RIYADH — While corporate social responsibility and its CSR acronym have become generally familiar terms, the more novel and fundamentally different practice of Creating Shared Value, or CSV, remains less understood despite its growing adoption by leading multinational companies all over the world. “CSR responds to community needs and addresses local social concerns,” said Dr. Dima Jamali, American University of Beirut Professor of Management, and Kamal Shair Endowed Chair in Responsible Leadership. “Initiatives in our region have mostly entailed spending pre-allocated budgets on chosen charities or NGOs, volunteering time, and donating products, in the spirit of “giving back” to communities within which profits are made.” “Creating Shared Value on the other hand is embedded at the core of companies implementing it,” said Jamali, whose book “CSR in the Middle East” (Palgrave Macmillan, 2012) covers the evolution of the practice in the region. “Companies adopting CSV recognize that their own long-term sustainability and growth are directly linked to those of their communities, suppliers, customers and consumers, as well as the safeguarding of the environment. Many of those operating in the region, mainly multinational and large local entities, have in recent years been moving away from pure philanthropy to more institutionalized and hybridized approaches, while monitoring value added and impact.” CSV originates from a concept developed by Harvard Professor Michael Porter and Harvard Kennedy School of Government Senior Fellow Mark Kramer, who first presented it in a 2006 Harvard Business Review article, and further elaborated on it in a January 2011 follow-up piece. The authors define CSV as “policies and operating practices that enhance the competitiveness of a company while simultaneously advancing 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.” They add that “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 center.” A key example from the article of companies successfully incorporating CSV is Nestlé, the world's Nutrition, Health and Wellness leader. “Nestlé recognizes that its success depends on creating value for people – from the farmers who supply our products, to our employees, consumers and the communities where we operate,” explained Nestlé Middle East Chairman & CEO Yves Manghardt. “We live up to our commitments to environmental, social and economic sustainability through business practices embedded at the core of our operations, which include initiatives to produce more with less resources, reduce energy and water consumption, improve working conditions for our suppliers, and enhance products to meet the specific needs of our customers and consumers.” As Porter and Kramer highlight, “inevitably, the most fertile opportunities for creating shared value will be closely related to a company's particular business, and in areas most important to the business. Here a company can benefit the most economically and hence sustain its commitment over time. Here is also where a company brings the most resources to bear, and where its scale and market presence equip it to have a meaningful impact on a societal problem.” For Nestlé, these areas are nutrition, water, and rural development, which it tackles through published commitments and action covering various measures to improve its products; managing the use of resources at its factories, specifically water, to promote environmental sustainability; working with farmers around the world to help make farming a desirable profession and increase quality and quantity of yields; as well as compliance with international, local and stringent internal regulations. On the rural development front, the Company connects with farmers in different ways that include providing technical trainings through capacity building programs; offering financial assistance and services; and direct purchase of products from those with whom it shares long-term relationships. One palpable example is the Nescafé Plan, which aims to increase the amount of coffee beans Nestlé directly sources from farmers and their associations. By the end of 2014, Nescafé had sourced around 186,750 tons directly through its Farmer Connect operations from about 171,900 farmers. It also distributed more than 29.8 million high-yield, disease-resistant coffee plantlets to farmers in 2014 alone. In the Middle East, where under-nutrition and obesity exist side-by-side, the company's main focus area is on nutrition, emphasizing continuous nutrition improvement of its product portfolio based on research and according to international recommendations, as well as micronutrient fortification to address specific local deficiencies. Nestlé also delivers nutrition information, advice and portion guidance to help consumers make informed choices to lead healthier lives, and follows strict guidelines to ensure responsible marketing to children. It also implements nutrition awareness and community initiatives, namely the Nestlé Healthy Kids Program – Ajyal Salima. Launched in 2010 and targeting 9-11 year-olds, it incorporates a tailored curriculum scientifically developed by the American University of Beirut, and implemented in the region in collaboration with local governments and NGOs. Porter and Kramer conclude their CSV overview with the acknowledgment that “not all societal problems can be solved through shared value solutions. But shared value offers corporations the opportunity to utilize their skills, resources, and management capability to lead social progress in ways that even the best-intentioned governmental and social sector organizations can rarely match.” — SG
