The Planet of shared value

“People are worrying about saving the planet, but the planet is fine: it’s the people that are screwed!”. In a New York lashed with a sudden, torrential autumn rain, this spark of humorous intelligence helped warm the participants at the eleventh #EnelFocusOn. The quip was originally made by the great late stand-up comedian George Carlin, but it was used by Mark Kramer, the keynote speaker at the event on 25 September, to frame the chosen theme: how creating shared value can tackle climate change.

Shared value v. climate change

Mark Kramer, Co-Founder and Managing Director of FSG (Foundation Strategy Group), is considered the father of CSV (Creating Shared Value), a paradigm that is changing the way of approaching business. The article (co-written with economist Michael Porter) which baptised the new concept was published in the Harvard Business Review in 2011 and was immediately received as a revelation of something innovative in the relationship between business and society. This concept has not been confined to the lecture halls of Harvard, where Kramer teaches, but is leading the way for some of the world’s biggest companies – like Enel, whose sustainability strategy is inspired by the principles of CSV.

At the #EnelFocusOn event, CSV was adopted as the method for attempting to tackle climate change, which Ryan O’Keeffe, Enel Director of Communications, defined in his opening remarks as “the greatest challenge of our time.” And how could it have been otherwise in this special week which saw the Big Apple host the General Assembly of the United Nations, the UN Global Compact Leaders Summit and the tenth edition of Climate Week.

“The issue is urgent: we have to act right now with prepared and shared initiatives to reduce CO₂ emission levels or else the scenario in 2100 will be devastating,” explained O’Keeffe, after unrolling a graph that displayed how the temperature of the Earth remained relatively stable for thousands of years until a spike in the past century.

Social innovation? Only from businesses

So how can CSV solve a problem that is so dramatically urgent? Kramer believes that companies, which are seen as being mainly responsible for the present situation of environmental pollution, provide the only real resource for solving it. The most important thing is that they are ready to change their business model, rather than attempting to defend the status quo.

There are three ways – explains Kramer – for a company to build a relationship with society: Philanthropy (“giving back to society a part of the wealth”), Corporate Social Responsibility (“minimising damage and making business more responsible”) and the Creation of Shared Value. This offers a far broader perspective because it recognises the close relationship between social wellbeing and economic success, and manages to bring them together, thereby replacing the trade-off that is typical of traditional economic thought.

“In contrast to politics, which claims that something is real, companies are dealing with reality and have to find solutions that work. Business is a source of innovation. Profit is the most powerful means to solve social problems”

Mark Kramer, Co-Founder and Managing Director of FSG
 

Careful, though: CSV does not mean sharing wealth that has already been created, nor balancing the interests of various stakeholders, as it is a market-competitive strategy that creates long-term value for society and the business at the same time. In essence, it consists in meeting social needs which expand business opportunities, a virtuous cycle where innovation is the engine that increases social (and environmental) impact over time. And this innovation can only come from companies. In 2013, the non-profit sector invested 1.2 trillion dollars in social innovation and governments 3.1 trillion, while businesses invested 23.1 trillion. “The resources that capitalism can provide are far greater than the amount that comes from any other sector,” explains Kramer.

The father of CSV cited several real cases, such as the South African insurance company, Discovery, which offers policies to incentivise healthy living for its clients (with discounts for gym membership and the purchase of fruit and vegetables) and has obtained tangible benefits such as an increase in life expectancy of up to 10 years.

“Not all profit is equal,” warned Kramer. Profit made at society’s expense is counterproductive, while profit that brings shared value allows society to move forward and companies to grow faster. “The philosophy of shared value is the next competitive frontier of capitalism,” concluded the #EnelFocusOn guest, who identified Enel as a model to follow: “One of the most innovative Groups in the world, with a specific unit dedicated to innovation combined with sustainability.”

Sustainability doesn’t mean “just renewables”

Earlier at the event, Antonio Cammisecra, Head of Enel Global Renewable Energies and CEO of Enel Green Power, outlined the Group’s sustainability strategy. The world is living in an apparent paradox, for while we rightly indicate carbon neutrality as the solution to global warming, “more than one billion of the planet’s inhabitants live in the dark,” with no access to the electricity which would allow them to study, cook or work. The challenge for a utility company, therefore, is to increase the number of people with access to electricity while decarbonising the energy mix. Naturally, the use of clean energy is the master path to reducing CO₂ emissions, but this alone is not enough, because “sustainability is broader than the use of renewables: creating shared value means creating value for the business and for all the stakeholders, starting from the communities where we are present.” For example, reducing the environmental impact to a minimum when building plants, improving management of resources (from water to waste) and positively contaminating the ecosystem. For Enel, sustainability is “embedded into the business.”

The CEO of Enel Green Power noted many of Enel’s best practices: from electrification projects in hospitals (Ethiopia) to the creation of solar energy lamps (South Africa), from projects of eco-carpentry (Peru and Mexico) to professional training for indigenous populations (Australia).

“Do you know why hydroelectric power stations were called “centrali” (“centres”) in Italy? Because the construction of a station sparked the development of a community: around the power plant, businesses, villages and families could prosper. It wasn’t called Creation of Shared Value then, but it was already being practiced 100-150 years ago”

Antonio Cammisecra, CEO of Enel Green Power

Next stop Bucharest

The participants at Enel’s New York talk on the future included a group of influencers from four continents – journalists, bloggers, entrepreneurs and digital consultants. There was considerable participation in the live streaming, with the speakers answering many questions on social networks. The questions were all interesting: from the methods of measuring social impact to the interest of financial investors in creating shared value (“the majority of the capital on Wall Street is invested long term,” said Kramer), from the greenwashing communication strategies used by some companies to the pervading tendency of the media to focus on bad news while ignoring solutions to the problems.

The lively exchange of ideas, which also took place on the internet, demonstrated that the #EnelFocusOn format is now truly established, it works and continues to move forward. A platform of fully digital conversation that removes barriers between internal and external, in full accordance with the Open Power philosophy, a step into the future of innovation and technology.

In closing, Roberto Deambrogio, Enel Head of Europe and North Africa, and, from 1 October, the Group’s new Director of Communications, reminded attendees of the next appointment in Bucharest (Romania), where the theme will be the Internet of Things. Stay tuned.