The Lion’s Shared Value
Wednesday, 26th August 2015 at 11:00 am
On the surface it might seem counter-intuitive, but one of Australia’s largest food and beverage companies is committed to preventing obesity and alcohol abuse, writes Ellie Cooper in this month’s Executive Insight.
Fifteen years ago, Lion defined its core purpose as “making the world a more sociable place” and has since operated with the philosophy that sustainable shareholder returns would flow only if the organisation delivers social benefits.
This early incantation of shared value was described in the recent State of Shared Value in Australia report – in which Lion was one of six companies profiled – as “a significant step at a time when it was still popular to define shareholder value as the ultimate purpose of business”.
Lion’s core purpose has developed over time and is now to “enrich our world every day by championing sociability and helping people to live well”.
Sustainability Director, Libby Davidson, said “our people are encouraged to consider all decisions through this prism”.
“For many years, we’ve also had an explicit commitment to doing the right thing for the long term as an inherent part of our values as well as the behaviours we expect from all our people.
This has led to the integration of clear social goals in the company’s long-term growth strategies,” Davidson said.
“We’ve worked hard to be clear on both our purpose and the kind of culture we’re trying to create and have also integrated sustainability into our corporate strategy.”
As Pro Bono Australia News reported, one of the key State of Shared Value findings was a lack of correlation between a company’s core business and the social issues they were trying to address.
However, Davidson said Lion aims to incorporate shared value into all its operations. A large part of this is mitigating the negative impact that the food and beverage industry can have on consumers, while continuing to generate profits.
“We place social considerations front and centre in our innovation and portfolio management strategies,” Davidson said.
“Our shared value journey has been an evolution from stand-alone sustainability initiatives, sitting alongside our operating businesses, to integrated strategies that are inherent to how we do business and core to who we are.
“Balancing social goals with commercial strategies… helps us to grow people and stakeholder engagement, build trust in our brands and deliver new avenues for growth.”
Two of Lion’s key focus area are developing a positive drinking culture and facilitating better nutrition.
The Goodness Project is an initiative across Lion’s dairy and drinks business, including PURA milk and South Cape cheese, which sets hard targets for the nutritional value of products.
“The dilemma of today’s diets is that on the one hand, Australians aren’t getting the nutrition they need, while at the same time we have a problem with obesity,” Davidson said.
“We’re taking a leadership position by improving the nutritional profile of our dairy and drinks products and championing their natural goodness.
“Almost everything we make comes from Australian farms, and is aligned to consumers’ desire to eat better quality, less processed and more wholesome food.
“But we have to walk the talk on this. Our Goodness Project is aimed at enhancing the nutritional credentials of a range of our products and better positioning them for success with a new generation of consumers.
Davidson said their portfolio of brands have been independently peer-reviewed by the CSIRO and Deakin University against The Goodness Project nutrient criteria, guiding Lion’s strategic plan.
“Over the next five years we will deliver significant reductions in salt, sugar and fat content. We’ll also be lifting the bar higher on artificial colours, flavours and added fructose in our children’s products,” she said.
“We’re rolling out front of pack, Health Star Ratings and additional energy information across our portfolio.
“We launched the Goodness Project this time last year so it’s still fairly nascent but we are tracking well against our targets.”
Another of Lion’s shared value initiatives is growing their range of lower-strength beer alternatives to “help promote a positive drinking culture in Australia and New Zealand”.
“We have invested in XXXX Gold and the mid-strength beer segment over a number of years because we believe in providing consumers with choice and options to moderate,” Davidson said.
“It’s about providing a range of choices to suit different occasions and making sure you introduce viable choices at lower alcohol levels.
“XXXX Gold is now Australia’s leading beer at 3.5 per cent ABV (Alcohol by Volume), which is a huge shift in drinking preferences from 20 years ago.
“In fact most of our new innovations now sit at a lower ABV than the traditional 4.6 to 5 per cent that most beers were brewed at years ago. XXXX Summer Bright Lager is a full strength beer but at only 4.1 per cent ABV it is just 1.1 standard drinks per bottle.”
One of the major challenges of implementing shared value, identified in the State of Shared Value report, are internal perceptions of both what the concept means and why it’s worth the effort, and aligning it with the broader strategy of the organisation.
“The key for Lion has been to firmly entrench the shared value ethos in our culture and values,” Davidson said.
“Creating a core purpose centred on the needs of the community is the foundation of a culture of sustainability.
“When we communicate the core purpose we are very clear that alcohol misuse and excessive dairy or juice consumption are not compatible with our view of healthy sociability and living well.
“Humans aren’t likely to ‘live well’ in a degraded environment, so it’s clear to our people that Lion needs to preserve natural resources and minimise its footprint to fulfil its purpose.
“We set up the core purpose as a filter for all decisions and, along with our values, it has a powerful peer group effect – being regularly raised as a challenge when we discuss contentious issues.”
While Lion has a shared value ethos, the company has intentionally strayed away from using the term within the organisation.
“We’ve adopted the shared value ethos for some time now, although we haven’t always referred to it explicitly as ‘creating shared value’. Internally, we use the term ‘sustainability’ for these concepts,” Davidson said.
The State of Shared Value report also found inconsistencies in language across the business community and questioned whether a shared vocabulary is needed.
However, Lion said applying labels can have the opposite effect, distinguishing one objective in what should be a holistic approach.
“We believe that you need to be careful in how you use terms like sustainability and shared value within a business if your goal is to create an integrated strategy where shared value goals are essentially commercial goals,” Lion said in the report.
“You need to be careful not to reinforce – through the use of the terminology – the idea that this is a separate activity that happens away from core business.”