In the beginning there was charitable giving: companies that were more sensitive to social issues donated part of their revenues to philanthropic initiatives. This is a noble approach that is still widespread today but is subject to the impact of short-term decision-making.
And then came the concept of Corporate Social Responsibility (CSR), a structured model that integrates actions that foster social development into the company’s strategies and processes, and, as the name suggests, means that the organisation assumes a greater responsibility for the consequences of its actions. CSR consolidates the benefits for society, making them longer lasting, while for companies (as in the case of charitable giving) it translates into an expense that only provides a return in terms of an improved reputation.
Creating Shared Value, a revolutionary article
In 2011 American economists Michael Porter and Mark Kramer published an article in the Harvard Business Review that was somewhat revolutionary. The concept that it introduced was that of “Creating Shared Value” and this was revolutionary because it proposed a model in which the solutions to social problems became, for companies, also an opportunity to make a profit.
Let’s take the case, for example, of a large food production company that, in its search for quality cocoa, chooses to educate its suppliers about sustainable and efficient production. The result is twofold: not only are there benefits in terms of product quality and productivity but also the lives of the cocoa farmers are improved.
It is a complete about-turn compared with the CSR philosophy and the philanthropic approach, which are based on the idea that a company must minimise the social impact of its own activities or “give back” to society a part of its profits. From a shared value perspective, “doing good” in society is not an obligation for the company: it is an advantage. Furthermore, the top-down model is replaced by a participatory approach in which all of the main stakeholders are involved.
Social and environmental issues, then, are no longer external to the activities of the company but have an impact on the business. Expenditure for social activities is no longer a risk and collaborations with NGOs become strategic alliances. Above all, the perspective is no longer focused on short to medium-term financial gains but presupposes a long-term vision. The real strength of shared value is its capacity to last and evolve over time, bringing together profit and sustainability: it is the sustainability of the future.
The first event in Europe
Porter and Kramer’s approach is in perfect harmony with the vision of the Enel Group, so much so that since 2015 we have been adopting a model for creating shared value that incorporates socio-environmental factors into our business processes.
It was therefore natural that Enel should join the Shared Value Initiative (SVI), the association founded in 2012 in order to promote the spread of the shared value model around the world. With this objective in mind, on 28 February in Milan Enel hosted the meeting open to numerous companies, associations and NGOs with the aim of promoting shared value; this was the very first time such an event was held in Europe.
Participants included exponents from international colossi such as Nestlé and Zara, but also of those small and medium-sized enterprises which are considered the backbone of the Italian economy. Creating shared value is not a prerogative just for multinationals but also for companies with fewer employees. While, on one hand, they don’t have as many possibilities in terms of their budgets, on the other, they often show a greater flexibility when it comes to changing their strategies.
There was a substantial representation from Enel, led by Maria Cristina Papetti, Senior Executive CSV Sustainability Projects and Practice Sharing. Also present were the associations (such as Confindustria) and NGOs (the Italian organisation ACRA, the mission of which is to bring water, food, electricity and education to the rural areas of developing countries).
A sharing workshop
The choice of the venue and the name of the event were also significant: “Advancing a Shared Value Culture: A Shared Value Workshop & Ideas Exchange” was held at the Enel Smart Grid Lab. It wasn’t a series of conferences so much as an exchange of experiences, an ideas workshop in which the key word was sharing.
Meetings like this one are necessary because, in order to really achieve a shared value model, the will to do so is not sufficient: it is necessary to create the right conditions. In particular, there are two key prerequisites that have been identified by the SVI. The first, which was introduced by Bobbi Silten, Managing Director of SVI, is the concept of “purpose,” intended not as the simple definition of an objective, but as a company’s profound and fundamental reason for being. Identifying the company’s “purpose,” putting it into practice, raising awareness of it and refining it are the phases with which a company can acquire a leadership role in the field of shared value.
The second keystone is culture, which was discussed in detail by Dane Smith, Managing Director of FSG (Foundation Strategy Group), the company set up by Porter and Kramer that has a guiding role within the SVI. The company culture shapes the ideas and behaviours, defining what is acceptable and what is worth encouraging: it should be fostered at all levels of the organisational hierarchy and cannot be imposed from above. It can be spread by the good example of top management and with the identification of prestigious “testimonials.” Without an adequate company culture, the creation of shared value simply doesn’t work.
Regarding the case of Enel, Papetti outlined the journey of integrating sustainability into the business, the new approaches for creating shared value together with local communities, the importance of a long-term vision and the need to communicate the philosophy of shared value with a language that can be adapted to each individual interlocutor. “It is necessary to pass from sustainability to sustainable business,” she concluded.
In the case of both keystones, the participants at the workshop worked partly in small groups and partly all together in order to best define the concepts of “purpose” and “culture” in their respective companies and organisations. In this way all the people taking part could share their ideas and experiences through a collaborative approach that was appreciated by everyone.
The event concluded with a visit to the Smart Grid Lab, a pioneering centre of excellence in Infrastructure and Networks, where the participants were able to try out our virtual reality equipment: an experience that made the Milan event – the European debut for the Shared Value Initiative – even more precious.