CSR & Shared Value - Rajit Pal Singh

I think of CSR not merely as compliances or philanthropy but more in terms of a value shift underway in the society. This values shift encompasses a move away from I, my corporation, my business to we, our stakeholders, our community, the overall context in which my business is operating in and how I can add value to my own business through social inclusion. One of the great business thinkers of the 20th Century, Peter Drucker noted, "Every few hundred years, there occurs a sharp transformation. Within a few short decades, society - its worldview, its basic values, its social and political structures, its arts, its key institutions - rearranges itself. And the people born then cannot even imagine a world in which their grandparents lived and into which their own parents were born. We are currently living though such a transformation." (The Post-capitalist Society, 1993.) This transformation is getting mirrored in our conception of Corporate Social Responsibility as well. What started during the industrial revolution as industrial welfare programmes to ensure minimum working conditions for the workforce engaged in industries at the time, is now morphing into a 'development that meets the needs of the present, without compromising the ability of future generations to meet their needs' - a definition provided by the Brundtland Commission in 1987.

I see another level of transformation in the making - towards formulating and actioning 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 - in short, creating shared value. ('How to Fix Capitalism and unleash a new wave of growth' - an article in HBR Jan-Feb'11 by Michael Porter and Mark Kramer). I highly recommend this article for anyone interested in understanding the CSV concept further. It is brilliantly illustrated with examples and models that help one determine the distinction between CSR and CSV and also appreciate the nuances of both.

This, in essence, is another progressive way of thinking about one's business and operating model to create a win-win for all the stakeholders. It is my belief that though both these approaches - CSR (Corporate Social Responsibility) and CSV (Creating Shared Value) are different, yet they complement each other. Organizations embarking on either are undertaking their first step towards becoming more responsible, and the path that they choose is a function of the resources - time and talent, available to them. Small and medium sized organizations might find it a challenge to embark on CSV as they might not have right talent or sufficient resources at their disposal that would enable them to relook at their business model or determine the manner in which they could add more value to their stakeholders and community; this is a manageable task for larger organizations. These small and medium sized organizations find it relatively more manageable to undertake the required compliance certifications integral to CSR, and hence choose this path towards being more responsible. A couple of examples from some of the more well-known of these large organizations to illustrate this point ('How to Fix Capitalism and unleash a new wave of growth' - Michael Porter and Mark Kramer) - An illustration of an organization that reconceived its products and markets in order to maximized CSV is provided by GE. Sales of GE's Ecomagination products reached 18 bn USD in 2009 - the size of a Fortune 150 company. GE now predicts that revenues of Ecomagination products will grow at twice the rate of total company revenues over the next 5 years. An example of the way an organization has addressed resource optimization at the same reducing costs is provided by Coca Cola. Coca Cola has already reduced its worldwide water consumption by 9% from a 2004 baseline – nearly halfway to its goal of a 20% reduction by 2012.  was part of Mark Kramer's workshop on Creating Shared Value in New Delhi, where certain India-specific examples of organizations like Novartis, GE, Mahindra World Housing Industry, Wall Mart and ICICI were highlighted. Novartis recognized an opportunity in rural India where 70% of India lives and where people don't have health-seeking behavior; Novartis created distribution channels with the help of 300 health educators, impacted 42 mn people and is growing at a healthy pace, with plans of being replicated in other developing countries as well. ICICI is performing crop insurance for small-hold farmers, impacting 2.5 mn farmers in India, in the process turning into an attractive business proposition for ICICI. Examples of organizations that think of Corporate Social Responsibility in terms of reengineering their business to create more value and win-win all around, abound. The end goal should be becoming more responsible, the route that organizations take to achieve this - CSR or CSV, is up to them. Both routes are relevant in the end game.