3 - Tensions
Cards (16)
- Shared value: “policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates”
- Creating shared values:
- Value: Economic and societal benefits relative to cost
- Joint company and community value creation
- Integral to competing
- Integral to profit maximisation
- Agenda is company specific and internally generated
- Realigns the entire company budget
- Corporate social responsibility:
- Value: Doing good
- Citizenship, philanthropy, sustainability
- Discretionary or in response to external pressure
- Separate from profit maximisation
- Agenda is determined by external reporting and personal preferences
- Impact limited by corporate footprint and CSR budget
- How to create shared value:
- Reconceiving products and markets: Is the product good for your customers?
- Redefining productivity in the value chain: What can you do about energy use and logistics, resource use, procurement, distribution, employee productivity, location?
- Enabling local cluster development: What is the relationship with the supporting cluster?
- Why has the shared value approach failed?
- Only cover easy wins, often only targeting high-end consumers
- Techno-centric solutions leading to unintended consequences
- Consumerism at the core
- Criticisms of Creating shared value:
- Unoriginal idea: Recycling of old ideas such as strategic responsibility and social innovation.
- Tensions between social and economic aims missing: Focuses on win-win situations.
- Superficial conception of corporations’ role in society: Does not tackle deeply rooted problems: e.g. ”old” strategy models; the “sanctity” of shareholder capitalism and corporate self-interest.
- Value: benefits relative to costs
- CSR programs focus mostly on reputation and have only a limited connection to the business, making them hard to justify and maintain over the long run. In contrast, CSV is integral to a company’s profitability and competitive posi- tion. It leverages the unique resources and expertise of the company to create economic value by creating social value.
- Ambec & Lanoie conclusion: the expenses incurred to reduce pollution can be partly or completely offset by gains made elsewhere
- Opportunities for increasing revenue by being green (Ambec & Lanoie):
- Better access to certain markets
- Product differentiation
- Selling pollution control technologies
- Opportunities for reducing costs by being green (Ambec & Lanoie):
- Risk management and relations with external stakeholders
- Cost of materials, energy and services
- Cost of capital
- Cost of labour
- Differentiating products more likely to increase revenue when there is:
- Credible information about the environmental features of the product
- Willingness to pay by consumers
- Barrier to imitation.
- Being green saves costs of materials, energy & services when:
- Firms have a flexible production process
- Firms are in highly competitive industries where optimisation of resources is important
- Firms are in industries where market-based environmental policies are implemented
- Firms already have R&D facilities
- Being green saves labour costs when:
- Firms whose emissions may affect worker's health
- Firms that seek to attract young, well educated workforce
- Firms located in areas where sensitivity to environmental concerns is important
- Barnett et al solutions for corporate sustainability
- Accurately account for environmental impact
- Broad collaborations between sectors and stakeholders. Give voice to under represented stakeholders & reduce veto power. Develop business dexterity.
- Design for degrowth - determine the level of consumption that is sufficient for our optimal well-being
- Criticisms of "does it pay to be green"
- Endogeneity: "chicken or the egg" problem
- Difficulty in measuring direct/indirect benefits
- Not the question of "does", but "when"
- Does it even matter if it pays to be green?