.
He said one company that appeared to understand this was U.S. clothing retailer The Gap, which provides training in life skills - such as communication skills, financial literacy and time management - for female workers in its supply chain.
The Gap says its P.A.C.E programme, which has reached more than 35,000 women in 12 countries, has had a strong business impact by reducing turnover and absenteeism and boosting productivity.
Porter and his colleague Mark Kramer argued in 2011 that business-as-usual capitalism is trapped in a narrow approach focused on maximising short-term financial performance.
By striving for what they called shared value instead, companies can still hit their financial targets - but through addressing problems in society that cut across their business.
"The concept of shared value is focused on the idea that actual for-profit business can play a very fundamental and very direct role in affecting all of the dimensions that cities have to deal with," Porter said.
"We've tended to think that these social issues - having to do with community, health, society, the environment - were outside the realm of business ... but what we're finding is that business can meet a lot of social needs too, at a profit."
New global development goals (SDGs) adopted a year ago at a United Nations summit introduced an urban goal that calls on enhancing sustainable urbanisation.
Porter urged cities like Hong Kong to measure their urban development efforts through the Social Progress Index which evaluates the extent to which countries provide for the social and environmental needs of their citizens.
Ten cities in Colombia and the administrative regions of Rio de Janeiro have already used the Social Progress Index to measure their social progress.
Porter acts as an advisor for the Social Progress Index which in 2016 ranked Finland at the top of 133 countries based on more than 50 non-economic indicators, including health, nutrition, education, sustainability, personal rights and environmental protection.
(Reporting by Astrid Zweynert; Editing by Katie Nguyen.; Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, which covers humanitarian news, women's rights, trafficking, property rights and climate change. Visit news.trust.org to see more stories)
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