Jonathan Sanchez, co-founder of STAND, says that CSR window dressing has to give way to a system of true shared value which is sustainable, equitable, long-term and authentic
Businesses are intrinsically selfish. This may be a hard statement to accept, but it is an honest one. Contrary to American corporate law – whereby corporations are strangely afforded human rights – businesses are not people. Nor are they charities, NGOs or civil service organisations. They are human constructs which serve one purpose, to grow and, as a result of that growth, to deliver profits or dividends for owners or their investors.
None of this is necessarily wrong, capitalism, much like democracy, currently appears to be the least bad model of global development. It provides employment, capital flow, purchasing power and leads to increased standards of living while generating cold hard currency which can be continuously recycled from one corporate or state investment to another.
Creating wealth is a constant and power has shifted from government cabinet rooms to corporate boardrooms. CEOs are able to define and set global policy, and the world now revolves around stock earnings, profitability and a seemingly endless ability to innovate, whereby new ways are ‘found’ to improve how we live and develop further what we consume.
But it is wrong, as many do, to proclaim long live the free market economy because there is simply no “free” market. For anything to be extracted, constructed, engineered or assembled, something or someone has to pay. Before we address the people cost, we should first consider the environmental cost… rather than issuing a plea to save the orangutan, Palawan, or whales at Sea World, we can instead focus on the financial, societal and business impact of environmental degradation.
We have little left to extract value from and we are running out of resources. Putting it simply, without oil, water, minerals, soil, what business will be left? We can no longer ignore that many of our crops are failing across the centre of the planet, and the lack of basic commodities such as wheat leads to civil unrest.
In Egypt, bread it appears is appears more valuable to people than votes or democracy. If we fail to provide clean drinking water, a commodity that is rarely free, what is to stop more bloody protests and governments firing on thirsty citizens in Latin America? If we cannot help our utility companies to shift to renewables, what will happen when we hit our next oil price spike and the currency that is black gold wreaks untold damage on the cost of living?
These social and economic issues will not go away. In fact they are getting worse. And as commerce extracts the last elements of “free” value from our planet the money invested to date and the resources funded have to go somewhere and the market will not stop. We are reaching the tipping point: the point at which the market has evolved.
But in order to make achieve systemic change discussion about “sharing value” – or Creating Shared Value – will not put food on the table, generate energy nor find new and sustainable mineral resources. Sharing values is all well and good and is something which certain religions have practiced for centuries. But we should be mindful of this African saying:“When the missionaries came to Africa, they had the Bible and we had the land. They said, ‘Close your eyes and pray’ We closed our eyes. When we opened them, we had the Bible and they had the land.”
Does partnership work?
We are witnessing endless programmes based on sharing, or at least partnership, by the corporate world. However these partnerships are seldom equal and in some cases can amount to exploitation. There is an echo of neo-colonialism in the background. We witness this via partnerships in much of Africa, whereby vast areas of land are purchased to grow agricultural crops for export, which may well harm communities and their economies, rather than “creating” a business model that is both sustainable and legitimate.
We witness sharing occurring between governments and development agencies, for example the World Bank has shared billions of dollars, but still more than half their projects see nation states fall further into debt. Many of these projects focus on infrastructure projects that then result in developing economies slipping further into debt as they hand over millions of dollars to the huge corporations engaged in infrastructure projects. Ultimately this wealth is not shared and evidence clearly shows that people and communities continue to suffer – and are then lumbered with increased taxes if they eventually do break out of the poverty trap.
At the micro-level sharing often has a negative consequence. Take, for example, orphanage tourism, where travelers share their time in local orphanages or spend time rebuilding schools and social and community infrastructure. While this is laudable it effectively removes the local labour force from income opportunities. We witness sharing in economic blocks, where nation states are pressured to reduce trade barriers, tariffs and trade tax, creating a global economy but rendering local growth and sustenance either a challenge or simply an afterthought.
What has to happen is a systemic re-think, and more importantly a re-action to the situation we have ignored for too long. We are all looking but we are clearly not seeing.
It is often said “first they laugh at you, but as time goes on the laughing slowly ceases”and, with this in mind, we should be bold in asserting that there is a different model – albeit one which bucks the current trend. HAVAS Media’s Meaningful Brands Index demonstrates that businesses which build-in sustainable business models, create social value and develop equitable partnerships outperform most stock indexes by on average 120 per cent.
Evidence unquestionably demonstrates that sustainable business is better business, that creating value is better than only sharing it. Unilever, a company I worked with until recently, has spent in excess of five years on its journey to become a wholly sustainable business, some might say decades. Unilever plans to double in size while reducing its negative impact by half. At the same time it is committed to increasing its positive social impact. This is an admirable change, and not one based on “sharing”, it is one based on “creating value”.
Unilever is creating value for shareholders, consumers and communities by being totally transparent about creating value for itself. This is not a company writing endless cheques to charity to buy itself good and “share value”. This is a company that believes quite rightly that it can make money by critically revisiting and overhauling the way it does business. It is creating new value, not sub-dividing the value it once had.Not one project in the Unilever Sustainable Living Plan should add one cent of on-cost to products or business. Instead, it creates new value by innovating products, being more responsible with manufacturing and sourcing as well as demanding new ethical, fair and profitable standards from suppliers and partners.
The world needs to move and move soon, shifting from the emperor’s new clothes of citizenship and CSR, to one of creating value – value that is sustainable, equitable, long-term and authentic.
So what should we do?
Creating Value, means doing five things well, and soon.
- Business needs to work closely with government: not to over-ride and under-regulate, but identify on a macro-level significant challenges host nations face and apply their scale and ability to fix them. This means less coffee and croissants in Davos, and more think tanks, action-tanks and accountability to play a positive role. Pay your tax, work for and with people, not just politicians,and moreover make firm nation-by-nation commitments to create value in the nations where your company is privileged and permitted to operate.
- Business needs to break some bones and disconnect CSR, philanthropy and charity from sustainable business and value: both in innovation and creation. It is a hard job, but engineering sustainable business practices across the supply chain and not purely preaching “helping the needy” in marketing and social media, is sure to create long term value. This is crucial in a world where we no longer have enough fish to teach people how to put the rod in the water.
- Governments need to ‘re-claim’ authority,whereas business must promote this in public research, innovation, societal studies and academia. The leaders we elect no longer control the drugs, seeds and industries that feed, clothe and keep our people healthy. We no longer make fair choices. Instead we share choices with businesses that have simply acted where governments have too often feared to legislate.
- Civil society organisations, charities, NGOs must regroup and reframe the debate. They should no longer be dependent on the corporations that guilt-pay them to “share value”. They must re-engineer, re-innovate, and move into solutions, product design and commerce. The time for these organisations to become producers is now, and global consumers want it.
You have to change, you and me. We have to face the fact that we are not the smartest, brightest. We must move aside for those that know, care and are affected by the actions and reactions of those that have failed and continue to do so. Break the circle of the Mobius band of leaders, CEOs and marketers moving endlessly from one multinational to another. Perhaps, the best value we can create is to finally admit we do not have the answers and move aside and let others try. And this means a transfusion from leaders in the NGO world and in government to business and vice versa.
There is a huge opportunity here. Take the half a trillion Euros lost on the European Utility Market value due to the boom in off-grid solar energy. This value has not been lost: it has to go somewhere else. We have the money, we have the people, we have the businesses and above we have the passion. We simply need the resolve to stand up, to own it and to create new value. There has never been a more important time to do so.
Jonathan Sanchez is co-founder of STAND, a consultancy service for leaders in business, politics and sustainability. The business works with leaders who wish to develop their personal and corporate purpose to drive sustainable growth and politics. Prior to STAND, Jonathan joined Unilever in 2011 as the Global Vice President for Communications & Sustainability with responsibility for Russia, Africa, Middle East and the South East Asia and Australasia regions. He lives in Bangkok and Singapore and is passionate about South East Asian Politics, Sustainable Business & Development and street-food.