The Difference Between Corporate Social Responsibility and Creating Shared Value

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In today’s increasingly aware society, it has never been more important for companies to demonstrate an adherence to positive values that enhance life for everyone. Over the years bigger businesses have constructed various schemes and policies to embed such values in their company culture. In this article we compare and contrast two of the most popular forms of thinking –  corporate social responsibility and creating shared value.

What is Corporate Social Responsibility (CSR)?

Corporate social responsibility is usually encapsulated in a set of policy directives and goals that are used to govern a company’s activities in such a way as to limit its negative impact on local communities, the environment and to promote a positive consideration of human rights issues.

It can involve the following:

  • Programs in local communities designed to specifically benefit residents, such as putting money into young people’s sports schemes or schools.
  • Socially responsible investment ensuring that the business only works with positive partners, eschewing relationships in sectors such as alcohol, tobacco, gambling or carbon intensive energy production.
  • Developing relationships with employees and customers that go beyond standard business arrangements. For instance, offering employees childcare services or extended maternity leave or putting on special networking events for customers.
  • Environmental protection and sustainability that helps offset some of the ecological damage caused by the business with restorative programs.

What is Creating Shared Value (CSV)?

Creating shared value is about generating new policies and operational procedures that  allow your company to maximise revenues and profitability, whilst still offering clear benefits that resolve social issues. It is a relatively new concept in business, which was proposed in a now famous article that was first published in the Harvard Business Review in 2011 by Professor Michael Porter and Mark Kramer.

It is perhaps best illustrated by an example. Imagine a clothing company in South America that has developed a new fibre that can be processed for only a fraction of the energy cost of alternatives that is entirely derived from natural sources. This new fibre would help rejuvenate farming in the local area, would give the consumer a sustainable source of clothing and would reduce the world’s overall carbon footprint.

Creating shared value doesn’t just examine the way the business can potentially impact society and the environment – it functions as a core element of an organisation’s operations. It is about making business into a vehicle for a better world, building more honest, responsible and transparent corporations, that are invested in creating positive social outcomes.

A good article that explores how CSV works in the real world with examples and advantages can be found at the British Accreditation Bureau website giving you more insight into this new business ethos.

How are CSV and CSR Similar?

At first glance you would be forgiven for thinking that CSR and CSV are very similar and perhaps even the same. This is because both can create a real impact for local communities and the environment. Increasingly CSR has been focused on environmental issues and the dangers of pollutants, carbon and plastics used by the organisation, and there have been serious attempts to resolve this impact.

CSV also examines how environmental and social impacts can be reduced by the core business processes. So in this sense the outputs of both CSV and CSR are the same – a reduction in significant impact and an approach that is strongly founded in sustainability. And again both harness the popular current thinking that businesses are not discrete entities detached from the wider world and play an important role in creating the society we live in.

Interestingly some of the certification currently available to businesses on the worldwide stage can help with both CSR and CSV. Of particular note is ISO 14001, the internationally recognised standard that allows businesses to implement an environmental management system (EMS). It grants organisations the power to use a system of continual improvement to limit their environmental impact.

The Most Significant Differences Between CSR and CSV

  • Philosophy and ethos – creating shared value has a positive approach to using business as a solution for social issues, whereas corporate social responsibility creates value in the local community, but not always as a direct result of enterprise and profits.
  • Separation– CSR treats social issues as if they are separated from the company’s core business. For instance, investing in environmental rescue schemes in the local community. CSV questions how the core business of the company can resolve social issues in a potentially beneficial manner.
  • Motivations– CSR is often led by pressures from outside agencies and groups, requesting that the company take a more responsible stance with current issues and environmental directives. With CSV there the company’s actions are driven internally, with management often financially incentivised to find social issues to address. 
  • Profitability– with CSV the business aims to create economic value in tandem to social values by addressing the issues that relate to the company’s core business. With CSR there is an assumption that a percentage of the organisation’s profits are redistributed to pay for activities to resolve selected social issues.
  • Publicity– over the past few years as CSR has grown in popularity, but some critics of corporate policies have dismissed these activities as stunts designed to distract from the real impact of the business. With CSV the business becomes the marketing, as core business activities are generating real social value this impact becomes part of the public consciousness.

Companies Succeeding with CSR

There are now many companies on the global stage that are effectively implementing CSR policies that benefit society as a whole. According to Forbes 2017 list, some of the most notable include:

  • Lego – this company has embraced CSR at every level, most notably its Build the Change and Sustainable Materials Centre initiatives as well as its growing partnership with the WWF, demonstrating a clear adherence to sustainable issues.
  • Microsoft– praised for its use of an open source platform that encourages development and evolution that are concurrent with wider social aspirations of a cohesive, global society.

Companies Succeeding with CSV

CSV is definitely creating an impact on the wider world whilst also generating profits for companies on a large scale. Some of the leaders in this sphere will be familiar to everyone today:

  • BMW – the company’s Guggenheim Lab is a special development laboratory that is set to travel to nine major cities during its lifetime, helping support teams of ground breaking individuals address current issues arising from our increasingly urban lifestyle.
  • Heinz – the company’s micronutrient program has now helped over 5 million children in 15 developing countries battle iron deficiency, vitamin and mineral malnutrition. With full approval from UNICEF and the WHO this program is creating phenomenal social value.

And Finally…

Gone are the days when corporate business could be accused of being a machine that places profit above people and the planet. With corporate social responsibility a change in direction was made – now with creating shared value becoming a real part of business the future looks increasingly bright and positive for all of us.