Shared Value is moving business and wider society far beyond traditional CSR models. Following The 2015 SharingValueAsia Summit, FleishmanHillard’s Rachel Catanach discusses the changing concepts of doing business across global markets
Is the act of a business proclaiming to ‘give back’ to society congruent with the principles of Shared Value?
Businesses ‘give back’ in many ways. From employment, to dividends, to taxes paid, but what is clearly resonating in society today is that it’s not only about the money. Societal expectations of business have changed. It is now about how business behaves with its employees, its customers, its suppliers and its investors. A high level of transparency and accountability with all stakeholders has never been more important.
A lot of businesses, particularly in Asia, have a philanthropic ethos, which is commendable. However, it is no long sustainable for business to rely on philanthropy as a way to build social capital, particularly if they are giving with one hand and creating a negative impact with the other. One does not cancel out the other. Consequently, businesses are confronted with the reality that there needs to be a stronger, more direct correlation between their actions and the impact their business is having.
The other driver in this equation is that government alone cannot address all the demands now placed upon it. Governments are looking to business in a limited but deliberate manner to work with them and other stakeholders to provide solutions to some of the big problems that they face. Driven by consumer demands and the innovative capabilities of the private sector, this is certainly the case in Asia, and China’s engagement with business on environmental issues is a case in point.
Does shared value present a more sustainable model relative to other corporate mechanisms for social impact?
There is a spectrum of contribution mechanisms. Philanthropy is at one end of the spectrum, and traditional CSR, where social value creation is indirectly linked to the business, is somewhere in the middle. And then there is Shared Value, which is integrating your social, economic and environmental contributions with your core business as part of the strategic decision-making process, working hand in hand with government and civil society to create effective solutions that simultaneously contribute to a company’s bottom line.
So it is certainly distinct from CSR 2.0 and 1.0, but it is very much on the spectrum and it will continue to evolve because it is about corporate behaviour. But this is also what makes it more sustainable. Shared Value moves far beyond a commodity-based exercise that may be cut in times of economic stress and far from being centred on individual relations; it is about being innovative to create social and economic capital and is central to a company’s strategic development and competitive advantage.
According to Havas 2015 Meaningful Brands Survey, most people would not care if 74% of all brands disappeared and most believe companies & brands should play a role in improving our quality of life and well-being. Where does this arguably place business relative to government and civil society in the market?
This is reaffirmation of business as being complementary to government and civil society. In some cases, business may take a lead role, but this is not across the board. Collaboration is critical to so many areas of development. Infrastructure development cannot be executed by business alone, for instance, because of the need for the government’s long-term planning policies, financing capabilities and commitment. Business still requires the support of government to implement many social solutions.
Have government, NGOs and civil society been supportive of Shared Value? How can business attract the support of multi-sectoral stakeholders?
It comes down to the base components of good communication – clear expectations and a shared understanding and language. The language gap between the sectors is not insurmountable, but it can at times require a facilitator or translator. Business can fill this niche, building a bridge between civil society and government to ensure common objectives.
The access of businesses to consumer insights puts them in a better informed position than other market actors, including the government. The challenge for business, of course, is that they need to see a return on investment from this endeavour. This is where government, NGOs and civil society organisations can assist by demonstrating the reward potential of multi-sectoral collaboration models, both in terms of the bottom line and social impact. The expectation that real business value will be generated is inherent to shared value, which is why it presents a more competitive proposition than CSR.
Of course, collaboration is only possible between those that have a common ground and common agenda. Ideological divides may not always be overcome and so partnerships are always dependent upon the good will of the individual stakeholders.
Are B2B partnerships unfairly overlooked and perceived only in commercial terms?
Many B2B companies embrace Shared Value principles and see the robust opportunities that this model presents for innovation throughout their supply chains. It’s possible that such B2B partnerships don’t get the same reputational rewards, but the return can include increased efficiencies on a larger scale, along with improved environmental and social impact and employee engagement. Bear in mind, however, that the principal goal of B2B businesses is not to win the hearts and minds of consumers, but to ensure they can build the business relationships they need to optimise their position and performance.
What are the best mechanisms to ensure and deliver transparency in Shared Value programmes?
Shared Value programmes need to be inextricably linked with a company’s strategic objectives. Measurement, therefore, needs to be aligned to these objectives as well the programme’s core goals, whether these are development of new market opportunities, new products and services, employee engagement, or social or environmental impact, and so forth. There is no silver bullet approach to measurement and it has to be bespoke. It is all about determining what metrics work best with your strategy and how you can use them to substantiate your shared value position and strategy.
Rachel Catanach is the Managing Director of Fleishman Hillard Hong Kong