In a special feature this month, we interview Peter Yates AM, Chair of the Shared Value Project. Peter shares his experience with shared value and how it has reshaped his thinking in his various roles in the corporate and philanthropic sectors. Peter also shares highlights from his recent visit with the Shared Value Project to Hong Kong, and the opportunities for Australian business as the shared value movement continues to grow in Asia.
What does shared value mean to you?
Businesses using their resources, both skills and financial, to solve society’s problems profitably and in a way that gives them a strategic advantage for their core business. The benefit to our society of business engaging in shared value is that we create sustainable and scalable solutions to our social problems rather than having to reply solely upon the resources of philanthropy or government.
What lead you individually to the shared value idea? How did you come across it?
I came across shared value when Rhod Ellis-Jones and Helen Steel approached me with the idea. I had worked Helen on the Knowledge Cities World Summit that I chaired, so I respected her thought leadership. The concept of shared value appealed to me instantly. I spent a significant time running businesses and I was not really satisfied that we were going to solve society’s problems by using solely the CSR departments of big businesses.
How has your engagement with shared value helped you individually in your various roles in the corporate and philanthropic sectors?
Shared value has provided me with a framework where I feel confident about encouraging businesses to become involved in solving society’s problems. I have worked with businesses in a number of different ways, where I have approached them for support of various philanthropies. While they have been supportive, inevitably you will end up dealing with the marketing department, the PR department, the sponsorship department, or sometimes the CSR department – but you rarely end up dealing with the C-Suite. You may have a relationship with the CEO, CFO, or the Chairman, but when you make your pitch, you still end up back with these other departments. What has surprised me about the shared value concept is how strongly it has been embraced by the leadership of very big businesses here in Australia and the entire C-Suite, because they get that it is the avenue through which they can unleash the full resources of the business. Through shared value I have found the intersection between my past interest in being a business person and my current interest in philanthropy and solving society’s problems in a way that I had not expected.
What do you think shared value success looks like in Australia and where do you think we at on the journey?
I think shared value success in Australia is emerging. I think we are starting to see some well documented case studies in which we are seeing the emergence of new ways to address society’s problems. We are seeing examples that are in fact shared value, but business had not previously known what to call these examples and as a result they often didn’t know why they should give their support. In terms of where we are at on the journey – the level of understanding is no longer in its infancy here in Australia, so the concept is better established. In terms of actually driving shared value on a wider scale we still have a long way to go, but given the level of engagement I’ve seen from business I think that we could see it accelerate relatively quickly.
What do you think are some pertinent issues in Australia that could be solved through creating shared value?
One of the critical issues I believe could be solved using shared value is the issue of lack of housing – which means housing affordability and homelessness – because that requires large capital to be deployed in a way which solves that problem, and it cannot be done by government and philanthropy, it has to be done by business.
I think another pertinent issue that could be solved through creating shared value is the relationship between business and our community. I am not satisfied that the relationship is as strong as it could be, and I think that we have plenty of examples at the moment where it is quite weak. There is the mindset that says: “business makes money, therefore it should contribute more money back to society, because contributing money back to society is good and therefore good equals more and more”, I don’t think that’s going to solve anything. I think that the notion of shared value creates a way in which shareholders can be comfortable about our publically listed companies solving social problems using their resources. I think it is a way in which the community and our businesses can change from an almost ‘cargo cult’ mentality vis-à-vis CSR into another dialogue which is: “if business uses their skills and financial resources to achieve solutions through both scale and sustainable solutions, then the relationship we have at the moment between business and community will be improved.”
You recently travelled to Hong Kong and have been working on developing the movement there, can you talk about this experience and the opportunities you see there?
Hong Kong is a very interesting city state, it’s obviously not a country, it is an entrepôt. There are four different components: there is the traditional Chinese family wealth, the colonial business wealth, the multi-national wealth, and the people of Hong Kong. My sense is that the role of philanthropy is somewhat confused in Hong Kong and we have seen from our meetings there that this confusion can become reorganised when you talk about businesses being involved in solving societal problems through shared value rather than businesses, particularly private businesses, solving society’s problems through philanthropy. Particularly when in some cases in Hong Kong the philanthropic endeavours have been generous, but sometimes competing in the same space. Based upon the conversations we have had there now, particularly with both Mark Kramer’s visit last year and Michael Porter’s recent visit, I’m optimistic that we can create a movement around shared value in Hong Kong in the foreseeable future.
What opportunities do you see for Australian businesses in Asia as the shared value movement grows in the region?
There are opportunities in particular for Australian businesses that are involved in development agencies in Asia. We have seen the Business Partnerships Platform (BPP) initiative by the Department of Foreign Affairs and Trade (DFAT) to effectively tender out parts of the foreign aid budget using shared value principals by supporting projects that are going to create profit and create scalable solutions to social problems in developing countries.
Asia certainly has its own challenges, and like Australia, the resources of philanthropy and government to solve societal problems are not sufficient. The resources of business are always going to be significantly greater, and to an extent Australian businesses understand the shared value concept in this way and therefore they can lead by example and encourage this way of thinking in Asia.