Shared value: who will bring the leadership required?

By David Donaldson

Thursday April 14, 2016

What’s the value of shared value? Is it the holy grail of public-private-NGO partnership needed to give social outcomes a much-needed boost? They were the questions on lips of attendees at yesterday’s Shared Value Forum in Melbourne.

While the sceptic might worry that its core ethic of improving social or environment conditions while making money seems to mean many things to many people, the Department of Foreign Affairs and Trade offered an insight into how it’s helped provide clarity in dealings with the private sector.

DFAT is a signed-on partner of the movement, bringing collaboration with the private sector squarely into its aid program for the first time.

Simon Cramp, director of private sector development at the department, said it “was a real revelation for us” finding a concept that didn’t make excuses for profit but “said it was an essential condition”, unlocking “a whole lot of other conversations that we’d been finding very difficult to have until then”.

The concern at foreign affairs had been that they would be inundated with “crazy pitches from business for public funds to do things in developing countries”, Cramp explained, which would have led to the department adopting a very risk-averse stance, crushing opportunities for innovation.

But having a public stated guiding principle in shared value “has led to a very curious and helpful thing”, he said — business curating its contact with government itself.

“We can run a very clear ruler over what they put to us.”

“Because shared value is a very particular thing, those businesses that understand it are coming to us with shared value pitches. Those that don’t understand it are looking it up, reading, deciding it’s not for them and not calling us in the first place,” Cramp said.

“And that is a godsend for an organisation that doesn’t have many staff to deal with what is a very large policy issue. So for us that’s been a huge benefit.”

It also helps government to evaluate those pitches more clearly than is possible under a corporate social responsibility model, Cramp said. Businesses can’t green-wash or value-wash as easily.

“We can run a very clear ruler over what they put to us,” he said. “Is it going to make money, and what’s the social impact?

“If it was a CSR proposition that can be a lot harder — ‘oh it sort of does some good’ — and it doesn’t really have to talk so much about the commercial aspects. It makes it much more difficult for us and puts in a much more subjective decision making mode.”

It’s helped the department reevaluate how it works with existing partners, too — such as cruise company Carnival, which has improved how it works with local communities around the Pacific. NGOs have been supportive of the move towards shared value principles, he argues, as it meets many of their aims.

Cramp said that while shared value has many meanings and is useful as a way of starting conversations between those with similar concerns, “as the practice gets deeper, it’s also a very sophisticated business model”.

‘The jury’s out’ on shared value

Calls for more trust in business to deliver positive social outcomes were met with support from the private sector-heavy audience, but there was some concession of the complexity around firms aiming for improved social conditions.

Notwithstanding the movement’s relative infancy, the dual requirements of profit and impact seem to favour certain types of activities. Insurance — where lowering risk to customers has quantifiable financial benefits for the company — and international development — where improved access to markets can lead to massive growth — featured most prominently among examples of successful social value implementation.

“The jury’s out, in my mind, whether there is the leadership, the imagination and the will.”

World Vision CEO Tim Costello expressed a reserved positivity. He said there is a need for partnerships across sectors and leadership in creating social impact. “I really want to believe in shared value,” he told the audience — but admitted he is not yet fully convinced.

“For a long time business has had a mantra of saying ‘if it’s good for the community, it’s good for business’. If it was that simple — businesses never slow to sniff where a profit is — we’d be doing it,” he said.

“The jury’s out, in my mind, whether there is the leadership, the imagination and the will.”

Costello suggested it can help to break down the barrier between for-profit and not-for-profit organisations, offering the idea of a “for purpose organisation” — but leadership is the key.

“It’s going to require trust and collaboration, which is often inimical to competition, shareholder interest and competition. I think the chasm we’re facing is … do we have the leaders prepared to jump?”

Reframing public-private relations

Perhaps its broader value lies in the ability to change how people think about relations between business, government and NGOs, as Shared Value Project chair Peter Yates suggests.

“My interest in shared value is around trying to reframe the dialogue between community and business,” he explained.

It’s about building social benefit into business models, rather than the less systematic approach of corporate social responsibility.

“Shared value is the way in which the community says ‘I understand the role business can play, will play, wants to play’, and business says ‘we know how we can do our business and the role we can play in the community’ — without being framed entirely around philanthropy or the tithing concept of CSR,” Yates said.

“If we can get that dialogue completely reorganised, both culturally and mentally, that is what will create trust.”

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