As a part of CECs latest project around CSR and Sustainability, we’ve asked our members to tell us about their CSR programs.  Often, they tell us about their programs for philanthropy, and in many cases, they will spend up to 3% of company revenue on these programs!

Now, this seems like a staggering figure: if my company has revenues of $1billion, there’s a good chance that we’ll be spending $30million each year on philanthropic exercises.  Where progressive companies such as Nestlé look to “Create Shared Value” (CSV) for both themselves and for society (which method we’ll look at, below), others simply share the value that they’ve already created.  And what do they get in return?  Some cite a boost in employee engagement, whilst others cite intangible reputational benefits.  Few can quantify either gain very well.

Now, I give to two charities each month; they’re international development charities, and I’ve selected them carefully based on my belief that there are corners of this world in which help really, genuinely is needed.

Further to some of the responses I’ve heard during our CSR project, however, I’ve been reflecting recently on WHY I give this money, and trying to get my head around what I get back from these donations.  It’s been tough!

Each month, I get an email from these two charities, but, in spite of the valuable information contained in their messages, I don’t pay them much more attention than all the other emails that somehow find their way into my junkbox.  I do, admittedly, obtain a certain feeling of self-worth – a sense that I’m making a difference – but it would be difficult to quantify, if pressed (probably my personal equivalent of “increased engagement”).  Finally, I have an inkling that my friends and acquaintances appreciate the fact that I’m a socially-minded kind of guy, but perhaps I’m giving myself a little too much credit (in a manner somewhat akin to companies’ frequent estimation of reputational gains).

So, to put this back in its business context… Would my personal CFO, if I had one, sign off on these investments of spurious return?  With shareholders to satisfy, in these straitened times, would the CFO of O’Keeffe O’Donovan Ltd., multinational corporation, really sign off on this expenditure?

He might.

Or – as we’re all familiar – he might tell me that, over the course of a year, that money could be spent elsewhere to bring  far greater, far more tangible returns.  He might tell me that our business runs to make money, not to give it away.

Nestlé is one of the companies who has captured this fundamental concept in its sustainability program.  They’ve even moved away from the traditional monikers, “CSR,” “Corporate Responsibility,” and “sustainability.”  They call their program “Creating Shared Value,” and at its heart lies the idea that they seek opportunities that will benefit both company and society.  They’ve assessed their entire value chain, and identified the key areas in which they have mutually profitable interests.  And this is where they choose to invest their resources.  (See illustration below.)

Having teamed up with leading academic Michael E. Porter, they understand that there is profit to be made in investing in the development of the communities that make up their supply chain.  They understand that there is profit to be made in sharing knowledge with the communities who provide them with the raw materials for their products.   They understand that there is profit to be made in providing nutritional education to communities, and, in subsequently supplying them with nutritious products.

They operate with a holistic perspective, and a view to the long term, and this philosophy should inform every business decision that they make, from top to bottom.  It’s built into their training programs, and into their recruiting strategy, to such an extent that their employees are trusted to make decisions that will benefit the business and society.

Ultimately, this ticks both of the boxes outlined above: they get the reputational gains (however spurious) and they certainly engage their employees, who see the impact of their investments.  In addition to this, however, they turn a great profit. For this reason, their business views CSV as the business tool it is, rather than the “fluffy” programs of CSR and philanthropy that we see getting pushback from the line at other companies.

Look out for more of CECs work around sustainability and CSR over the coming months, including the launch of a new Sustainability and CSR Discussions Forum on Monday 27^th September. Use this to connect with over 400 of your peers, and leverage their experiences. Sign up here.