Creating Shared Value (CSV)

Fostering conscionable corporate mindsets
By Earl D.C. Bracamonte


Is it possible for business enterprises to be catalysts for social progress while still sustaining profitability for their undertakings? According to the proponents of Creating Shared Value (CSV), this ideology is not only possible, but is actually the course that should be taken in the context of 21st century business ethics.

This was the over-riding message put forth at the first-ever CSV Forum held at the New World Hotel recently. The forum gathered together business leaders, government, non-government organizations (NGOs), bilateral and multi-lateral aid agencies, the academe, social and charitable institutions, media and other stakeholders to introduce the concept of CSV as a viable, effective, sustainable and profitable business philosophy.

The world's leading CSV proponent Mark Kramer led a panel of speakers at the forum, giving attendees an appreciable grasp of CSV as the next step in the evolution of what is commonly referred to as Corporate Social Responsibility (CSR). Kramer is currently a Senior Fellow in the CSR Initiative of the Mossavar-Rahmani Center for Business in Government at Harvard University's Kennedy School of Government.

“The value chain impacts any business and there are lots of issues to address like child labor, global warming, and carbon emissions to name a few. It is therefore imperative for a company to zero-in on a unique campaign relevant to the industry it pursues and its competitiveness. It must be able to identify with certainty what issues matter to its corporate strategies,” enthused Kramer, during a closed-door colloquy with media persons.

It's not the usual job, moreso for a Harvard Senior Fellow, to teach global corporations how to spend their monies to benefit society. Kramer, who is also the founder and managing director of FSB Social Impact Advisers, has become the authority to helping companies integrate their philanthropic efforts with their overall business stratagems.

The forum also featured three other distinguished speakers who expounded on how the CSV philosophy can generate greater gains for both business and society: Dr. Maria Capanzana, director of the Food & Nutrition Research Council (Nutrition); Arjhun Tapan, special senior adviser to the president on infrastructure and water of the Asian Development Bank (Water Resources); and Antonio Meloto, chairman of Gawad Kalinga (Rural Development). The three speakers shared insights on how corporations can help ensure that a society's citizens are adequately provided for in terms of their nutritional and water needs, and how rural areas can achieve development in partnership with big businesses.

Kramer is the author of an award-winning study titled “Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility (published in the Harvard Business Review in December 2006) with co-author and fellow Harvard Professor Michael E. Porter. The study called for a more effective way of creating mutual benefits for business and society; a model that, according to its authors, builds on the successes of the traditional model for CSR.

Essentially, CSV takes the strengths of the traditional CSR to a whole new level. The core rationale behind the idea is symbiosis, a term originally used in biological sciences to refer to a mutually beneficial relationship between two living organisms. The relationship exists to ensure the survival and growth of both organisms. With this perspective, Kramer says businesses can begin to create programs that benefit society while also creating a competitive edge. “A company must create social programs that are consistent with the same core frameworks it uses to run its business. That way, its social program will be integrated with the business practices that it has found to be successful. An investment on social issues can be weighed against the imprint it has achieved. Thus, economic benefit results in competitive and fiscal terms.”

Both Kramer and Porter gave the illustration of how global food company Nestle works with local farmers for production of its food products. They point out that Nestle benefits as a company by taking care of the welfare of the small farmers. In the Philippines, Nestle uses this same approach in working with small coffee farmers in the production of coffee for its Nescafe products.

“Another example is a food company who found an alternative for palm olein that was zero in trans-fat, had better solubility and gave four times more profitability to farmers. They worked with small farmers in Africa and since most of their products were agriculturally-based, it afforded better livelihood to the farming communities they tapped,” Kramer elucidated.

“To go back to my former example, Nestle works with coffee farmers by buying directly from them. Thus, lessening the coffee imported by the Philippines when the company buys from Vietnam and/or Thailand,” he added.

In the face of challenges like global warming, population explosion, poverty, malnutrition, economic recession and competition for resources, CSV prescribes that society and businesses enter into a mutually beneficial relationship. “Businesses should pick out the battles it plans to wage from the many concerns that abound around them. On the other hand, the willingness on the part of civil societies to collaborate is highly encouraged. After all, they can reach communities that corporations can't. Some of the successful collaborations are that of McDonald's and the Green Peace project,” intoned Kramer.

The CSV Forum sought to encourage the local business community to transition current CSR efforts to CSV to achieve sustainable growth while helping boost social progress in the country.

CSV does not pit business against society but rather recognizes that business and society are interdependent. A company depends on society for its existence and vice-versa. Thus, the life of a corporation and the life of society must achieve a reliance that is mutually beneficial. As such, the CSV model calls for campaigns that benefit societies while being integral to a company's business strategies.

“Corporate philanthropy addresses general issues only. Therefore, a CEO's commitment affects the turn of a company's moral obligation. So until it has been proven, skepticism remains. After all, profit changes the level of commitment,” lamented the esteemed speaker.

To read Kramer and Porter's scholarly paper in its entirety on the Dec 2006 issue of the Harvard Business Review, simply log-on to www.hbr.org or www.fsg-impact.org.

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