The document discusses the evolution from profit-centric to value creation in corporate strategies, emphasizing the importance of incorporating social and environmental impacts alongside financial considerations. It highlights the necessity for organizations to embed sustainability into their business models and engage stakeholders through strategic communication. Ultimately, it advocates for a shift in mindset towards responsible investment and integrated reporting to enhance trust and ethical leadership.

1. FROM PROFIT TO
VALUE CREATION
World Public Relations Forum
Oslo 22 April
Presented by Mervyn E King SC

2. Corporate Legal Advisers
SOCIO-POLITICAL PRESSURES
18th century unlimited
Reluctant wealthy
19th century artificial person
Incapacitated person

3. Corporate Legal Advisers
PRIMACY OF SHAREHOLDER
Ford Motor Company
Shareholders seen as owners
Milton Friedman
Profit at a cost
Focus through 20th century

4. COMPONENTS OF MARKET VALUE>?
More than financials
Source: OCEAN TOMO LLC
January 1,2015

5. Corporate Legal Advisers
BEYOND FINANCIAL REPORTING
Triple context
Reporting in monetary terms
FR critical but not sufficient
SR critical but not sufficient
The two in silos divorced from reality

6. Corporate Legal Advisers
FROM PROFIT
 From Friedman’s “free” economy profits
 21st century value creation by a company
 Historically book value – the difference between total assets
and total liabilities
 Book value greater or less than the market value
 Book value equals market value
 Value of money – the present value of discounted future cash
flows
 All through a financial lens

7. Corporate Legal Advisers
TO VALUE CREATION
 How does the company make its money?
 The positive and negative impacts on the triple aspects of the company’s
business model and output – financial, social and environmental – the
SDG’s - dimensions
 Enhancing the positives, eradicating or ameliorating the negatives
 Embedding sustainability issues into strategy
 As water is critical to the beverage manufacturer
 Now value is seen through a value creation lens in a resource deprived
world
 In the long term better interests of shareholders

8. Corporate Legal Advisers
AN ORGANISATION’S VALUE
CREATION PROCESS
8

9. Corporate Legal Advisers
EXCLUSIVE TO INCLUSIVE
Linking stakeholders to an organisation
Through strategic communication
Develop strategy on a more informed
basis
Board oversight not blind
CCO or CSRO

10. Corporate Legal Advisers
CHANGING APPROACHES
 Mindset changes
 Capitals and stakeholder relationships
 Population growth and diminishing natural assets
 Greater stakeholder expectations
 Responsible investment –UNPRI
 Financial capital to inclusive capital
 CFO to CVO

11. Corporate Legal Advisers
CONCEPTS
 Humankind and nations – concept of limited liability
 Integrated reporting
 Representative responsible shareholders
 Helen Keller: “The only thing worse than being blind
is having sight and no vision”
 Why grope in the dark?
 We have the light – the IIRC Framework and King IV

12. Corporate Legal Advisers
FOUR OUTCOMES
Ethical culture and effective leadership
Value creation in a sustainable manner
Adequate and effective controls/informed
oversight
Trust and confidence in the organisation and
legitimacy of operations

13. Corporate Legal Advisers
NELSON MANDELA
 “Action without vision is only passing time, vision without
action is merely day dreaming, but vision with action can
change the world.”
 Integrated thinking to create a business model with positive
impacts on the three critical dimensions is vision with action
 The revolutionary immensity of strategic communication with
stakeholders starts ameliorating the outraged conscience of
society

14. THANK YOU FOR YOUR
TIME AND ATTENTION
Prof Mervyn E King SC