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Article KPMG
A New Vision of Value: Connecting Corporate and Societal Value Creation
This report explores two potential disconnects between corporate cash flows and value creation: Positive externalities where companies are not fully rewarded for the value they create for society, and negative externalities where they do not pay the full costs of production (but "externalize" some costs to society.)
By offering a simple method for conceptualizing these two types of externalities, the authors show how businesses can be prepared for three forces that will likely drive them toward internalization: regulation, stakeholder pressures, or market realities. This can provide a guide for companies to identify their long-term interests in policies that align business value with societal value.
Notes on Related Topics
Long-Term Value & Business Strategy (A) – The report explicitly links long-term corporate value to societal and system outcomes rather than short-term financial performance.
Free Enterprise Competitive Markets (A) - Enables managers to conceptualize the specific ways that markets may not be operating as expected and helps companies target the "market rules" needed to align business and societal value.
Healthy, Stable Systems (A) – It frames economic and social system stability as prerequisites for sustained business success.