Event wrap-up: creating shared value in energy
BLOG: Shared value bringing trust back to the energy sector.
More than 30 people made it to our recent shared value in energy masterclass. They came ready to share, debate and explore new approaches to deliver for communities, consumers and corporates alike. Whether you were there, or wished you had been, this synopsis should get you thinking on why and how you could start adopting shared value approaches in your energy work.
Shared value is a new way of operating that creates social and financial returns at the same time.
As founder of Australia’s Shared Value Project, Rhod Ellis-Jones is one of the earliest adopters of this business strategy in Australia. As Principal at Ellis Jones, it’s a strategy that he has infused through his work advising businesses, governments, not-for-profits and social enterprises. He began the night by sharing the fundamentals.
- Shared value is defined as policies and practices that enhance the competitiveness of companies while simultaneously improving social and environmental conditions in the regions where they operate.
- It is a business strategy focused on companies creating measurable economic benefit by identifying and addressing social problems that intersect with their business.
- To qualify as shared value, there must be an identifiable economic benefit to the company as well as measurable impact on a social or environmental issue.
In practice, shared value looks like:
- Sustainable business and social/environmental value creation
- Competitive advantage
- An approach under which different methods and practices can grow and thrive; a new framework for innovation.
- Differentiated statement of intent to shareholders, customers and society; a different conversation.
- Trust in the role of business in society.
- Reaffirmation of the value of the human dimension of business (internal and external).
It’s not sustainability or CSR.
It’s common question, and one Rhod preemptively addressed: “isn’t this just another name for sustainability or CSR?”
In short, no.
Shared value, in its purest form, sits at the intersection of corporate assets and expertise; business opportunities and challenges; and social and environmental needs.
CSR and sustainability, which are predominantly communications and compliance functions, rarely serve business-wide interests directly.
With a shared value approach, the social or environmental value created enables, or directly increases, the commercial outcomes. And it goes deep. When applied holistically, it redefines business or organisational strategy. And it does so in a way that means the profits scale along with the good created for the community or the environment.
Some other key ways that shared value can be distinguished from CSR and sustainability include it’s:
- application as a business strategy with cross-disciplinary teams
- focus on business returns and social returns
- use as a profit and/or market growth strategy
- capacity to deliver competitive advantage
- strategic influence, that is measured and reported
In this way, shared value represents a distinct shift in thinking around the role of businesses in solving unmet social and environmental needs. As a framework, it can be applied to bring together the diverse interests of governments, investors, social causes and environmentalists, and harness action toward mutual goals. And in energy, as it disrupts and transforms, that is something which could serve us very well.
Three examples of how shared value in energy shapes up.
Three panellists talked to shared value in action, each with a different perspective.
Kristen Lee from ACCIONA Australia, spoke to the benefits of deep community engagement in delivering benefits that resonate and genuinely improve local lives in the areas local to wind farms built and operated by the company.
Octopus Investments, Harry Manisty, discussed the sweet spot his investors seek in financing projects that deliver both social and commercial returns.
And Laura Baker from NAB’s Innovation Team talked about shared value in action, making a big difference to the lives of NAB customers defaulting on personal loans (which research showed was often due to unexpected disadvantage caused by death, disability or domestic violence). By referring customers in need to financial counselling with their not-for-profit partner, NAB Assist has enabled many people to find their feet when faced with hardship as well as improving the NAB bottom line, with far more debt recovered than the previously more hardline approach.
Facilitated by Melinda Scaringi, Director, Energy and Environment at Ellis Jones, the panel discussion ranged from big data to agritech, to regional employment, to internal debates.
Top three takeaways.
- Trust is key: At a time when trust in institutions is at an all-time low, shared value provides a framework to build trust with investors, communities and customers. Because it delivers genuine positive human outcomes that also enhance business outcomes. ACCIONA’s community investment programs reflect the central role that strong local relationships play in securing community buy-in for the development of sustainable wind farms, a context of complex planning restrictions. Trust is equally important in the context of the financing the renewable energy sector. Harry highlighted, in particular, the strong emphasis that investors put on environmental, social and governance credentials of renewable investments.
- Shared value can help to foster local investor interests in the renewable energy sector: Harry noted that one of the challenges that Octopus Investment faces is educating local investors about the financial returns inherent in renewables. While the environmental returns from renewable energy have become clear, the uncertain policy context has made local investors wary. Foreign investors, with their experience of investing in UK and European renewable markets, however, are clear about the financial rewards. Shared value provides a lens to articulate the case for greater private and public investment in this sector.
- Implementing shared value is a marathon, not a sprint: Shared value-led business transformation is a long-term proposition. Laura spoke candidly about NAB’s continued efforts to engage internal stakeholders on shared value, the importance of champions throughout the business and high profile wins. Shared value provides a framework for innovation within NAB. This approach has led to new services like NAB Assist as well as a partnership with Origin Energy to provide vouchers to customers to install solar electricity on their rooftops. NAB is also using the lens of shared value to consider how they can better align investment in agribusiness.