Arauco: Shared Value Strategy
FSG worked with Arauco to create a shared value strategy for a $2.3B expansion of its industrial complex in the Arauco Province of Chile. The project included an internal diagnostic of Arauco’s readiness for adoption of a shared value strategy, and recommended internal changes necessary to ensure success of the strategy. The diagnostic, based on intensive secondary research as well as over 100 interviews with internal and external stakeholders, resulted in a consensus-based vision for success of the investment. Based on the vision, FSG developed a series of shared value initiatives that addressed the three major project risks identified – asset productivity, labor supply, and relations with external shareholders. For each shared value initiative, FSG created a high-level implementation plan, including timeline, organizational supports needed, and partners needed.
Arauco is a leading company in the global forest industry, but its success has not always been shared or celebrated by many of the local communities surrounding its manufacturing facilities and forest holdings. As the company planned a major expansion of its pulp and processing facilities in the Arauco Province in Chile, the executive team realized an opportunity to take a creative and inclusive approach to value creation that helped addressed social problems while at the same time being sustainable for the business in the long term.
Creating a strategy for shared value involves learning the assets, abilities, and challenges of the business as well as the perceived social needs of the communities in question. FSG worked closely with a small Arauco team to interview employees, executives, and contractors across the company’s four core business units to better understand the unique abilities and challenges of the company. Additionally, the team spoke with dozens of external stakeholders – from local community members and civil society leaders to government officials and industry groups – to better understand the community’s needs and vision for success.
The working group used the information collected through secondary research and interviews to compile a portfolio of mutually reinforcing activities to address social needs in a sustainable way for the business. Based on approval to move forward from the executives, the team worked together to further refine the portfolio and build out implementation plans for potential shared value initiatives moving forward.
Arauco is one of the world’s leading forest industry companies. Headquartered in Santiago, Chile, Arauco operates five primary business units: Forestry, Woodpulp, Sawn Timber, Panels, and Energy. The company pursues its vision as "a global leader in the development of sustainable forest products" through a strategy of globalization, adaptability, diversification, compliance, innovation, and a focus on human capital.