The Australian Centre for Philanthropy and Nonprofit Studies, qut
From one-way giving to ‘shared value’
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- From predictive to emergent business giving strategies
From one-way giving to ‘shared value’As many companies seek to be more engaged with the communities they operate in, terms such as CCI and ‘corporate social investment’ more accurately describe what they are doing as part of their social responsibility remit. The context of global corporate philanthropy is changing: ‘As global companies strive to be responsive to the citizenship priorities set by communities where they operate, they treat corporate philanthropy as an investment in a healthy and sustainable ecosystem that supports growth. Their global philanthropic strategy is to leverage corporate assets (business knowledge, cash, employee time, expertise and products) and target them to maximise the social and business returns that will keep the cycle of success in motion. This attitude is reflected in the way companies are beginning to speak about corporate philanthropy as “corporate community investment” or “corporate social investment.” Especially in a global setting, “philanthropy” is no longer a preferred term.’ (The Conference Board 2013) Many companies, such as IBM, are taking the assets they offer to fee-paying clients and offering them to benefit other parts of the community. By adopting a strategic approach and applying business principles, large corporations can provide effective long-term programs to society instead of ephemeral one-off initiatives. As Porter and Kramer (2011) posit, companies must take the lead to bring business and society back together. Though their thinking is not new (organisations such as the US-based Boston College Center for Corporate Citizenship, the UK-based organisation Business In the Community, and the Asia Pacific based Centre for Corporate Public Affairs have been championing the mutual societal and business value of CCI for more than two decades), Porter and Kramer have neatly packaged the mutual benefits that can accrue to the community and to businesses when companies seek to create commercial and social value from their operations. They describe this new way to achieve economic success as ‘shared value’, a concept that takes the traditional value principles of economic progress and applies them to social progress: ‘The capitalist system is under siege. In recent years business increasingly has been viewed as a major cause of social, environmental and economic problems. Companies are widely perceived to be prospering at the expense of the broader community. Even worse, the more business has begun to embrace corporate responsibility, the more it has been blamed for society’s failures. Companies must take the lead in bringing business and society back together. The recognition is there among sophisticated business and thought leaders, and promising elements of a new model are emerging. Yet we still lack an overall framework for guiding these efforts, and most companies remain stuck in a “social responsibility” mind-set in which societal issues are at the periphery, not the core. The solution lies in the principle of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the centre. We believe that it can give rise to the next major transformation of business thinking. The concept of shared value can be defined as policies and operating practices that enhance the competitiveness of a company while simultaneously advancing in the economic and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal and economic progress. The concept rests on the premise that both economic and social progress must be addressed using value principles. Value is defined as benefits relative to costs, not just benefits alone. Value creation is an idea that has long been recognised in business, where profit is revenues earned from customers minus the costs incurred. However, businesses have rarely approached societal issues from a value perspective but have treated them as peripheral matters. This has obscured the connections between economic and social concerns.’ (Porter and Kramer 2011) Companies such as Campbell Soup and IBM find the more they deliver social value to the community, the better they perform in the marketplace. It is business giving that harvests rich rewards such as increased employee engagement and market performance (Conant 2013). Even the naysayers within companies are becoming convinced of the value of developing business giving programs. This is supported by research from McKinsey & Company that pinpoints a number of areas where the value of corporate responsibility approaches can be measured, including growth, returns on capital, better risk management and better quality management (see Table 12.1). Table 12.1 Valuing corporate responsibility (Adapted from Bonini, Koller and Mirvis 2009) Value in environmental, social and governance (ESG) programs: Growth new markets: access to new markets through exposure from ESG programs new products: offering to meet unmet social needs and increase differentiation new customers/market share: engagement with consumers, familiarity with their expectations and behaviour innovation: cutting-edge technology and innovative products for unmet social or environmental needs, possibility of using these products/services for business purposes – e.g. patents, proprietary knowledge, and reputation/differentiation: higher brand loyalty, reputation, and goodwill with stakeholders Returns on capital operational efficiency: bottom line cost savings through environmental operations and practices – e.g. energy and water efficiency, reduce need for raw materials workforce efficiency: higher employee morale through ESG; lower costs related to turnover or recruitment, and Reputation/price premium: better workforce skills and increased productivity through participation in ESG activities; improved reputation that makes customers more willing to pay price increase or premium Risk management regulatory risk: lower level of risk by complying with regulatory requirements, industry standards, and demands or NGOs public support: ability to conduct operations, enter new markets, reduce local resistance supply chain: ability to secure consistent, long-term, and sustainable access to safe, high-quality raw materials/products by engaging in community welfare and development, and risk to reputation: avoidance of negative publicity and boycotts Management quality leadership development: development of employees’ quality and leadership skills through participation in ESG programs adaptabilityability to adapt to changing political and social situations by engaging local communities, and long: long-term strategy encompassing ESG issues. The notion of business giving is being reframed and has moved a long way from the traditional model of philanthropy and strategic philanthropy (Centre for Corporate Public Affairs and Business Council of Australia 2007). Some new models are proving more successful than others. Corporate foundations are being reinvented as vehicles to fund approaches for potent social change. They can be regarded as existing not at the core of a company but on the periphery, where they can be well positioned to build a bridge to the adjoining society and engage with it: ‘Companies and NGOs are expanding their horizons and looking for partners across sector boundaries—Cross-Sector Partnerships (CSPs). These CSPs create value on multiple levels—expanded portfolio of resources and competencies and superior social value. A Danish study indicates that corporate foundations are legitimate players in the realm of CSR and respected across sector boundaries due to their natural connection to both the private sector and civil society.’ (Doh 2013) In the UK, retailer Marks & Spencer (M&S) put corporate responsibility into practice with ‘Plan A’, designed to put sustainability at the heart of its business strategy. Plan A was developed by M&S as part of a whole-of-business transformation from 2007 (at the time, the Chief Executive Officer (CEO) of the company said ‘Plan A’ green strategy was so-named because there was no Plan B); (Butler 2013). The M&S Plan A ‘green’ strategy is an outward-looking concept that works with external businesses to build livelihoods, protect the environment and improve wellbeing within communities and, in turn, has delivered substantial financial benefits back to M&S. What M&S has done may be termed as strategy-driven corporate responsibility, which has included driving CCI. It is highly market-oriented and applies the same principles as to any other part of a company’s business. Plan A uses financial, manufactured, intellectual, natural, social and human resources and relationships to achieve its core purpose of enhancing lives everyday through inspiration, innovation, integrity and being in touch (Wiggins 2014). From predictive to emergent business giving strategiesA successful business giving strategy should be seen as organic, open to influence from unforeseen social changes. Mintzberg, Goshal and Quinn (1998) call this ‘emergent strategy’ (see Figure 12.1). It accepts that the initial intentions will collide with a changing reality, learn from it, and lead to a constantly evolving strategy. Social change is inevitable, so a business giving strategy that accommodates change will have a better chance of long-term success. 
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