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