Shared Value Business: the Case of Stockland

At the end of August I attended a forum organised and hosted by the Business Council of Australia (BCA) on ‘The Sustainability Challenge’.

The invited guest was Bjorn Stigson, President of the World Business Council for Sustainability Development. His presentation was relatively downbeat, reflecting how difficult it is proving to make significant progress on global issues such as climate change in a ‘nobody-in-charge’ world.

Part of the problem, as BCA’s CEO Jennifer Westacott emphasised, is that a sustainability agenda is too often portrayed as at odds with an economic growth agenda. “Indeed”, she argued, “the sustainability agenda is the natural home of business and it should never have been captured as part of some extreme political or ideological agenda.” For business, environmental good practice remains “fundamental to the social licence to operate”. Yet the present debate on emissions reduction “seeks to paint big business as the culprits” rather than a partner for sustainable development.

How does one overcome that perceptual categorisation? How can one portray business as part of the solution rather than simply castigating it as the cause of the problem? Those were the implicit questions in my recent blog on the causes of the anger that have characterised the Occupying Wall Street protests. One answer, I suggested, drawing heavily on the recent work of Michael Porter and Mark Kramer, was for companies to articulate their ‘shared’ economic and societal value.

Perhaps it is not surprising, then, that for me the highlight of the BCA forum was the presentation by Matthew Quinn, Managing Director of Stockland. He argued eloquently the business case for sustainability but in a highly distinctive manner. I am happy to be corrected but to my knowledge his speech represented the first time the corporate ambitions of an Australian company had been presented as “creating shared value for all stakeholders” (Matthew’s emphasis). It was not a desultory genuflection to the latest business school semantics. The speech, from beginning to end, was permeated by the concept.

Stockland, of course, is known for its development and management of residential, retirement living and commercial property assets. It builds homes, retirement villages and shopping centres. Profits are important. They fund future projects and provide a return to public investors.

Stockland, as a good corporate citizen, could have continued to present its accountability in terms of separate ‘sustainability’ and/or ‘corporate responsibility’ reports. What Matthew’s presentation recognised, however, is that environmental and community benefits are not additional to Stockland’s business model – they are central to it.

Shared economic and societal value begins by understanding that what Stockland is building are not properties but communities. Residential development is not simply a financial transaction based on subdivisions. It’s about creating places where people want to live. Social value (the provision of local schools, childcare and health, retirement and shopping facilities) and environmental value (planning for open space, parkland, water recycling and low energy houses) are not costly ‘add-ons’ to the business. They represent the lifestyle which is being purchased. Societal benefits contribute to economic return.

Similarly, shopping centres can be made more valuable to the extent that they are designed and managed as community hubs. Commercial property, not just residential, can bring greater economic returns through the creation of societal value – making malls a pleasant and safe venue to meet and talk not just a place to park and shop.

What Stockland is effectively doing is rearticulating in contemporary language the vision of its founder Ervin Graf. Graf, sixty years ago, argued that the purpose of his business was “to not merely achieve growth and profits but to make a worthwhile contribution to the development of our cities and great country”.

Matthew Quinn’s presentation recognised that these two goals are integrated within a single strategic enterprise. Profits (economic return) and community development (societal return) are the business’ shared values. In the long-term they leverage off each other.

Stockland is not defining its community activities as ‘giving back’ to society. Its ethos is driven by social investment not charitable endeavour. The initiatives are the business: it is the nature of the business itself, properly framed and implemented, which creates beneficial social and environmental impact.

Shared value cannot be just a well-intentioned statement of faith. The challenge now is for Stockland to demonstrate, through robust liveability metrics, that the property developer’s investment in community provides superior financial outcomes and improved shareholder returns over the long-term – higher sales, greater occupancy and faster speed to market.

If so, as Mathew Quinn concluded, shared value “is a win-win. It is a better way”. In my next blog I’ll talk about another iconic Australian company which has the potential to present its activities as ‘shared value’. I’d be delighted to have other instances drawn to my attention.