The other day, a project partner asked if I misspelled my job title: ‘CR&S Manager’, instead of ‘CSR Manager’. When I explained, he asked, “What do you mean by ‘Corporate Responsibility and Sustainability’? Isn’t it just the same thing as Corporate Social Responsibility?”
It’s not. CR&S is about creating Shared Value, a term coined by renowned economist and Harvard Business School Professor, Michael Porter and Mark Kramer, who define it as “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.” It is not about redistributing profits created by firms, but expanding the total pool of economic and social value. The CR&S in my job title encompass the two aspects of this concept:
- Corporate responsibility, which is a pre-condition of Shared Value. This involves complying with legal and ethical standards, mitigating any harm caused by the business and promoting good practices for environmental, social, and governance issues.
- Corporate sustainability goes beyond this to create Shared Value; that is, to create economic value through creating social value. Shared Value initiatives address social challenges as a business proposition, and are usually growth drivers.
So how can you identify shared value opportunities in your business? At Olam, this goes to the heart of our corporate purpose of ‘Growing Responsibly’. In my time as CR&S Manager for Olam’s Africa Region, I have seen how the three routes to creating Shared Value recommended by Porter and Kramer have been realised around the business – and the questions you need to ask in order to get there. Here are just a few:
- Reconceive products and markets. Identify all the societal needs, benefits and harms that are or could be embodied in your products. Can the products be redesigned to create value?
For example, in Olam’s Packaged Foods Business we fortify Milky Magic biscuits with essential minerals, and Tasty Tom tomato paste with vitamins A, D, E, and K. This is not a marketing pull, but an essential contribution to health on a large scale in a region where Vitamin A deficiency affects 40% of children under 5, and can lead to blindness and death.
Meanwhile in Tanzania, we are working in partnership with Vodafone, TechnoServe and USAID to bring tailored mobile phone services to coffee, cocoa, and cotton farmers. This will ensure safer and quicker payments for both farmers and Olam, as well as sending farmers advice via SMS, allowing farmers to ask questions such as the daily price for their product, and enabling Olam to track credit distribution.
Redefine productivity in the value chain. What societal concerns can be addressed to bring productivity benefits? Can suppliers be supported to improve their yields? Can workers’ health be improved to increase their productivity?
Across the world, Olam Livelihood Charter programmes support over 350,000 farmers to improve their yields and revenues through access to agri-inputs, training, and market linkages. These initiatives are focused mainly on “expanding the pie” by generating more volumes and profits for all, rather than “sharing the pie” through simply paying more for the same product. Similarly in Ghana, Olam’s flour business strengthened the capacity of local bakers by financing modern baking equipment imported from South Africa for them. Accompanied by training and technical support, the bakers were able to increase their sales, while increasing their purchases from Olam’s mill.
An example from Olam’s cashew supply chains was used in Porter and Kramer’s 2011 article on Shared Value, which explains that by opening local cashew processing plants and training workers, we have cut processing and shipping costs by as much as 25% and greatly reduced carbon emissions. Moving processing closer to origins has helped build preferred relationships with local farmers and provided direct employment to 17,000 people—95% of whom are women—and indirect employment to an equal number of people, in rural areas where jobs otherwise were not available. Moreover, part of the electricity for the Bouaké cashew factory in Côte d’Ivoire comes from boilers heated by cashew shell waste. This reduces the environmental burden on landfills, makes use of a renewable energy source rather than fossil fuels.
Very often, the first step to redefining productivity is detailed research to understand the true value of social and environmental initiatives that could otherwise be seen as purely redistribution. For example in Gabon, investing in thorough land and water surveys before developing palm and rubber plantations enabled the team to focus developments on high-yielding areas whilst preserving essential ecosystems. The detailed surveys also helped to plan highly efficient, low-impact road and drainage networks, reducing construction time and costs, as well as long-term maintenance. While in Tanzania, Olam is developing a workplace wellness system to reduce illness and worker absenteeism and increase worker productivity. The system includes a tool that will allow Olam to estimate the costs to the company of various health issues in its workforce, and the net benefits of potential mitigation measures.
- Build supportive industry clusters. Identify the gaps and deficiencies in areas such as logistics, suppliers, distribution channels, training, market organisation, and educational institutions. What are the weaknesses that represent the greatest constraints to your productivity and growth?
The African Cashew Initiative (ACI) is just one example where Olam has played a part in building an industry cluster to improve company productivity by addressing more widespread gaps or failures. The overall quality and productivity of the cashew industry has been enhanced through consortium initiatives to promote smallholder training and access to improve seedlings, knowledge transfer on cashew processing, collaboration with research bodies and universities, and favourable economic policies.
One of my colleagues, Varun Mahajan, who is Olam’s Country Head for Zambia and the Commercial Head of our Coffee Plantations in East Africa, recently summed up our approach to Growing Responsibly brilliantly:
“Ultimately, we recognise that Olam, the environment and the community around us are one ecosystem where we are interdependent on one another to thrive so we will be as committed to their lives as we are to our business. It is all about shared values and an integrated landscape approach.
Côte d’Ivoire –
shell-fired boilers at
Côte d’Ivoire – cotton farmers advised by Olam agronomist
Gabon – Environmental Impact Assessment
for palm plantation