Creating Share Value - the new business model?

19 November 2013

Creating shared value – the new business model?

The groundswell is growing for a major shift in corporate strategy development, where profit and societal issues are intrinsically linked with the aim of creating shared value (CSV).

Traditionally the intent of corporate strategy is to ensure profit, while the intent of corporate social responsibility (CSR) is to address social or environmental issues that are often separate to core business. The strategic intent of CSV is to generate profit while addressing these issues.

"Innovative businesses are using CSV to assess social and environmental issues as commercial opportunities. It is about creating business value by creating societal value," said Net Balance Director, Terence Jeyaretnam.

"Innovation and creativity are key to CSV, which is beyond tweaking business models or corporate philanthropy. It is about weaving social need in to the fabric of business and creating new ways of doing things. Importantly it is evidence-based. It is not about intention, but measureable impact in solving identified problems."

"Businesses are uniquely positioned to leverage their size and resources to address environmental and societal problems sustainably and at scale," said Mr Jeyaretnam.

Net Balance, Australia’s largest sustainability advisory firm, views CSV as fundamentally a growth strategy enabling business to expand existing markets or create new markets for products and services that address societal needs. It is also strongly underpinned by improving the productivity of the supply chain to reduce costs whilst minimising societal and environmental impacts

"We believe CSV is a valuable addition to the evolving the sustainability and CSR agendas. It does not replace these well-known frameworks but builds on their core principles and aspires to create business value from strategically addressing societal and environmental issues with new or reframed products, services, business models or supply chains," said Mr Jeyaretnam.

Net Balance is undertaking research into CSV in Australia and will release a green paper early in 2014. Companies taking part in the research include National Australia Bank (NAB), BT Financial, LionCo, Stockland, PwC, Nestle and Toyota Australia.

"The concept of shared value has helped us to review the impact and sustainability of our corporate responsibility programs by ensuring that we understand the purpose of our business and leverage our strengths when addressing social issues," said NAB General Manager, Corporate Responsibility Paula Benson.

"We have been exploring ways in which we can innovate our corporate responsibility approach in order to deliver social and economic value, while complementing our overall business strategy. Some examples of this are our environmental upgrade agreements for retrofits of commercial buildings, our work building indigenous business partnerships and our support for mental health issues and suicide prevention which has a direct link back to our MLC insurance business.

"It is critical that we continue to consider how the concept of creating shared value can enhance the longevity and impact of our programs, " said Ms Benson.

The term CSV was coined by Professor Michael Porter and Mark Kramer in a publication ‘Creating Shared Value- How to reinvent capitalism’ (Harvard Business Review, January/ February 2011). It was followed up by a paper from their colleague Marc Pfitzer, Innovating for Shared Value (Harvard Business Review, September 2013).

Marc Pfitzer will be in Melbourne on 26 November as key note speaker at the Creating Shared Value conference in Melbourne. Net Balance, NAB and Three Pillars are hosting the event. The conference will also feature expert commentators including Tim Costello, CEO World Vision, Paula Benson, General Manager Corporate Responsibility NAB and Les Hems, Director Net Balance. Net Balance will also present research findings on how leading organisations in Australia are implementing CSV.

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For more information:

Net Balance – Kathryn Franklin, 0419 883 928

National Australia Bank – Kelly Quirke, 0427 208 478

Net Balance CSV Green Paper

Net Balance is developing a green paper exploring the role of CSV in Australia. In addition to NAB, other organisations taking part include BT Financial, LionCo, Stockland, PwC, Nestle and Toyota Australia. The green paper will be released in early 2014. The projects/ products being examined include:

BT Financial

Super for Life – An easy to use on-line superannuation fund which enables customers to manage their super with their everyday banking accounts.

LionCo

XXXX Gold – A mid strength beer which has become the leading beer brand in Australia, out-performing full strength beer.

Stockland

Liveable residential communities - Developing residential communities that are stronger, healthier, connected and more resilient.

PwC

AskU - A market research app that helps organisations to gain faster, real time market insights at a cost of 20 cents per question. Ten cents from each question answered goes to charity.

PwC

Indigenous Consultancy - A purpose built consultancy, majority owned and operated by Indigenous people to empower and provide solutions for indigenous communities.

Nestle

Uncle Toby’s Oats Program - Working with researchers, agronomists and farmers to secure the supply of quality Australian oats.

Toyota Australia

Supplier Development Program - Working with local suppliers to improve productivity, safety and on time production of parts as well as diversify operations to improve their financial viability.