The rise of the Chief Value Officer

May, 14, 2020, by Laura Taylor

At Mutu, we are committed to PPP, Purpose, People then Profits. We specifically changed the traditional order by replacing “before” with “then”, because we strongly believe that Profit will always flow when Purpose is clear. This happens when People are supported, engaged and Passionate, which would make the Mutu acronym PPPP as a result. Passionate People with a common Purpose create collective and inclusive Profit. This statement may raise questions, because what is Profit? In the traditional sense of the word, Profit has been myopically stated in monetary terms. This is largely because inputs driving profits, in the form of revenues and expenses, have been denominated uniquely in financial terms. This approach started when Luca Pacioli published one of the world’s first business best sellers in 1494, on the subject of double-entry bookkeeping. It is not surprising that Pater Luca, a monk, would have uniquely focussed on the financial side of the double-entry equation. In his day, the world population was sparse by today’s terms. Resources would have looked to be unlimited from his perspective. Over the horizon were vast lands and riches to be discovered, as the 1492 voyages of Columbus confirmed.

We are no longer in that happy circumstance of unlimited opportunity, if we ever were. Since 1492, exploration and extraction of natural resources has accelerated, even on the basic level of undertaking such voyages and the archaic technologies used. Instead of new discoveries of land and minerals over the horizon, we may now be discovering a Tragedy over the Horizon instead. Humanity has supercharged, supported by the profits from economic activities. We have ignored the true costs during the profit accounting, and have overlooked many human activities of great import that contribute value, without being expressed in such terms. In other words, we have lost sight of the true value creation of our activities and are instead focussed on just one Purpose of note, being Profits. 

Mutu is therefore very proud to be founded as a Value-driven organization. To evidence its commitment Mutu has appointed likely one the first CVO executives in New Zealand and the world. Why? CVO is an acronym that stands for Chief Value Officer, which is a combination of the traditional CFO (Chief Finance Officer) with sustainability responsibilities and reporting obligations, thereby integrating the reporting process between financial and non-financial metrics. The purpose of the CVO is to identify, evaluate and report all aspects of the Value chain with Mutu’s key stakeholders. These are not just the financial results, and not just the positive aspects either. We recognize that organizations have both positive and negative impacts on their Environment, Society and Governance (ESG). To reflect both positive and negative impacts Mutu, therefore, has a proper integrated double entry reporting system.  This clearly identifies whether a business is worth doing i.e. has the correct Purpose. Luca would have approved if he lived today.

By defining the critical purpose of Mutu as being sustainable in this integrated manner, various positive impacts will flow. The growing Sharing Economy that Mutu is part of drives re-use and repurposing of existing assets, rather than to add further production and consumption growth of new assets. With New Zealand in a bubble, most likely an expanding one with our cousins in Australia, our proposition will support the move to greater independence from imports and exports. This, in turn, is aligned with our Whanau’s need for greater self-reliance and potential for income generation due to the economic and logistical impacts from the Coronavirus. Greater circularity and re-use will lead to lower landfill waste contributions and emissions through the value chain. Thereby greater financial and business inclusion to drive additional revenues and support for meeting our collective Paris Agreement targets, while ensuring we remain inclusive and expansive towards the Not For Profit sector that is under so much pressure nowadays as well. Kia Kaha to all of our community groups and supporters providing much-needed succour and supplies for those most badly affected by the current corona crisis. 

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