Ethical Corporation: Innovation, competitiveness and responsibility – The new frontier of corporate responsibility

In a must-read article on corporate social responsibility (CSR) and innovation from Ethical Corporation Magazine, a distinction is drawn between “Value Protection”, and “Value Creation”.

“Value Protection” activities are described in the article as “corporate responsibility to protect the value of the existing assets of the firm. “

From the article “For example, oil and energy companies can reduce their environmental burden, while still exploring, transporting and selling oil and energy products, which ultimately damage the environment through carbon dioxide release. “

An even greater call for Innovation is required for “Value Creation”. Here’s where it gets really intriguing and compelling to me – this is what IBMer’s call “Innovation that Matters to the World”. It requires not only product of process innovation, but oftentimes business model innovation. In other words, “Value Creation” might change much about the way a business interacts in the world, and earns shareholder returns.

The article is worth a reading as a whole. Here is a snippet:

“Innovation here means new products and services that are adopted by users and consumers enabling companies to compete by creating and supplying new markets that replace existing, less sustainable markets and patterns of production and consumption.

In this sense corporate responsibility takes the form of value creation, by providing the ground for companies to generate a new basis for value.

The challenge of innovation for sustainable development is that it is not an easy process. It requires products and services based on new technologies, often embedded in new business models, and altered social institutions and patterns of use.

To create these technologies and to support their embedding in society and institutions, companies need to undertake co-operative action with other producers, with consumers and other stakeholders in order to ensure that those innovations are more responsible than past ones and as a way to promote their rapid adoption.”

In my opinion, as a business person, I see a need for both value protection and value creation. Strategically, I would like to see corporations look at “the greatest good” and “the greatest harm” they can create in the world, and to eliminate the harm, to become truly sustainable with net zero impact on the environment. However, we need to also look at what can be done tactically NOW to become more responsible, to our employees, stockholders and stakeholders (including future generations, who need a clean planet).

For an interesting read that is in alignment with the “Value Creation” model, check out Cradle to Cradle: Remaking the Way We Make Things by William McDonough and Michael Braungart. You might want to google them too… lots to explore here. Innovation that Matters….