Value creation needs to be integrated & holistic
February 8, 2023•331 words
Value creation is a complex, multifaceted landscape of tested and potential meaning.
For some, it means turning a given amount of money into more money.
For others, it means creating non-financial value through smart, innovative enterprise.
Then there is the macrocritical question: How much value can a given society create?
And on what foundational resource base?
In any negotiation, each party brings their own specific sense of value, and aims to work toward their own intended valuable outcome. Whether value creation in their exchange is zero-sum or mutual and compounding may determine whether they are positioned to create sustainable value—especially for others not present in the negotiation.
Who, specifically, holds a stake in what is being decided is a critical question. We now know industrial systems tend to generate stakes—for better or worse—for very large numbers of people, and for the health and resilience of natural systems that sustain life.
Environmental and climate science trace conditioning factors that determine these stakes. We cannot honestly say value is being created in a scenario where financial gains are tied directly to widespread destruction of valuable natural systems that cannot be rebuilt or replaced.
Eventually, it cannot be financially rewarding to invest in activities that undermine nature and climate resilience and the wider health and wellbeing of people and societies.
New modes of value creation, new business models, new metrics, and newly optimized enabling policies, will emerge to fend off these unsustainable costs.
Banking operations and business models will evolve to capture this opportunity.
Investors and industries that build credibility as direct contributors to wider value creation and the building of resilience across whole economies, will find favor in markets, in long-term portfolio allocations, and in public incentives.
The very idea of what constitutes industriousness, efficiency, and enterprise value, will evolve, so that fewer and fewer segments of the overall economy will be able to justify any investment in polluting practices.