Many successful businesses are forging strategic alliances in their value chain in order to run their businesses profitably. They also promote the right conditions of employment, where they can. Arguably, several businesses are doing well by doing good as they create shared value opportunities in their supply chain. At the same time, they are instrumental in improving the lives of their suppliers. They do this as they want to enhance the quality and attributes of their products, which are ultimately delivered to customers and end consumers.
Effective communication with stakeholders is a very important element of responsible business behaviour
Nestlé, Google, IBM, Intel, Johnson & Johnson, Nestlé, Unilever, and Wal-Mart are some of the multinational organisations who have somewhat embraced the ‘shared value’ approach. These successful global businesses have shown that they are capable of creating value for shareholders as well as for society in general. In many cases they are building partnership and collaborative agreements with external stakeholders (including suppliers) hailing from different markets.
Evidently, these businesses are reconceiving their products as they are taking a broad view of their purchasing and procurement and on production activities. Several multi-national organisations are looking beyond their short-term profits for shareholders. They are also looking after their other marketplace stakeholders. Many multinational organisations are redefining productivity in the value chain and enabling local cluster developments to mitigate risks, boost productivity and competitiveness.
Nestlé’s corporate business principles incorporate the 10 United Nations Global Compact Principles on human rights, labour, the environment and corruption. It transpires that Nestlé is an active member of the Compact’s Working Groups and Initiatives. ‘Creating shared value’ has become an integral strategy of how Nestlé does its business. In a nutshell, this approach is focusing on stakeholder engagement as well as environmental sustainability.
Nestlé maintains that it complies with international regulatory laws and acceptable codes of conduct, as it improves its company’s operations. Yet, at the same time it is nurturing its suppliers’ (the farmers’ in the developing countries) talents. Nestlé has revisited its numerous processes and its value chain activities. Each stage of the production process, from the supply chain to transforming resources adds value to the overall end product, for the benefit of the company itself. Nestlé sources its materials from thousands of farms; many of them are situated in poorer rural regions of the world.
Nestlé provides training in order to encourage sustainable production while protecting the supply as well as the quality of its raw materials. This brings positive, long-term impacts on the local economy. At the same time, the suppliers are running profitable farms, as they are offering their children a better education. Moreover, both Nestlé and the suppliers are committed to protecting their natural environmental resources for their long term sustainability.
The International Hotel Group (IHG) reaffirm that they are successful in identifying innovative opportunities within the environment and in fostering closer collaboration with the community. IHG have aligned their CSR report with the Global Reporting Initiative Scorecard. The hotel chain claims that it is envisaging reductions in energy consumption of up to 10 per cent over the next three years.
IHG’s CEO alleged that his group has planned to achieve this target by using an online sustainability tool named, ‘Green Engage’. IHG suggests that this tool has helped them in measuring and monitoring energy, water and waste management. The international hospitality chain prides itself of a dedicated web page which outlines education programs to employees, diversity initiatives, and environmental protection among others issues. IHG’s Url site even features a business model which depicts the way how they are successful at ‘creating shared value’ through corporate responsibility.
Evidently, many multinational organisations have taken on board Porter and Kramer’s latest notion, ‘creating shared value’ as they work hard to ensure a sustainable and high quality supply of their raw materials. Some of these latest corporate responsibility developments are focusing on training of suppliers, improving social conditions, buying from cooperatives and paying premiums, and working with certification programmes.
Of course, all these initiatives create value through the supply chain, particularly for the smaller businesses and sole traders. Effective communication with stakeholders is a very important element of responsible business behaviour. Through stakeholder engagement, businesses are identifying emerging issues, shape their responses and continue to drive improvements in their financial performance.
Mark Camilleri is a visiting senior lecturer at the University of Malta.