Inviting the community to share value

As companies come under pressure from stakeholders to improve their environmental and social performance to ensure they retain their social licence to operate, communicators are helping to promote the shift from traditional CSR to CSV: Creating Shared Value.

Until recently, supporting biodiversity was a call from conservationists; for companies it was regarded as cheque book philanthropy.

Today, multinational companies step in of their own accord. In April this year, Unilever, decided to champion the conservation of biodiversity to help stop the alarming decline in the bee population around the world. With bees being vital to crop yields, which are key to Unilever‘s products, the company is working with suppliers and farmers to proactively find solutions.

The evolution of CSR

Over the past decade, the public relations industry has seen a rapid growth in CSR initiatives. Across Asia, some companies are just now waking up to social responsibility due to new legislation and consumer pressure. Those who see the impact of successful communication initiatives look to public relations agencies for advice. Agencies are expected to create more strategic, innovative, exclusive and outside-the-box programmes. When the strategy is well-thought-out, and aligned with brand values, an integrated campaign can be a powerful marketing platform.

Instead of isolated CSR programmes, we are seeing cross-sector partnerships, with more collaborations with governments and NGOs, for larger-scale initiatives. By collaborating with locally influential and independent third parties, companies build credibility.

What started as chequebook philanthropy has evolved to a deeper and more strategic course of action. One of the key catalysts in the evolution of CSR towards a more sustainable cause has been companies looking internally to employee engagement. It is this understanding of the powerful impact that employees have that has prompted companies to rethink their value chain. Going back to core business values has integrated societal and environmental impacts into how a business operates.

A new breed of leaders

The pressure from millennials with disposable income is particularly strong. They expect their brands to be transparent, ethical and sustainable. They are also very technology-savvy and brands must be more innovative in engaging with them and prepared to deal with issues at every level, even those who have had long-term CSR programmes.

Millennials will select employers based on a company’s values and commitment to communities. Some of the most powerful CSR initiatives we have supported have included employee engagement. Companies have realised that engaging their employees, and listening to them, will improve productivity and determine their success in a market.

"Some of the most powerful CSR initiatives we have supported have included employee engagement."

In this digital age, millennials are also looking outward to make their lifestyle more meaningful. They are aware of the impact of their consumption and expect brands to do the right thing. They have no qualms about saying what they like or don’t like on social media. The power of social media has put an incredible pressure on brands and they have to be sincere and transparent in innovative ways to reach back to consumers, and they will surely influence corporate CSR strategies.

Regarded as having one of the best CSR reputations, and renowned for its commitment in arts and culture, BMW set up the innovative BMW Guggenheim Lab in 2011, a three-year programme that took a mobile laboratory to cities worldwide exploring new ideas, addressing issues of contemporary urban life, education and sustainability. Ideas were transformed with the support of local authorities into urban infrastructure projects benefitting the community.

The choice of CSR or CSV depends on the brand values and culture of a company. The millennials, who will become business leaders, will push for change, more accountability and making a lasting impact. Aligning values to business goals will become key, and this will be driven by enlightened CEOs and boards, trickling down to all divisions internally, as well as externals in the supply chain, distribution and partners.

Understanding CSV

CSV is about changing the way core businesses operate in integrating societal and environmental impact. CSV does not benefit just one stakeholder but multiple parties along the value chain. This concept is still met with reluctance as the cost of changing can outweigh the short term returns.
With increasing external pressure from consumers, government and institutions to clean up the processes of a business supply chain, especially if it involves environmental or societal impact, companies are compelled to act. More are relying on their PR partners to come up with a cohesive and integrated strategy, involving different parties and invested returns.

Agencies need to see how clients can make positive changes that align with their core business but still resonates with stakeholders. This can be a game changer, working and engaging with different stakeholders for a more strategic and sustainable initiative.

Visa understood this when they launched the first ever China Financial Literacy Alliance. In China, there is widespread lack of financial knowledge among rural residents and teenagers, making them vulnerable in a modern economy where finance is a vital part of everyday life. This initiative also underscores Visa’s long-term commitment to responsible corporate citizenship. Engaging regulators, NGOs and communities through a unique public-private partnership, they laid the groundwork for long-term brand preference for Visa. Their key values and commitment to the community also saw increased participation in nearly half of its China employees.

Transition from CSR to CSV

Companies have seen the limitations of CSR with budget constraints, inconsistent reputation recognition and other external influences. With CSV, companies can start to look at constructive restructuring and pursuing new market strategies.

The historic signing of the climate change pact in Paris this year will transform how we think about business models, supply chains, productivity and environmental impact. Companies will take note of the UN-adopted sustainable development goals aimed at ending poverty, protecting the planet and ensuring shared prosperity.

Some brands have already begun to make positive social changes. L’Oréal has already cut greenhouse gases by 50 per cent, with a new target to be carbon neutral by 2020. Unilever, in an enviable position as one of the top companies on the sustainability index, realised that their brands can have a social impact if they tackle social and environmental issues in their brand strategy. With 400 brands, the power to address the issues and change human behaviour is tremendous. In 2010, Unilever’s Sustainable Living Plan was built into the company’s core purpose, marketing and brand management strategy with a strong involvement of the end consumer. With this strategy in place, the past five years have yielded strong returns and the company is regarded as a good long term investment.

Multiple collaborations

Collaboration continues to be key as companies understand that a collaborative approach, with multiple partners, internally and externally, is necessary for success. A great example is AstraZeneca’s Respiration Health Programme in China to raise public awareness about chronic respiratory diseases.

More than 100 million people in China are affected. To tackle this immense national health issue, AZ China created a powerful coalition with Project HOPE, a global health organisation, and more than 10 leading companies in the healthcare sector, called The China Alliance for Respiratory Diseases (CARD). Throughout 2015, CARD activities were launched nationwide to engage healthcare reporters and government healthcare communication staff, increase public awareness and launch pilot lung screenings, free diagnosis and nebuliser chamber programmes. AZ did not donate drugs or engage only the practitioners; they addressed this important social need by reconstructing their marketing strategy to include third parties for the community’s benefit.

Challenges ahead

Many companies believe that CSR activities protect them from negative impacts during a corporate crisis. The contrary may be true as any deviancy from what is communicated can draw more attention to the company or raise more questions which may amplify the crisis.

Last year, just days after being named the leading automaker in the Dow Jones Sustainability Index, Volkswagen, a highly regarded and well respected brand, was embroiled in a diesel emissions cheating scandal. More shocking was that the scandal ran counter to the VW code of conduct. The company is still reeling from the aftermath. And, just in April, Mitsubishi Motors was found to be falsifying fuel economy data for vehicles sold in Japan.

All these scandals do not bode well for companies who are new to CSV. Consumers are now sceptical, seeing such initiatives as greenwashing and money making ploys rather than sincere commitments. It has also highlighted the disconnect with what is going on behind the scenes and what is communicated. Public relations agencies need to truly understand the brand core values, performance and whether these align with the communication.

Growing corporate engagement on climate change

More companies are collaborating with local governments through civic engagement programmes, which have a greater impact on communities. In April, Japanese electronic multinational Ricoh kicked off the 10th anniversary of its Eco

Action Day initiative in Singapore, focusing on the country’s efforts to mitigate climate change and calling for organisations and individuals to pledge positive actions.

At the beginning of 2015, China implemented a new environmental protection law to deal with environmental offences. The stock market established a new ruling requiring transparent and accountable reporting. With President Xi Jinping’s joint statement with US President Barack Obama last year, the Paris Agreement, China’s commitment in international climate finance and the proposed launch of a national carbon trading programme, ‘climate change’ and ‘green industries’ have become buzzwords in China.

Meanwhile, the Hong Kong Stock Exchange launched Environmental, Social and Governance reporting aimed at providing consistency and comparability between financial and ESG information.

“With increasing external pressure from consumers, government and institutions to clean up the processes of a business supply chain, especially if it involves environmental or societal impact, companies are compelled to act.”

India’s Companies CSR Act, passed two years ago, mandates that large companies donate at least two per cent of their net profits on CSR each year, as well as setting up a CSR board committee and instituting a CSR policy. Companies have responded positively and initiated CSR projects across all industries and more are also developing climate change initiatives. However, this has also created a dilemma for some who see it as reverting to philanthropy instead of aligning with their core business strategy.

Public relations taking a stand

Since the early 1950s, Ruder Finn has recognised the importance of social responsibility in public relations and its impact on business. In Asia we have partnered with many NGOs and institutions for important social causes. Our partnership with CSR Asia, provider of advisory, research and training services on sustainable business practices, started in 2008. We are also supporting Heifer China, an international NGO, with their long term Pro-poor Wealth-Creating Value Chain programme to help families get sustainable income and earn a livelihood through environmentally-friendly animal farming, product marketing and cooperative construction. This year we have also been active in the communication of Ocean Recovery Alliance projects announced at the Clinton Global Initiative in 2010, and are focused on innovative prevention programmes for plastic waste reduction.

What’s next?

The choice can still be either CSR or CSV for many companies as an indispensable public relations and marketing platform. Doing nothing is no longer an option. Companies need to be more committed to leverage their brands to do much more in solving social problems and reducing environmental impact. The next few years will see more disruptive innovations in services and products, more demands on ethical manufacturing and production and large-scale behavioural shifts towards healthier lifestyle and consumption.

The key is to define a signature programme that is relevant to stakeholders and employees who can create change. Social media will continue to play a major role in communicating sustainability activities and, increasingly, companies will establish a dedicated platform for their activities and sustainability reporting. With the recent scandals, companies will have to work hard at proving their claims and will be scrutinised thoroughly by third parties. CSR or CSV initiatives must be sincere, long term, well-developed and communicated, and successfully aligned with company goals to benefit both business and community.

Jean-Michel Dumont

Jean-Michel Dumont is responsible for the growth and development of Ruder Finn Asia, devising Asia-wide strategic direction for Ruder Finn and setting the tone on how the company’s business is managed. 2016 marked Jean-Michel’s 30th year in public relations in Asia: over the years, he has led messaging, media and crisis trainings for clients as diverse as Audi, Citibank, Michelin, Danone, Roche or SG Private Banking, as well as executives from the government of Brazil, China and Colombia.