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Creating shared value is anything but business as usual

2016-03-11CSR AisaEsther Teh0

Companies are finding new ways to accelerate growth and increase competitive advantage through innovative business models that meet societal needs at scale. These companies are “creating shared value” (CSV) by using their core business processes and practices to enhance the competitiveness of companies while simultaneously improving social and environmental conditions. Though, innovative business models will only prove useful if they solve real problems.
While continuously promoting commercial activities, companies need to pay attention to three key elements in creating shared value. First, identify social needs that the business can begin to address. Second, make use of the corporate assets, expertise and knowledge within the business to address those particular social needs. Third, seek out business opportunities to address those needs by using reliable and commercial approaches.
Rather than viewing social needs as the prerogative of solely CSR and philanthropy, CSV focuses on finding the business opportunities hidden in social problems, creating a win-win situation. Hence, social issues are not mere externalities to be mitigated but rather core business concerns that have substantial impact on growth and operational efficiency. In the case of a local supermarket supporting single mothers to produce reusable grocery bag, the supermarket is responsible and may score high on social value, but may be losing out big on its economic value and gaining competitive advantage.
Some of the fundamental principles seen in successful CSV strategies include:
Start off from the top with a purpose. Kirin is an early adopter of CSV in Japan. With the company gearing towards the Kirin Group Vision 2021 (KV2021), a centralized ‘shared value’ unit was formed to work on long-term business plan based on the CSV fundamentals. Kirin embeds social mission into their corporate culture to the point it is ingrained in their culture, products and services.
Research and define specific needs. Inarch 2011, when the earthquake and tsunami hit northeastern Japan, Kirin put forward its shared value approach. The company established a cross-functional project team to work external partners to find out what was needed most by the communities. Research found that the communities needed help to restore the local food culture and industry. In November 2013, it released Hyoketsu Wanashipear juice. This product uses pears from the Fukushima region, an area that faced consumer unease because of worries that agricultural products have been affected by the nuclear crisis ignited by the tsunami. The product was received well by the consumers.
Build relationships and think of inclusive growth. Jolibee, a fast food chain headquartered in the Philippines, depends largely on ingredients such as rice and vegetables. Jolibee launched the Farmer Entrepreneurship Program in 2008 to improve small farmers’ skill, productivity and income in exchange of high quality requirement for daily raw materials. Jolibee partners with the Catholic Relief Services Philippines and National Livelihood Development Corporation. This partnership combined the elements of market, finance and agro-enterprise clustering that allowed farmers to meet the volume, quality and timeliness requirements of institutional buyers.
Think global, act local. Similar to Jolibee’s initiative, Nestlé Malaysia, a food and beverage company is guided by a policy on Environmental Sustainability that states that, ‘…when selecting agricultural raw materials,  Nestlé prefers to use agricultural materials which are produced based on sustainable practices and are locally available.’ The company employs agricultural staff and works with support staff to train farmers, provide them with better technology, and assist farm communities in local development projects. Through its farming initiative, Nestlé Paddy Club, farmers are taught new ways of paddy farming. An innovative method called Semi-Aerobic Rice Identification (SARI) is used, which is more ecological than conventional farming techniques since it uses water more efficiently. Reduced greenhouse gases are emitted from paddy farming as farmers use environment-friendly microbial supplements such as Agri-Organica provided by Nestlé.   In turn, Nestlé gains continuous supply of reliable, safe and traceable rice used in the production of infant cereals.
When businesses tackle social problems as a central part of their competitive strategy, they can achieve large-scale and fundamentally sustainable changes in society. Learn more about successful CSV initiatives in Asia at the CSR Asia’s Creating Shared Value Training in Kuala Lumpur on 5 March.
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