‘Dirty’ Profit Views Limiting – Costello
Wednesday, 27th November 2013 at 9:58 am
The growth of Creating Shared Value (CSV) in Australia could be hindered by discomfort with business profiting from social outcomes, experts have told the the Creating Shared Value conference in Melbourne.
It was a common theme that emerged during a panel discussion facilitated by NAB’s Paula Benson which gave Not for Profit leader Tim Costello, Shared Value scholar Marc Pfitzer, CSR Officer at Hitachi Australia Sarah Coburn and Tomorrow’s Agenda Research Director Les Hems the opportunity to share their views on issues in the shared value space.
CSV, where intent to address social challenges is embedded into core business strategy, provides business the opportunity to generate profit through creation of social value – a concept met with unease by some.
“There’s still the lack of comfort in Australia that’s its okay to make a profit,” Costello said, representing the Not for Profit sector.
“There’s suspicion as if making profit is somehow dirty…yet we’re all out here asking those who have made profit to give to us!”
Hitachi’s Sarah Coburn compared those Australian attitudes to CSV to those she had witnessed in North America.
“For Australia, one of the biggest shifts in thinking that we need to grasp on the social side is that it’s okay to see business benefit and make money out of social impact initiatives,” she said.
“Australians are a little more hesitant in that area.”
Marc Pfitzer emphasised that reception to profit was a key to moving forward.
“In this context, profit is good, profit is our engine of scale. If we recognise that, that we share common interest in these social outcomes … then we’ve got the basis for co-creating shared value,” Pfitzer said.
Costello acknowledged the difficulty in aligning beliefs surrounding the social issues and approaches that are most worthy of attention.
“Shared value certainly assumes shared values, and there’s where the discomfort continues,” he said.
“There is debate going on about how much shared value is actually shared values.”
“The choice of those social outcomes is a values choice…we cannot assume that those outcomes are valuable or valid for everyone,” Pftizer countered.
“We’re not imposing social value creation, we’re driving social outcomes cost effectively.
“It takes however shared values indeed to drive the shared value agenda forward… fundamentally we have to put the planet and people back in balance.
“We need to break those boundaries and there’s no other way we’re going to solve complex problems.”
Costello spoke of the role corporates could play in changing the world in collaboration with NGOs.
“The millenium development goals were a real watershed for this shift,” he said. “The engine [of change] actually is business.”
Yet he flagged potential hurdles to co-creation of value.
“There is push back. Everyone in the non-profit sector recognises that we are simultaneously investors and producers and citizens and consumers … the push back is that there are a number of organisations … assaulting Not for Profits’ international agencies, saying ‘you’ve lost your radical soul getting into bed with government’ and saying corporates aren’t actually where change comes from,” Costello said.
He also spotlighted corporations law and the restrictions it imposes as an ongoing driver of the suspicion surrounding profit-making in the Not for Profit sector.
He spoke of corporates being criticised by shareholder representatives in the wake of the tsunami for taking action outside their “job”, perceived to be merely distributing a dividend with which shareholders would decide what to do.
Pfitzer was confident CSV-related successes could prove wrong for those people critical of the social role corporates could play.
“We’re not asking them not to make money – [money] is one of the great drivers of innovation. When we challenge it and say we need to meet a certain return we essentially are putting ourselves under pressure to continue innovating and delivering in cost effective ways – that is the power of business.”
“Profit created by advancing social condition is inherently superior profit.”
The conference, hosted by 3 Pillars, Net Balance and NAB, followed the inaugural event held last year.