Why I don't believe in sharing value

Evidence shows that sustainable business is a better business and that creating value is better than sharing it

Jonathan Sanchez is the director of brand consultancy Stand
Jonathan Sanchez is the director of brand consultancy Stand

Businesses are intrinsically selfish. This may be a hard statement to accept, but it is an honest one. Contrary to American corporate law - where corporations are strangely afforded human rights - businesses are not people. Nor are they charities, NGOs or civil service organisations. They are enterprises created by humans to serve one purpose - to grow and, as a result of that growth, to deliver returns to their owners or investors in the form of profits or dividends. And they do that job exceptionally well in a particular form of economic system that we call capitalism.

None of that is necessarily wrong. Capitalism, much like democracy appears to be the least bad model of global development. It channels capital into pursuits that help create jobs, foster innovation and has the power of lifting millions out of poverty by generating wealth that can be continuously recycled from one corporate body or sector to another.

Cost of wealth creation

Creating wealth is the very purpose of a business enterprise. That relentless pursuit of wealth has resulted in power shifting from government cabinet rooms to corporate boardrooms.  CEOs are able to define and set global policy, and the world now revolves around stock earnings, profitability. The ability of the business enterprise to endlessly 'innovate' new products and services has brought about dramatic improvements to our lives. But that has come at the cost of unabated and often wasteful consumption.

It is wrong, as many do, to proclaim the triumph of the free market economy because there is simply no such thing as a "free" market. For anything to be extracted, constructed, engineered or assembled, something or someone has to pay. So before we address the people cost, we should first consider the environmental cost. Rather than issuing a plea to save the orangutan, Palawan, or whales at Sea World, we can instead focus on the financial, societal and business impact of environmental degradation. Development economists call this "externalities". It is an attempt estimate the impact of any economic activity on the environment — such as water, air and ecology – and put an accountable unit cost on it.

This has become exceptionally urgent. We have little left to extract value from the environment and we are running out of resources. Putting it bluntly - without oil, water, minerals, soil, what business will be left? We can no longer ignore that many of our crops are failing across the centre of the planet, and the lack of basic commodities such as wheat is leading to civil unrest. In Egypt, bread appears more valuable to citizens than votes or democracy. If we fail to provide clean drinking water, a commodity that is rarely free, what is to stop more bloody protests and governments firing on thirsty citizens in Latin America? If we cannot help utility companies shift to renewables, how can they provide affordable power when the next oil price spike hits? What will happen to our cost of living and to those who already struggle to pay their power bills?

These social and economic issues will not go away. In fact they are about to get worse. And as commerce extracts the last elements of "free" value from our planet we are reaching the tipping point - the point at which the market ceases to be a solution to our problems.  Sharing values is all very well but discussing it endlessly will not put food on the table, generate energy nor find new and sustainable mineral resources. We should be mindful. There is something of wisdom in an old African proverb. It goes something like this: "When the missionaries came to Africa, they had the Bible and we had the land. They said, ‘Close your eyes and pray’ We closed our eyes. When we opened them, we had the Bible and they had the land."

Unequal partnership

We see endless programmes based on sharing of values. The corporate world likes to call it "partnership".But such partnerships are seldom equal and in some cases tantamount to outright exploitation. There is an echo of neo-colonialism in the background. We see this becoming common place across much of Africa, for instance, where vast areas of agricultural land are acquired for export driven commercial farming. Rather than "creating" a business model that is both sustainable and legitimate it results in the the displacement and destruction of local communities and their economies. We see "sharing" of values between governments and development agencies. For instance, the World Bank has "shared" billions of dollars in loans and guarantees for massive infrastructure projects only to see recepient nations fall deeper into debt. Ultimately wealth is not shared and evidence shows that such 'sharing of value' ends up just lining the pockets of large corporations while pushing the poor further into the debt trap.

Sharing of value, even with the best of intentions, can have adverse consequence. Take, for example, orphanage "tourism", where travelers share their time in local orphanages or spend time rebuilding schools and social and community infrastructure. While this is laudable it effectively removes the local labour force from income opportunities. We see sharing in economic blocks, where nation states are pressured to reduce trade barriers, tariffs and trade tax, creating a global economy but rendering local growth and sustenance either a challenge or simply an afterthought.

What has to happen is a systemic rethink of our action to the situation we have ignored for too long. We are all looking but we are clearly not seeing.

It is often said "first they laugh at you, but as time goes on the laughing slowly ceases" and, with this in mind, we should be bold in asserting that there is a different model – albeit one which bucks the current trend. Havas Media’s Meaningful Brands Index demonstrates that businesses which build-in sustainable business models, create social value and develop equitable partnerships outperform most stock indexes by an average of 120 percent.

Creating value is better than sharing it

Evidence unquestionably demonstrates that sustainable business is better business. Creating value is better than only sharing it. Unilever, a company I worked with until recently, has spent in excess of five years on its journey to become a wholly sustainable business (some might say decades). Unilever plans to double in size while reducing its negative impact by half. At the same time it is committed to increasing its positive social impact. This is an admirable change, and not one based on "sharing". It is one based on "creating value".

Unilever is creating value for shareholders, consumers and communities by being totally transparent about creating value for itself. This is not a company writing endless cheques to charity to buy itself "shared value". It is a company that believes (and rightly so) that it can make money by critically revisiting and overhauling the way it does business. It is creating new value, not sub-dividing the value it once had. Not one project in the Unilever Sustainable Living Plan should add one cent of on-cost to products or business.  Instead, it creates new value by innovating products, being more responsible with manufacturing and sourcing as well as demanding new ethical, fair and profitable standards from suppliers and partners.

The world needs to move and move soon, shifting from the emperor’s new clothes of citizenship and CSR, to one of creating value - value that is sustainable, equitable, long-term and authentic.

Creating Value, means doing the following five things well:

Business needs to work closely with government: The objective is not to over-ride and under-regulate, but identify on a macro-level significant challenges host nations face and apply their scale and ability to fix them. This means less coffee and croissants in Davos, and more action and accountability. Pay your tax, work for and with communitiesand make firm commitments to create value in markets where your company is privileged and permitted to operate.

Business needs to disconnect CSR, philanthropy and charity from sustainability and value: It is a hard job, but engineering sustainable business practices across the supply chain is sure to create long term value. This is crucial in a world where we no longer have enough fish to teach people how to put the rod in the water.

Governments need to ‘re-claim’ authority: The state should do what it is supposed to do - protect the enviroment, defend the vulnerable and balance welfare with growth. Governments are the guardians of social good and they must reclaim the authority that they have often been reluctant to exercise. 

Consumers no longer make fair choices. They simply make choices that businesses offer. It is therefore the responsibility of the government to ensure that those choices take into account the cost of social good. Becasue if that is simply left to whims of the market then the pressure of profit maximisation will always end up discounting the cost of externalities.

Civil society organisations, charities, NGOs must regroup and reframe the debate: They should no longer be dependent on the corporations that guilt-pay them to "share value". They must re-engineer, re-innovate, and move into solutions, product design and commerce. The time for these organisations to become producers is now, and global consumers want it.

Change

You have to change, you and me. We have to face the fact that we are not the smartest, brightest. We must move aside for those that know, care and are affected by the actions and reactions of those that have failed and continue to do so. Break the circle of the 'mobius' band of leaders, CEOs and marketers moving endlessly from one multinational to another. Perhaps, the best value we can create is to finally admit we do not have the answers and move aside and let others try. And this means encouraging mobility of leadership between the development sector, non-governmental organisation, business and the government.

Stand up PR

For public relations professionals there has never been a more important time to stand up and be counted, listened to and respected. We spend too much time at the bottom of the pyramid fixing the problems created by companies too scared, too ignorant or frankly too oblivious to know. PR pros have always been the advisors, the mirror that reflects the outside in. Too often we devalue our opinion. Perhaps because the pure 'cash-for-counsel’ model does not sit comfortably with activism.

PR pros must be the diplomats for organisations, the human litmus paper, that can test the credibility of corporate claims against actual social responsibility and in doing so act as catalysts of change. We can be the ‘objective’ eye but only if we refuse to see ourselves as mere press release producers and instead see ourselves as guardians of corporate reputation. Let us not forget, the difference between politics and PR is as thin as a ballot paper.

Business has the money and societies are made of people. As PR practitioners we have the ability to see around corners. We simply need the resolve to stand up. There has never been a more important time to do so.

jonathan@stand.consulting

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