(e.g. processed food products that lead to obesity), and a positive social externality may be associated with the manufacture of products that improve the health of customers (e.g. organically produced food products). Negative environmental effects can, for example, correspond to practices that generate greenhouse gas (GHG) emissions and therefore pollution, non-recycled waste, etc., while a positive environmental externality corresponds to practices that reduce these negative effects.
With the CSV approach, societal issues are the source of pressures that companies cannot avoid, but must be able to analyze and anticipate. The reinforcement of these pressures is likely to enhance the company’s image, as well as considerably reduce its room to maneuver, due to regulatory constraints, public protests, boycott operations organized by activists (environmentalists, etc.) and media campaigns (Boiral and Joly 1992; Gasmi and Grolleau 2005). As a result, many companies only became aware of this after being surprised by public reactions to issues that they had not previously thought of, as being part of their professional responsibilities (Porter and Kramer 2010). While in the past, companies were rarely seen as actors of societal change, in recent years, CSR practices based on CSV have made real opportunities for companies to reduce negative externalities, while improving their competitive advantage and their relationships with key stakeholders. The common principle of all approaches to these practices is that companies cannot limit their activities to the sole objective of profit maximization, without taking into account their responsibility to society as a whole. Governments and businesses must play a key role in reducing negative human-induced societal externalities and corporate activities in a meaningful way, in order to sustainably safeguard our planet and reduce global poverty. Of the world’s top 100 economic powers, 63 are corporations and only 37 are States (Strategor 2013, p. 339). Corporate engagement is essential and desirable, as it will have a considerable and positive impact on society. As a benchmark, institutions – especially supranational and national ones – must consider the importance they have afforded to reduce their budget deficit, by developing appropriate strategies in order to reduce the ecological and social deficit.
While environmental and social practices are becoming a major strategic issue for companies of all sizes (Berger-Douce 2007), many companies do not appreciate the opportunities and benefits of integrating social practices (Porter and Kramer 2010). A few companies are working to secure their value chain, processes and infrastructure, but most continue to operate in ignorance of the societal risks they may face. The importance of CSR practices in companies, and in society in general, is becoming increasingly strong (Lépineux et al. 2010), and the formalization of this responsibility is crucial for the company (Gasmi 2014). Not all companies have the same attitude towards CSR practices. Referring to the models proposed by Godet (1991) and Louppe and Rocaboy (1994), four types of strategies can be identified by characterizing social and environmental practices in the firm: 1) a strategy of inactivity or lack of interest in societal issues; 2) a strategy of reactivity to momentarily integrate this issue, in order to preserve the firm’s institutional image and propose ad hoc solutions; 3) a pre-emptive strategy to anticipate changes and prepare to react to them (comply with legal obligations, moral demands, etc.); 4) a proactive strategy with an inclusive attitude towards CSR issues, which are considered structural strategic priorities. While companies that integrate their societal strategy in a proactive and CSV-based approach are organizations that exploit the business opportunities offered by this type of strategy as far as possible, many of them do not really take advantage of these opportunities.
Generally speaking, CSR promoters have used four arguments to defend their cause: moral obligation (asserting their duty to be corporate citizens), sustainability, reputation (image) and “legitimacy to operate” (Porter and Kramer 2010).
This book focuses on social and environmental strategies based on CSV and is divided into three parts. The first part presents the theoretical development, which analyzes the challenges of CSR strategies based on CSV. The second part includes two case studies that analyze the different forms of environmental innovation strategies based successively on the concept of “ethical values” and CSV, developed by the Decathlon Group. The third part analyzes the different social innovation strategies capable of inducing CSV.
Introduction to Part 1
This theoretical section deals successively with the analysis of the foundations of societal strategies based on the creation of shared value (CSV), the role that these strategies play in correcting and/or anticipating potential damage to the company, social and environmental innovations, as well as in analyzing ecosystems capable of facilitating the implementation of this type of strategy, the key steps in calculating the value of the impact investment and, finally, the development of innovative business models based on CSV.
The radical liberal conception of business has evolved towards a contractual conception of CSR. It is no longer a question of whether the value created by a company is private income for shareholders alone, but that it is also a partnership value for its other stakeholders. The CSV concept proposed by Porter and Kramer (2006) assumes that the firm must develop a societal strategy, while at the same time, extending its governance to its stakeholders. CSR strategies can enable a company to reduce the negative societal externalities brought about by its activities, and produce positive externalities. Moreover, they can limit the pressures exerted by stakeholders, by taking into account their specific expectations and the power and resources they hold which are necessary for the company. Regulatory or hard power authorities intervene at the regulatory level. Soft power players are a powerful source of influence and persuasion, which encourages the company to behave in a way that is acceptable to society. Societal practices will then reinforce the classic attributes of products with tangible and intangible product differentiation attributes. This differentiation is only effective if the company uses labels as a management tool to allow customers to make inferences when making purchases. But these eco-responsible purchasing acts will only increase if customers have a better understanding of the positive issues of CSR for society. The challenge in implementing CSV-based societal strategies is developing an organization capable of innovation in the company’s industry. Managers must give priority to societal, technological and organizational innovations that generate CSV for the company, by supporting its overall business strategy; they must also promote the establishment of fruitful collaborations with various actors in their business ecosystems (BE). To accelerate change, the traditional BE must be transformed into a regional societal business ecosystem (RSBE), without constraints and/or additional costs. If businesses want to be more resilient, they will adopt different approaches based on three levers: vision, societal project and partnership. Their competitive advantage will be linked to finding and selecting effective innovation strategies that other stakeholders can buy into. This implies that impact investment will allocate capital to projects that will generate social and environmental benefits, as well as benefits for companies. Some prospective methodology has been developed to estimate the potential benefits of such projects, by calculating a new indicator called the Impact Multiple of Money (IMM), based on the results of relevant foothold studies. Depending on their history and sector, companies must adopt a business model that refers to their value chain and its impact on the competitive environment, industrial investment choices and product life cycles. They can choose between three types of business models: repair (if they do not practice CSR), innovation (if they develop a new business) or the creation of a business from scratch. In all of the business models, they will have to achieve specific competitive and societal objectives.
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Foundations of the Societal Strategy Based on Creating Shared Value (CSV)
