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CSR vs. CSV - What’s the difference?

Posted by: Mark Kramer on 2/18/2011

In response to the recent Harvard Business Review article on Creating Shared Value I wrote with Michael Porter, I’ve received questions about the relationship between corporate social responsibility (CSR) and creating shared value (CSV).  Aren’t CSR and CSV the same thing – doing well by doing good?

We believe that CSR is a different -- if overlapping -- concept from creating shared value. Corporate social responsibility is widely perceived as a cost center, not a profit center. In contrast, shared value creation is about new business opportunities that create new markets, improve profitability and strengthen competitive positioning. CSR is about responsibility; CSV is about creating value.

Certainly the phrase "doing well by doing good" covers both shared value initiatives like the Chevy Volt -- a new product we see as shared value -- and more traditional CSR activities such as GRI reporting that responsible companies accept as a cost of doing business. But they represent very different strategic and management decisions.

It's true we wrote about CSR in Strategy and Society, although we deliberately avoided using that term in the title because even in 2006 we knew that we were trying to describe something different - we used the phrase "shared value" but it seemed too new, at that time, to replace the well-accepted terminology of CSR, and we are always reluctant to create new jargon.

The fact is we see management behavior regarding the social impact of business changing dramatically at many leading global companies. Whether called a "new form of CSR" or "shared value" it is fundamentally different than the CSR activities of 5 or 10 years ago.



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Riccardo Wagner
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Hi, your main point is that CSR is seen as a cost center and not a profit center. But the chances in social Responsibility / Sustainability etc. should be realised by developing strategies that lead to new Opportunities for the Company and Society so creating a win-win situation.

In your Opinion CSR does not represent this and is therefore no longer appropriate.

In this, your are in my opinion, just wrong - sorry, this might have been true 5 or 10 years in the past - but the CSR-World hast developed. That every social case needs a business case and that a CSR-Strategy needs to be closely linked to the core-business and should create Value is in my experience undisputed common ground for CSR-Experts for years - at least in Europe. I dont see one new catch in your theory. What I see is an unnecessary labeling Discussion.

Greetings

Riccardo Wagner
BetterRelations, Cologne/Germany
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Vito Scanderbech
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Dear Riccardo,

I have been studying CSR for long time (since 2006) and I have always been taught that what Mr. Kramer is now calling CSV is just an evolution of CSR and of the way companies are approaching to it (integrating it into their Corporate Strategy)

So, when reading these posts I find your last sentences extremely meaningful and straight to the point

Congrats!

Cheers,

Vito
Ed Ahnert
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Labels are important. Riccardo may be right about CSR-Experts in Europe but the same cannot be said for business leaders (as opposed to "experts") in the USA and Asia where I have done business for decades. I prefer the term Corporate Responsibility (CR) as lay people hear sustainability and think environment; hear CSR and think philanthropy. CSV seems to discount what Mark in his post calls "more traditional CSR activities such as GRI reporting that responsible companies accept as a cost of doing business."

In fact GRI reporting provides valuable nonfinancial information to company directors and to investors (e.g. more than 870 UNEP PRI members who manage ~$25 trillion in assets) and other stakeholders and improves the reporters' standing in the capital markets. Surely that is shared value.

Despite the difference of view over labels, I commend Mark and Michael Porter for a major addition to knowledge about how CSV or CR can add to corporate and community value.
Alex Todd
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You make a critical distinction between CSV and CSR. To me it is one of policy versus strategy; CSV is a matter of policy, while CSR is a strategic consideration. CSV is about the nature of the corporation, while CSR is about corporate initiatives. Business strategies informed by a CSV policy are authentic to the corporation and sustainable, while CSR strategies are add-on considerations that may or may not survive business threats and opportunities.

In my mind the biggest challenge for CSV, as it is for CSR, is giving management a clear mandate to implement them. Although an important part of the solution is in public policy, I believe boards of directors are a critical success factor. It is with the same objectives in mind (though I had not heard the term CSV at the time) that I introduced the concept of Aspiration Corporate Governance in my contribution to a recently published finance textbook (see http://is.gd/XILkwP).

- Alex

http://GovernanceCommittee.com
Mark Avery
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CSV is a term that needs its own identity. It is not CSR.

CSR has cost, but is generally tied into brand management, so the return of "good will" in the marketplace is decisive in buying decisions today. It is not direct ROI, but it has proven financial returns which justify financial investment. It is typically a box in the org chart and does not 'feel like' a philanthropic venture-- investments have to make sense to the company.

CSV is a nice packaging of social entrepreneurship that can be applied to any organization. It is a mentality, a strategic approach. I would say that, unlike CSR, CSV is not a box in the chart, it is a fundamental business mission that frames the 'mode of operations' for the whole company.

I think that is why I feel it is a valuable distinction here; the idea has 'gravity' and needs an identity of its own to grow as it can.
marcos reys
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I was at ETHOS conference at Sao Paulo where Mr Kramer presented onc again the concept of CSV and thje importance of competitiveness. I think we will allways have space for CSR but seems to me that the necessary conditions to implement inclusive business are present only under the CSV umbrella.
Barbara de Waard
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As an NGO Management and Marketing scholar, I would agree that CSV is essentially Social Entrepreneurship. After all, the authors themselves have referred specifically to ' blurring the profit/non-profit boundary' and as such, the concept is inextricably linked to organisational mission and of course, strategy.

I would also agree that CSV is just a step further than CSR into the direction of overall Societal Responsibility, a trend which has been predicted to dominate Management Thinking over the next few decades. For example, Kotler has recently described a corresponding paradigm shift in Marketing in his article 'Reinventing Marketing to Manage the Environmental Imperative' (2011, Journal of Marketing)

From a different perspective, charities/NGO's are generally moving towards adopting a more corporate approach in the current difficult economic climate i.e. converging on the profit/non-profit boundary from the opposite direction.

Maybe 'reinventing capitalism' is not far off.....
Vito Maria
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I have been studying (and now practicing/working) CSR since 2006 (my classes were based on your previous articles Mr. Kramer...:) ) and I have always been taught that CSR must be integrated into Corporate Strategy (what is now being called CSV). As everything, there are right ways of doing things and wrong ways of doing things. Doing sporadic philanthropy is a wrong way of doing CSR (you can do better..) whereas redesigning your procurement according to your Corporate Strategy is a right way of doing CSR. Hence, I strongly agree with the comment of Riccardo Wagner:

"This might have been true 5 or 10 years in the past - but the CSR-World hast developed [...] I dont see one new catch in your theory. What I see is an unnecessary labeling Discussion."

So why do we have to complicate our life with new acronym and unexisting differences??

Thanks

Vito Scanderbech
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