From CSR to CSV, a new perspective

“For a company to be successful over the long term and create value for shareholders it must create value for society”, Yves Manghardt, CEO of Nestlé Middle East at Ta’atheer – the Middle East Social Impact & CSR Forum, taking place May 2016 in Dubai.

A nice quote, highlighting that organisations should bring their CSR (Corporate Social Responsibilities) activities to the heart of an organisation. Harvard Professor Michael Porter and Mark Kramer, reiterate the same in their article ‘Creating Shared Value’ by claiming that companies must take the lead in bringing business and society together and become so-called ‘social entrepreneurs’. They say that most companies still remain stuck in a ‘social responsibility’ mind-set in which societal issues are at the periphery, not the core.

The term Creating Shared Value (CSV) suggests that economic and societal benefits go hand in hand creating company and community value at the same time. Companies might even convert their social responsibilities into business opportunities. The idea of shared value originates from the fact that businesses need a successful community not only as a market but also to provide critical input and supportive environment.

Though a growing number of companies such as Nestlé have embarked on this new concept, this is still pretty much in its infancy. At the Ta’atheer event I noticed some confusion amongst attendees and some even indicated not fully grasping the difference between both terms. It might be useful to map both concepts against each other in order to fully understand where exactly the differences lie.

Below table shed light on how to compare CSR versus CSV.

csrSource: Porter, M.; Kramer, M (2011), Creating Shared Value. How to reinvent capitalism – and unleash a wave of innovation. in: Harvard Business Review, pp. 62-77.

Creating shared value is in a way exceeding CSR. Where CSR is considered to be a separate program -quite often managed by and executed from the communication or public affairs department-, CSV is integral to a company’s way of doing business. The concept of shared value is not about sharing what already exists but instead expanding the total pool of economic and social value by weighting opportunities that are beneficial for both the company and for society same time.

In order to be successful, the CSV approach will request from the leadership team in companies new skills such as deeper appreciation of societal needs, and a deeper understanding of what regulates a company’s productivity. Therefore it is crucial as a first step to fully understand the concept of CSV and what it stands for.

This article was written by Stephanie Delaey, CSR consultant at SD consulting.