ITL #97 The illusion of shared value: time for a systemic re-think
10 years ago
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Sustainable business is better business, and creating value is better than only sharing it. By Jonathan Sanchez.
Businesses are intrinsically selfish. This may be a hard statement to accept, but it is an honest one. Contrary to American corporate law, whereby corporations are strangely afforded human rights, businesses are not people. Nor are they charities, NGOs or civil service organisations. They are human constructs which serve one purpose, to grow and, as a result of that growth, to deliver profits or dividends for owners or their investors.
None of this is necessarily wrong. Capitalism, much like democracy, currently appears to be the least bad model of global development. It provides employment, capital flow, purchasing power and leads to increased standards of living while generating cold hard currency which can be continuously recycled from one corporate or state investment to another.
Creating wealth is a constant and power has shifted from government cabinet rooms to corporate boardrooms. CEOs are able to define and set global policy, and the world now revolves around stock earnings, profitability and a seemingly endless ability to innovate, whereby new ways are ‘found’ to improve how we live and develop further what we consume.
Someone must pay
But it is wrong, as many do, to proclaim "long live the free market economy" because there is simply no ‘free’ market. For anything to be extracted, constructed, engineered or assembled, something or someone has to pay.
Before we address the people cost, we should first consider the environmental cost... Rather than issuing a plea to save the orangutan, Palawan, or whales at Sea World, we can instead focus on the financial, societal and business impact of environmental degradation.
We have little left to extract value from and we are running out of resources. Putting it simply, without oil, water, minerals, soil, what business will be left?
We can no longer ignore that many of our crops are failing across the centre of the planet, and the lack of basic commodities such as wheat leads to civil unrest. In Egypt, bread it appears is appears more valuable to people than votes or democracy. If we fail to provide clean drinking water, a commodity that is rarely free, what is to stop more bloody protests and governments firing on thirsty citizens in Latin America? If we cannot help our utility companies to shift to renewables, what will happen when we hit our next oil price spike and the currency that is black gold wreaks untold damage on the cost of living?
A worsening picture
These social and economic issues will not go away. In fact they are getting worse. And as commerce extracts the last elements of ‘free’ value from our planet the money invested to date and the resources funded have to go somewhere and the market will not stop.
We are reaching the tipping point: the point at which the market has evolved. But in order to achieve systemic change, discussion about ‘sharing value’ – or Creating Shared Value – will not put food on the table, generate energy nor find new and sustainable mineral resources.
Sharing values is all well and good and is something which certain religions have practiced for centuries. But we should be mindful of this African saying: "When the missionaries came to Africa, they had the Bible and we had the land. They said, ‘Close your eyes and pray’. We closed our eyes. When we opened them, we had the Bible and they had the land."
Fair share?
We are witnessing endless programmes based on sharing, or at least partnership, by the corporate world. However these partnerships are seldom equal and in some cases can amount to exploitation.
There is an echo of neo-colonialism in the background. We witness this via partnerships in much of Africa, whereby vast areas of land are purchased to grow agricultural crops for export, which may well harm communities and their economies, rather than ‘creating’ a business model that is both sustainable and legitimate.
We witness sharing occurring between governments and development agencies, for example the World Bank has shared billions of dollars, but still more than half its projects see nation states fall further into debt. Many of these result in developing economies slipping further into debt as they hand over millions of dollars to the huge corporations engaged in infrastructure projects.
Ultimately, this wealth is not shared. Evidence clearly shows that people and communities continue to suffer – and are lumbered with increased taxes if they eventually do break out of the poverty trap.
Negative outcomes
At the micro-level, sharing often has a negative consequence. Take, for example, orphanage tourism, where travelers share their time in local orphanages or spend time rebuilding schools and social and community infrastructure. While this is laudable, it effectively removes the local labour force from income opportunities. We witness sharing in economic blocks, where nation states are pressured to reduce trade barriers, tariffs and trade tax, creating a global economy but rendering local growth and sustenance either a challenge or simply an afterthought.
What has to happen is a systemic re-think. And more importantly, a reaction to the situation we have ignored for too long. We are all looking but we are clearly not seeing.
It is often said "first they laugh at you, but as time goes on the laughing slowly ceases". With this in mind, we should be bold in asserting that there is a different model – albeit one which bucks the current trend. HAVAS Media’s Meaningful Brands Index demonstrates that businesses which build-in sustainable business models, create social value and develop equitable partnerships outperform most stock indexes by on average 120 per cent.
Better business
Evidence unquestionably demonstrates that sustainable business is better business, that creating value is better than only sharing it. Unilever, a company I worked with until recently, has spent in excess of five years on its journey to become a wholly sustainable business, some might say decades. Unilever plans to double in size while reducing its negative impact by half. At the same time it is committed to increasing its positive social impact. This is an admirable change, and not one based on ‘sharing’. It is one based on ‘creating value’.
Unilever is creating value for shareholders, consumers and communities by being totally transparent about creating value for itself. This is not a company writing endless cheques to charity to buy itself good and ‘share value’. This is a company that believes quite rightly that it can make money by critically revisiting and overhauling the way it does business.
It is creating new value, not sub-dividing the value it once had. Not one project in the Unilever Sustainable Living Plan should add one cent of on-cost to products or business. Instead, it creates new value by innovating products, being more responsible with manufacturing and sourcing as well as demanding new ethical, fair and profitable standards from suppliers and partners.
The world needs to move and move soon, shifting from the emperor’s new clothes of citizenship and CSR, to one of creating value: value that is sustainable, equitable, long-term and authentic.
Creating value means doing five things well, and soon.
1. Business needs to work closely with government: not to over-ride and under-regulate, but identify on a macro-level significant challenges host nations’ face and apply their scale and ability to fix them. This means less coffee and croissants in Davos, and more think tanks, action-tanks and accountability to play a positive role. Pay your tax, work for and with people, not just politicians, and moreover make firm nation-by-nation commitments to create value in the nations where your company is privileged and permitted to operate.
2. Business needs to break some bones and disconnect CSR, philanthropy and charity from sustainable business and value: both innovation and creation. It is a hard job, but engineering sustainable business practices across the supply chain and not purely preaching ‘helping the needy’ in marketing and social media, is sure to create long term value. This is crucial in a world where we no longer have enough fish to teach people how to put the rod in the water.
3. Governments need to ‘re-claim’ authority, whereas business must promote this in public research, innovation, societal studies and academia. The leaders we elect no longer control the drugs, seeds and industries that feed, clothe and keep our people healthy. We no longer make fair choices. Instead we share choices with businesses that have simply acted where governments have too often feared to legislate.
4. Civil society organisations, charities, NGOs must regroup and reframe the debate. They should no longer be dependent on the corporations that guilt-pay them to ‘share value’. They must re-engineer, re-innovate, and move into solutions, product design and commerce. The time for these organisations to become producers is now, and global consumers want it.
5. You have to change, you and me. We have to face the fact that we are not the smartest, brightest. We must move aside for those that know, care and are affected by the actions and reactions of those that have failed and continue to do so. Break the circle of the Mobius band of leaders, CEOs and marketers moving endlessly from one multinational to another. Perhaps, the best value we can create is to finally admit we do not have the answers and move aside and let others try. And this means a transfusion from leaders in the NGO world and in government to business and vice versa.
Critically, for public relations professionals there has never been a more important time to stand up and be counted, listened to and respected. We spend too much time at the bottom of the pyramid, fixing the problems created by companies too scared, too habit-based or frankly too ignorant to know. PR people have always been the advisors, the mirror that reflects the outside in. Too often we devalue our opinion, as unlike lawyers, the pure ‘cash for counsel’ model has never sat comfortably in an industry that’s worked itself into an activation corner.
Public Relations professionals must be the diplomats for organisations, the human litmus paper, that should not only just sense the geopolitical, societal and economic issues we face, but act and lobby inside and outside the organisation to enforce change. We can be the ‘objective’ eyes of organisations if we reject the press release production and embrace policy formulation. Let us not forget, the difference between politics and PR is as thick as a ballot paper. You can either vote to buy Dove shampoo, or vote to change a regime, behaviours or even a company’s purpose. Public Relations professionals must step up, and change the vote for constant consumerism to conscientious capitalism.
Business has the money, societies have the people, and as Public Relations practitioners we have the ability to see around corners. We simply need the resolve to stand up, to own it and to create new value. There has never been a more important time to do so.
Author’s Details
Jonathan Sanchez is co-founder of STAND, a consultancy service for leaders in business, politics and sustainability. The business works with leaders who wish to develop their personal and corporate purpose to drive sustainable growth and politics. Prior to STAND, Jonathan joined Unilever in 2011 as the Global Vice President for Communications & Sustainability with responsibility for Russia, Africa, Middle East and the South East Asia and Australasia regions. He lives in Bangkok and Singapore and is passionate about South East Asian Politics, Sustainable Business & Development and street-food. A version of this essay first appeared on sharingvalue.asia.
The Author
Jonathan Sanchez
Jonathan Sanchez is co-founder of STAND, a consultancy service for leaders in business, politics and sustainability. The business works with leaders who wish to develop their personal and corporate purpose to drive sustainable growth and politics.
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