The road from CSR to CSV

The article Creating Shared Value not only introduces the concept of shared value, but also demonstrates the difference between CSR (Corporate Social Responsibility) and CSV (Creating Shared Value). In China, CSV is still a new concept and few companies has put this concept into practice. Most enterprises still focus on developing CSR strategy. Learning to change their tracks to CSV helps Chinese enterprises to increase both economic profits and social benefits, which will be an important step for them to gain competitive advantage in the market and expand their business around the globe.  

Here, I want to illustrate the difference between CSV and CSR by two examples and show how Chinese company can learn from the mature practice of CSV. 

In China, the companies doing well in creating shared value are all foreign capital enterprises such as Nestle, Microsoft and Cisco. Take Nestle China as an example. Nestle china’s sustainable coffee growing in Yunnan is a perfect practice in creating shared value. Nestle dedicated itself to create win-win situation in which local customers, suppliers, employees as well as local government all got benefits. Nestle invited foreign experts and gardeners to Yunnan to help local farmers build coffee industry chain. It was hard to teach local farmers who has few experiences in coffee growing. Nestle offered training to farmers and also taught them how to limit water usage in irrigation. Although Nestle’s effort in creating shared value led to losses in a quite long time, they got great rewards eventually. Nestle ensured its coffee beans conform to its global quality standard. Also, by procuring raw material locally and removing the existence of middleman, Nestle successfully saved large amount of costs. Nestle China also established trust with local farmers since Nestle’s practice successfully raised their income. Nestle’s efforts in creating shared value contributed to both the development of local communities and local environment as well as ensure Nestle China’s sustainable growing business.

Nestle China demonstrated the power of shared value. Shared value is about creating value for both business and community, which is integral to profit maximization and gain competitive advantage.  

As the article Creating Shared Value says, there are three ways to create share value. First is to reconceiving products and markets. The second is to redefine productivity in value chain. The third is to enable local cluster development. Nestle China‘s approaches to create shared value mainly focused on the second and third way which can be learnt from similar food and beverage companies in China. As mentioned before, for now, Chinese enterprises still focus on the strategy of CSR. It is time to switch the track of CSV. Take Eili, a leading Chinese company in dairy products industry, as an example. Its strategic goal is to build world shared heath. However, the model of Eli remains in the scope of CSR instead of CSV. It invests large amounts of money every year to execute its program in Corporate Social Responsibility such as protecting environment and biodiversity, but these programs are not related to its main business. Philanthropy gains Eili reputation and has become a way of building brand. However, CSR separates doing good from profit maximization of business. What Eili can learn from Nestle China is to upgrade their model of CSR to the stage of CSV. For example, it can bring advanced technology to livestock farmers in order to raise productivity and gain high quality milk. They can provide training for local farmers to use those advanced technology to raise livestock. Technology helps to reduce livestock’s over-exploitation of plantation on the prairie. A more sustainable way to raise livestock will help Eili secure sustainable source of high quality milk. In the meanwhile, solving the employment of local communities, raising those farmers‘ income and preventing further damage to the environment are huge societal values Eili brings. Through this way, there is no trade-off between societal values and economic benefits.

In conclusion, there is a big difference in CSR and CSV. Facing the pressing social issues, it is time for Chinese companies to deal with the challenges by creating shared value.