More Q&A on Measuring Shared Value from Nestlé and Intel

On last week’s lively Measuring Shared Value webinar, folks collectively submitted over 100 questions to our panelists representing Nestlé, Intel, Coca-Cola, and InterContinental Hotels Group. Since we could only answer a handful of questions during that hour, we promised to continue the conversation on FSG’s shared value blog. See below six additional responses from Suzanne Fallender, Intel’s Director of CSR Strategy and Communications, and Janet Voûte, Nestlé’s Global Head of Public Affairs.

The Q&A below addresses some important shared value topics, including:

  • Organizational roles of CSR/public affairs professionals integrating with the business

  • Shared value at the product-level vs. at the enterprise-level

  • Taking the first step toward shared value

  • Shared value measurement as an internal management tool vs. external reporting

  • Correlation of business and social results

A huge thanks to Suzanne and Janet for taking the additional time to share their insights and experiences!

1. All panelists come from social business or corporate responsibility roles. Are you all sitting on the teams in your organizations where strategy is developed to have these integrated conversations?

Suzanne: At Intel, our discussion related to shared value started out of our corporate responsibility group, but since that time we have engaged people from our sales and marketing, manufacturing, supply chain, finance, and others engaged in strategic discussions around the concept and also having them pilot the measurement methodology. In many ways, our approach of engaging others across Intel in applying shared value is consistent with our work in recent years engage business groups to embed corporate responsibility into business planning processes, product development, and metrics. Where I think it’s different is the way in which it seems to be helping groups really reframe the scope and scale of potential opportunities and impacts from the outset – whether they are developing new products or starting new internal and external initiatives. We’re still just at the beginning of the process of rolling this out to more groups – but it’s already resulting in some very interesting conversations in different parts of the company.

2. How is the idea of shared value embedded in your efforts to develop new product offerings? The examples so far [in the webinar] relate to company-wide implications, but do not speak to the opportunities of shared value at the product offering level.

Suzanne: We actually first started looking at the shared value approach with respect to products – specifically to our education transformation strategy, which includes the development of technology solutions for education among other factors (e.g. curriculum, policy, teacher professional development, and research and evaluation). As part of this education strategy, we engage directly with governments and educators to developed tailored solutions, including the Intel-powered classmate PC and the Intel Learning Series (which includes software, content, and services such as training) to understand and meet local education needs. We have measured both social and business impacts of this strategy. We’ve tracked social outcomes related to teacher and student performance (for example, in Portugal, where a national project launched in 2007 provided every primary school student with a classmate PC, PISA (Program for International Student Assessments) scores rose by approximately 20 points in all three subjects (reading, science, and math.) Our engagement and measurement of the social metrics has helped inform our product development and has enabled us to have the products needed to grow our market share in the education technology market.

3. This is a very general question, what was the thing that convinced Intel, Nestle, InterContinental Hotels Group and Coca-Cola to take this new approach of shared value even without having any evidence (data) to back it?

Suzanne: For Intel, we had already started down the path with our corporate finance group on trying to better measure the business value of our corporate responsibility and environmental efforts – developing an integrated value framework and internal finance tools, and also including financial impacts (i.e. cost savings from our environmental investments) where we could in our external reporting. In parallel, we had been investing for more than a decade in measuring the social and environment impact of our education programs, community engagement efforts, and voluntary environmental initiatives. We also had been working to embed corporate responsibility approaches more deeply into decision-making and business unit plans. It seemed to us that the shared value concept pulled all of this together in an interesting way and had the potential to help us accelerate our impact measurement and integration strategies. We also were very interested in learning from other companies who were struggling with the same challenges we were related to measurement and quantifying the value of things that are frankly inherently hard to quantify.

4. Why has Nestlé chosen to use shared value for external reporting whereas the others have not, and FSG framed it as an internal tool? What are the advantages and dangers?

Janet: Nestlé has actively pursued transparent external communications with investors, and all interested stakeholders in our Creating Shared Value focus areas of Nutrition, Water and Rural Development as well as in Environmental Sustainability and Compliance including human rights. We produce a report annually which we now entitle “Nestlé in Society: Creating Shared Value and Meeting our Commitments.” The report which is sent out to all of our investors together with the annual report, met the GRI A+ reporting standard in 2011 which indicates the highest level of transparency in reporting and we hope to achieve the same level in 2012. We believe that Creating Shared Value and our work in Environmental Sustainability and Compliance requires the support and engagement of external stakeholders and as such will be facilitated by open external communications. This is why we focus a great deal of attention on our reporting on societal performance indicators and commitments. The challenges with external reporting are real in so far as the data collection and external verification processes need to be in place and working efficiently.

Regarding Creating Shared Value measurement and metrics used for internal strategic purposes, we are also working to innovate in this area. As presented during the webinar we are testing a new Rural Development Framework which captures both the societal impact and the business benefit. Likewise in the area of nutrition, we are finding new ways to measure the business as well as societal benefit from our focus on reducing salt, fat and sugar in our portfolio or where appropriate, adding micronutrients and finding new distribution mechanisms to reach deserving populations.

Thus at Nestlé we believe in the importance of both external reporting of societal indicators as well as developing new internal metrics and measurement that assess both the business and societal benefit in our Creating Shared Value focus areas.

5. Paul's company [InterContinental Hotels Group] is focused on a cost-saving shared value (green). Nestle is focused on shared value is much more secondary or indirect. How does Nestlé answer this same question about whether shared value is really cost-effective and not a profit loser?

Janet: In the interest of time in this webinar, we focused on Creating Shared Value (CSV) in rural development which is one of our three CSV focus areas, the others being nutrition and water. We did not have time to cover the progress and improvements our Operations teams are making in the area of sustainable use of resources. Nestlé has worked hard to reduce energy consumption, water withdrawal and greenhouse gas emissions while increasing production. So we too have an actively managed Environmental Sustainability agenda. That said, as part of our Creating Shared Value commitment we believe in the importance of investing in the communities in which we operate including farmers and other suppliers, as one way to ensure long term societal and business success. Indeed we believe that long term thinking and investment planning are essential to the Creation of Shared Value.

6. Can Nestlé share externally its learning’s regarding the correlation between business and societal goals?

Janet: At Nestlé we have always taken a long-term view on business and as such our work in the area of creating shared value, and particularly cluster or, what we call rural development, predates by decades the CSV concept itself. CSV is in our history and our DNA. In particular, Nestlé has commissioned a number of case studies which will be published soon in which we can share our experiences. The first one will focus on 50 years of Nestlé presence in the MOGA district in the Punjab in India. The author, Professor Asit Biswas, will be publishing a book on “Creating Shared Value: Impacts of Nestlé’s Moga Factory on the Surrounding Area,” addressing Nestlé’s work with dairy farmers and their communities later this year. Likewise we are working with FSG to document our experience with Micronutrient Fortification of our products, including new distribution models, and its role in helping to improve health.

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