A New Look at Creating Shared Value

A lasting impact requires long-term commitment and cooperation

Visa volunteer teaching budgeting at the Gaoju Primary School in Ganshu Province in 2014.jpg
Visa volunteer teaching female migrant workers in Beijing 2013 (800x533).jpg

When Citibank China first started strategizing a corporate social responsibility project that would have a lasting impact on financial literacy, it ran into one major stumbling block: no one else in China was doing the same work.

“Back in 2007, we couldn’t identify any nonprofit organizations to work with,” said Lingzi Liu, head of Corporate Citizenship at Citibank China. With no clear partners out there, Citibank helped establish a new organization, the Shanghai Better Education Development Center. Now it’s a nationally-acclaimed nonprofit devoted to supporting financial literacy for young adults and children in China.

Citibank, which has operated in China for more than 100 years, made this long-term investment in financial education because it serves the company and its customers. This type of corporate social responsibility (CSR) that looks at the larger picture is gaining new steam among CEOs and leadership circles. Last month, AmCham China welcomed Liu from Citibank as a panelist to speak about creating shared value (CSV), a concept defined in a 2011 Harvard Business Review article as “creating economic value in a way that also creates value for society by addressing its needs and challenges.” In CSV, addressing social issues becomes integrated into a business' core purpose. Implementing this fresh idea requires more planning and organizational support. Speakers at both the Dec. 1 CSV panel and the Dec. 2 event “Philanthropy with a Lasting Impact” were eager to share their own experiences and best practices for making this approach work.

Get everyone on board

Sean Hinton of Terbish Partners has a background in investment banking and business consulting for industries such as the minerals sector – perhaps this doesn't make him the most likely supporter of CSV. Even so, Hinton is a great believer in evaluating the social and economic impact of business endeavors in developing countries, and finding ways to align the interests of business with those of communities.

When speaking at the CSV event, Hinton pointed out that external relations and community affairs activities are rarely well integrated into the key priorities of those with profit and loss responsibility. “This makes bringing shared value efforts into the core of the business an organizational challenge,” he said.

Another AmCham China member, mining company Teck, has transformed its support for CSV from lip service to reality by tackling an issue close to its focus. Zinc deficiency is a condition which can negatively affect a person's growth, brain functioning, and immune system development. Teck is one of the world’s largest zinc producers, and while it doesn’t operate any mines in China, the China market accounted for 26 percent of Teck’s revenues in 2013.

Teck CEO and President Don Lindsay chaired the International Zinc Association (IZA) from 2007 to 2011, and during his tenure, he initiated the zinc fertilizer program in China. Guided by Lindsay’s leadership, Teck boosted support for the program in 2012.

“[Lindsay] was the visionary for Teck’s internal program, which is really quite comprehensive within our organization,” said Teck China Executive Director and General Manager Ralph Lutes. “The program has been enthusiastically embraced by employees and by our external partners.”

Teck China's Senior Advisor of Corporate Affairs Helen Yuan added, “Every new employee at our corporate head office is briefed about our zinc and health program on their first day of work.”

Use what you know

Taking a similar approach, AmCham China member Visa supports financial literacy in its CSV efforts. Peter Wong of corporate relations for Visa China said the company runs financial education programs for young people, migrant workers, and rural residents. This adds value to its own business model in addition to their banking partners, including People's Bank of China and China Construction Bank.

“We need to make sure it’s a win-win situation,” Wong said. “We don’t force partners to do something outside of their area of expertise.”

Instead of a top-down perspective when dealing with partners, Teck also plays a supporting role for its zinc fertilizer program in China.

“We leave the technical work to the IZA and the Ministry of Agriculture,” said Lutes. “NATESC (National Agricultural Technology Extension Service Center of the Ministry of Agriculture of China) has 400,000 extension workers engaged in educating farmers in their various regions on best practices. We provide the private sector element. We’re working on promotional ideas, techniques, conferences, and we’ll be looking at other methods to gain traction on the education effort.”

Understand needs of NGO partners

When working with already existent nonprofit organizations, which are often hungry for corporate partnerships, goals and timelines should be an important goal of CSV and CSR discussions. Alison Friedman of Ping Pong Productions, a consulting service that promotes multicultural exchange and understanding through the performing arts, spoke at “Philanthropoy with a Lasting Impact,” providing the non-governmental organization's (NGO's) perspective.

“When NGOs look for sponsorships, it’s usually for existing projects. They don’t want to reinvent the wheel,” said Friedman. “Going through the corporation and paperwork is very onerous, especially for smaller NGOs. The faster corporate stakeholders engage in philanthropic projects, the better, without sacrificing due diligence. One way to do this is to start with more modest projects and build up.”

Friedman shared her own experience of applying for a three-year grant to run education programs in 20 cities throughout China. However, mid-way through, the grant changed to require a renewed application year to year – a much larger burden for a small team. Being transparent and reaching a clear and mutual understanding of a project can help NGOs to make allowances in advance.

“Because corporate philanthropy is so new in China, each company we work with has different expectations,” Friedman said. “Even for American corporation offices in China, we have to do a lot of donor education about the purpose and value of what they are getting long-term for their brand.”