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CSR Value ContinuumTriple Pundit guest blog

-by Wayne Dunn

The CSR Value Continuum: From Value Distribution to Shared Value Creation

3p Contributor | Tuesday February 11th, 2014 | 1 Comment

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By Wayne Dunn “That is shared value not corporate social

responsibility.”

That is the reaction I received two weeks ago after

sending a note about my value-centric approach to CSR

and highlighting the economic sustainability inherent in

CSR projects that have robust value propositions that

can align the social, economic and developmental

interests of companies, communities, shareholders and

other stakeholders.

CSR is a complex, evolving and exciting area that is

finding new ways to create and distribute value.

Simultaneously, the language and frameworks around

CSR are evolving rapidly and helping executives,

practitioners and academics with practice and

understanding. We are all learning and none of us is an

“expert.” I want to share some of my thoughts on CSR, shared value and a framework that has

helped me to be more effective in this space.

The concept of shared value has been eloquently described with powerful voices that have done

well to help business and society understand what it is, to think about how to develop it and

realize the compelling value propositions that it can create. Professor Michael Porter and his

team, through their work, their writing and the gravitas they carry, have helped many to see and

think about business differently. As they wrote, shared value “generates opportunity, innovation,

and competitive advantage for corporations—while solving pressing social problems.” To my

thinking, this makes shared value an important aspect of CSR and good business strategy.

I believe that we do a disservice to business and corporate social responsibility if we place shared

value actions outside of the scope of CSR, and I don’t think this is what Professor Porter and

others intended at all.

I’ve spent a couple of decades developing, analyzing, evaluating and supporting CSR-related

projects and programs around the world and across industries and sectors. Working on more than

60 projects in that time, I’ve developed some frameworks and tools that I find very helpful to

allow me to analyze and understand specific situations and strategies. One I nearly always use is

the CSR Value Continuum. It helps to look at the various CSR programs, projects and

initiatives that a company is doing and place them on a continuum ranging from value

distribution through to value creation.

Clearly, shared value is at the value creation end of this continuum, focused on finding those

opportunities where 1+1=3; identifying value propositions that can align corporate, stakeholder,

community, environment and other interests — creating new value by making the pie larger. At

the other end of the continuum are value distribution actions. These too are important. They are

where companies share or distribute value in a voluntary and strategic manner so that

communities, stakeholders, environment and other interests receive new value,and some level of

value is created for the company through goodwill, reputational capital, social license

enhancement, etc. Notice that at both ends of the continuum the actions produce value for the

company, that there is some alignment of shareholder and stakeholder interest. If there wasn’t,

why on earth would the company do them?

The mistake that people sometimes make is to assume that those CSR projects and initiatives that

are at or closer to the value creation end are necessarily more important, that companies should

do more of these and less of other projects. The full range of CSR actions — grants, donations,

scholarships, education, training, community development, environmental restoration, local

institutional development, local infrastructure, employment and skills development, local

procurement and business development — are all important tools.They can be important for the

company and for local stakeholders.

Depending on the specifics of each one, they will situate differently on the continuum. But in

general something like grants, donations and scholarships would fit more towards the value

distribution end of the continuum, while local procurement and business development would

tend to be closer to the value creation end. The value continuum is useful in revealing to

companies how their actions fall on a distributive-to-creative scale, and this understanding can

help both strategically and tactically to optimize value return from CSR investments.

Companies and projects stand to maximize benefit by consciously thinking of their CSR projects

and activities in terms of the value continuum and have a spectrum of activities that span the

continuum. This benefit includes discovering new strategies and opportunities for creating and

capturing more value from existing activities — opportunities which risk being overlooked if

focussing only on one end of the spectrum.

CSR is a complex and evolving field. There are some great projects and great innovations

happening, and value is being created in exciting and innovative ways. I’ve found that practical

tools and frameworks like the value continuum can help companies and practitioners to enhance

their understanding of the value aspects of their CSR activities and to be more efficient at

creating and distributing value.

Wayne Dunn is a Professor of Practice in CSR at McGill University in Canada (he calls himself

an accidental academic). He has over two decades of practical experience in CSR at all levels

and all over the world. His work has been used for a Stanford Case Study and has won many

awards including the first ever private sector project to win a World Bank Development

Innovation Award. He is currently the Executive Director of the CSR Training Institute and is

developing and delivering Executive Programs around the world. He is a Stanford Business

School Sloan Fellow and lives on Vancouver Island in Canada. He can be reached at

wayne@csrtraininginstitute.com.

Comment by Sebastien Mazzuri, FSG•

Dear Prof. Dunn,

Thank you for your insightful post. It is clear to me that successful social engagement from

corporations requires a portfolio of initiatives, which will be positioned at different levels along

the “CSR Value Continuum” you are describing. And I also agree that language and frameworks

are helping stakeholders with practice and understanding.

For this latter reason, one of the potential challenges I see with using a continuum is that it does

not make it easy to communicate some of the key differences between the examples of corporate

social engagement you provide. In particular, the strength of the link between social and business

value creation is very different at both ends of your spectrum. My experience and that of my

colleagues at FSG, especially with a corporate audience, is that there is value in drawing a clear

line somewhere to better spell out the characteristics of these different forms of corporate social

engagement; in particular, why companies engage, what value is being created, how and at what

cost for the business.

With shared value, it is possible to communicate information that is i) forward-looking

(companies know what social outcomes they are after), ii) directly linked to business financial

indicators (it is about increasing sales or market share or reducing costs, all of which will be

showing in the P&L), and iii) data-driven (companies have usually invested a lot in quantifying

the social opportunity as a market, and they should develop a measurement strategy to document

value creation with hard facts). This is more difficult to do in the case of product donations for

example, or compliance with a set of ESG standards. Companies are doing these for good

reasons but the link to business value creation through such factors as increased employee

engagement or brand recognition is more elusive and harder to quantify – as you implicitly point

out.

There are many frameworks that can be used to categorize these different types of initiatives, and

I am sure that the idea of a “CSR Value Continuum” resonates well with some audiences. What I

simply want to emphasize here is that I feel it is important to also go one step further and clearly

articulate, one way or another, the key differences between different forms of corporate social

engagement. This can only help executives, practitioners and academics accelerate the adoption

of these principles for the greater good.

Regards, Sebastien Mazzuri, FSG

Response by Author (Wayne Dunn)

Dear Mr. Mazzuri

Many thanks for your informative comment. My apologies for the delay in responding but I

have been active on field work and CSR projects.

You raise some interesting points and I suspect that our models and frameworks may have much

more in common than our discussion would suggest. I think I may not have communicated

clearly in my article as I certainly didn’t intend for a reader such as yourself to interpret that I

was referring to only product donations or ESG compliance. In fact, I believe that tools such as

the continuum do exactly what you explain is necessary - they help to understand and

communicate better - so please let me try to clarify this.

I agree totally on the importance of establishing metrics that are linked to corporate objectives

and in effective management of progress towards those objectives. I’ve been around this space

for a long time and recall too well the days when many firms measured their CSR in terms of

dollars spent, rather than value created. Metrics and systematic management has been a

consistent theme in my CSR field work, writings and lectures since the 1990s

I see CSR as being predominantly about value; value-distribution, value-creation, shared-value

between company and community, value over time, etc and in my work I’ve found it useful to

have a range of tools and frameworks (buckets, continuums, etc) that help to better understand

and communicate various aspects of value and optimize value-creation for the company and

other stakeholders. Relationships are also critical to realizing latent value but that is another

discussion.

I’ve long been an advocate for more systematic and quantifiable approaches to CSR strategy and

management. Beginning in the 1990s I was helping companies and communities to develop and

implement systems that would make management of CSR more efficient and easier to

communicate and manage. In 1999 I authored and delivered the first paper on CSR and

management that was ever presented at the Canadian Institute of Mining, Metalurgy and

Petroleum (CIM) http://www.slideshare.net/waynedunn/beyond-beads-n-trinkets-cim-

conference-paper-1999 . A core part of this paper illustrates my wholehearted agreement about

the importance of being able to differentiate various actions and activities. In my experience

(which stretches over 2+ decades, across all continents and includes corporate, community,

government, NGO and indigenous audiences) continuums and other related frameworks are

actually more effective at communicating differentiation than the more rigid ‘bucket’ systems. I

have found that, while bucket frameworks can undoubtedly be helpful, there can often be blurred

or confusing lines between different buckets (where does philanthropy stop and CSR begin, or

CSR stop and Shared Value begin? And why?) and that a single set of buckets can create an

artificial hierarchy that can make whole system optimization more difficult to achieve.

For example, if a company were to create a scholarship fund to train engineers, a program to

support science and math in schools, and give support for a University and college to improve

their ability to educate and train indigenous peoples from remote areas, I am sure we would

agree that this would fall into your Philanthropy bucket and be at the value distribution end of

my CSR Value Continuum. However, by applying a second framework, one that looks at the

ability of the CSR Investment to continue to produce value over time, a more nuanced and useful

perspective can emerge. Over time you have on ongoing increase in local workers who are

capable of working at professional and managerial levels, and an overall improvement in the

capacity of local and regional education to produce well-trained professional workers from the

project area. So, while the CSR spending was initially philanthropic and more about value-

distribution, over time the results seem to move down the CSR Value Continuum towards value

creation. And, unlike some CSR spending that is a pure expense in that the value created is used

up and gone in short order, this type performs more like an asset, returning value over successive

time periods. In this case the use of multiple frameworks enables proponents to communicate

more clearly how what seems like an initial philanthropic, value-distribution act can actually

produce longer term, sustainable value creation (shared-value bucket).

I’ve found that a unidimensional, hierarchical bucket type of system, or indeed almost any

framework if used by itself, could easily lead to the rejection of strategic activities such as the

example above and that a set of frameworks, that could include continuums, buckets and other

tools, can be of much more practical and strategic use. A recent short lecture that I presented has

some additional examples of the tools and frameworks

http://www.slideshare.net/waynedunn/csr-its-all-about-value and the full set as well as many

other aspects of CSR is covered in our Executive Program on CSR Strategy and Management

(http://www.csrtraininginstitute.com)

[Incidentally, the above example is taken from the development of the Saskatchewan Uranium

mining industry, one of the most successful examples of extractive sector CSR with Indigenous

peoples that I have ever seen – see http://www.slideshare.net/waynedunn/cameco-community-

relations-report-1998 for more information]

I hope I have been able to explain more clearly how the continuum is just one of a series of

frameworks and tools that we teach and use. Developed over time and based on both practical

field experience and theoretical modeling and analysis, they allow for a nuanced and practical

view of CSR and value. We’ve found that some of them apply better in one situation than

another, that some fit some companies and industries better than others but, in their totality, they

provide a useful set of tools for companies, practitioners and stakeholders and can accommodate

a multi-faceted view of value. And this helps immensely with managing and communicating

value and strategy around social engagement and CSR

Thanks again for contributing to this discussion. I agree that there are many frameworks and

tools and that some will resonate better with some audiences than with others. None of us have

all the answers and we are all learning as we work to help improve the efficiency of value

creation in the space where corporate and community interests meet.

All the very best, Wayne

What about “Shared Value”

The ‘Shared Value’ 4 bucket model

Do Nothing

Bad

Philanthropy

BetterBut not good

CSR

AlrightOK..

The Best

SharedValue

CSR Value Continuum©

• Helps to understand aggregate of project/corporate CSR activities.

• CSR includes a range of activities from Philanthropy through to synergistic value alignment (and a well-rounded and developed program would have activities along the continuum)

• Continuum of value distribution through to value creation

• Shared Value should be created on all CSR projects, not just those at far right. Level and amount of shared value/value creation changes but all are about value and shared value

Value Distribution

Value Creation

• Grants/Donations/Philanthropy

• Local organizations/governance

• Education & Healthcare

• Skills training

• Employment

• Procurement

• New products, markets, ventures

© CSR Training Institute 2013

All Good - All the way

it’s all shared value Every CSR investment and activity

should create value for the company & for one or more stakeholders.

Value Distribution

Value Creation

ValuePropositionAlignment

• Grants/Donations/Philanthropy

• Local organizations/governance

• Education & Healthcare

• Skills training

• Employment

• Procurement

• New products, markets, ventures

1 1 3

CSR Value Alignment Framework©

© CSR Training Institute 2013

Value Sustainability

•CapEx or OpEx?• Does the initial investment continue to

provide value beyond the investment timeframe

• Community Sports Event

• Local Supply Chain Development

Value Sustainability©

Current

Value

Medium Term Value

Long Term Value

• Grants/Donations/Philanthropy• Local organizations/governance• Education & Healthcare• Skills training• Employment• Procurement• New products, markets,

ventures

Does a CSR investment continue to produce value over time

Should Business ServeSHAREHOLDERS?

Should Business ServeSOCIETY?

IT SHOULD SERVE BOTH.

Wayne Dunn is President & Founder of the CSR Training Institute and Professor of Practice in CSR at McGill. He’s a Stanford Sloan Fellow with a M.Sc. in Management from Stanford Business School.  

He is a veteran of 20+ years of award winning global CSR and sustainability work spanning the globe and covering many indus-

tries and sectors including extensive work with Indigenous Peoples in Canada and globally. His work has won major international awards and has been used extensively as ‘best-practice’ by industry and academia.

He’s also worked oil rigs, prospecting, diamond drilling, logging, commercial fishing, heavy equipment operator, truck driver and underwater logging, done a couple of start-ups and too many other things to mention.   Wayne’s career includes big successes, and spectacular failures. He hopes he’s learned equally from both.

www.csrtraininginstitute.com

WAYNE DUNN, PRESIDENT AND FOUNDER

Helping business to serve society and shareholders, SIMULTANEOUSLY.