Corporate Social Responsibility (CSR) and Creating Shared Value (CSV) are necessary business strategies that create a positive impact for the world and build trust with consumers.
The terms CSR and CSV are sometimes used interchangeably because they are two sides of the same coin. CSR and CSV work in conjunction for the highest return on growth, consumer and employee satisfaction, and product innovation.
That said, there are key differences between CSR and CSV that we will discuss in detail to show why both are important aspects of impactful business strategies.
Continue reading to learn more about the similarities and differences between CSR vs. CSV and why both concepts should be included in your business model.
What is CSR?
Corporate Social Responsibility (CSR) refers to a concept in which corporations and companies incorporate environmentally and socially-conscious practices into their business decisions. This can be interpreted in both a narrow and a broad way.
The Narrow View
The narrow definition for Corporate Social Responsibility is a donation that corporations make to positively impact the world or the local community. Simultaneously, CSR activities generate positive news stories about the company to support business growth.
For example, when Walmart opens a new location, it donates funds to the cities where the new Walmart will open before and after opening. The funds are allocated most to the areas near the new Walmart location. These donations help the local community and create positive press for the new Walmart location.
CSR is a vital tool for corporations like Walmart to take responsibility for environmental and societal impacts made by their company. However, many consumers feel that large conglomerates can do more than make donations. This is where the narrow definition of CSR differs from the broad definition of CSR.
The Broad View
CSR in the broad sense is not just a one-time donation but a long-term commitment to bettering the planet and consumers’ lives. Instead of one mutually beneficial donation, companies with a strong CSR strategy offer a series of mutually beneficial efforts in various areas of the company.
In the broad sense, CSR is a company’s promise to its consumers to use portions of its wealth to impact the planet more efficiently than a single person could do alone.
Successful CSR programs balance the importance of humanity, the environment, and profit generation. Through donations and reevaluating business practices, a businesses' CSR practices show consumers its broader worldview.
The Triple Bottom Line Approach
The triple bottom line approach is a concept coined by John Elkington that posits that the bottom line of a business should not solely be profit. Instead, as the name implies, the metric for success should be measured by how a business impacts people, the planet, and profits.
By altering how we measure success in the business world to more than just maximized profits, businesses can create symbiotic relationships with their consumers.
The broad definition of CSR follows the triple bottom line approach. Companies advertising their CSR strategies have a market advantage. As of 2021, nearly 80% of consumers reported more motivation to purchase products from businesses with responsible initiatives.
CSR Washing
The narrow definition of CSR has led to the phenomenon known as “CSR washing”. CSR washing is essentially false advertising about the positive impact a company has. Some corporations advertise their CSR efforts with a narrow understanding of what CSR is.
Consumers tune in to the long-term effects of businesses and lose brand loyalty when they feel that a company is not genuine in its altruistic efforts.
Millennial consumers and investors are more aware than ever before of a company’s CSR practices. Consumers are willing to spend more money on brands that are sustainable and willing to boycott brands that are not.
The commitment to doing good is where CSV and CSR strategies overlap.
What is CSV?
Creating Shared Value (CSV) is also sometimes referred to as Corporate Shared Value. So what is shared value? The ideology behind CSV is that consumers can only continue to purchase if there is a planet for us to live on and wealth to go around. Fair trade practices, improved working conditions, and efforts to fight climate change and poverty are all examples of CSV.
Michael Porter, a University Professor at the Harvard Business School, defines CSV as capitalism that is “addressing a social issue with a business model” in his TEDtalk.
Businesses with CSV strategies positively impact and improve society while generating a profit. Consumers want to purchase from companies with CSV strategies because as the company grows, so does the positive impact.
The CSV business strategy follows the triple bottom line because it places people, the planet, and profits on equal footing, with an understanding that all are interrelated.
The Three Levels of CSV
There are three levels to the CSV strategy. Companies need to make changes to products, their definition of productivity, and how they support their supply chain. We will go into detail about each of the three levels below.
Impactful Product Changes
When it comes to CSR vs. CSV, altering products to simultaneously meet consumer needs and societal needs is part of the CSV strategy.
Product changes have associated short-term costs. However, when a company chooses to update its product line with consumer benefits in mind, shoppers transform into life-long customers who trust your brand.
Impactful product changes reveal to customers the wide scope your business has regarding its impact on the planet and its citizens.
Productivity Perception
Many modern companies have experienced a shift in their perception of productivity. Businesses with a CSV strategy understand that time and money must be spent on innovation, creative thinking, and employee wellbeing.
It is an old and inaccurate notion that cutting corners leads to higher long-term profits. Now, companies are seeing that productivity is not measured by profits and product output alone. Productivity is also gauged by idea creation, social and environmental innovation, and utilizing resources, from raw goods to suppliers, with greater care.
By changing how we define productivity, companies shift their focus from mass production for profit maximization to mass production for profit and the greater good.
Cluster Development
Cluster development is part of the CSV strategy to uplift businesses that are involved with your business to create better partnerships and ultimately better quality products. Creating Shared Value looks at the bigger picture of the supply chain. An integral part of the CSV strategy is to support related industries to maintain the supply chain.
An example of cluster development is educational improvements that generate a steady workforce and innovative ideas. Other examples of cluster development include supporting environmental causes, especially when the product uses raw goods in production.
Examples of CSR and CSV
Disney is one corporation that utilizes the broad definition of CSR. In 2009, the Disney franchise made a substantial donation towards environmental causes. This is an example of the narrow definition of CSR because it is a philanthropic gesture in response to global environmental damages caused by the creation and upkeep of twelve theme parks.
However, Disney utilizes both CSR and CSV strategies. On top of their donation, Disney also developed a CSV strategy to create zero net emissions to further mitigate their carbon footprint. Since the donation in 2009, Disney has made product changes for a lower environmental impact, implemented sustainable building practices, and more.
Disney is a good example of CSR vs. CSV because it shows that a business founded nearly 100 years ago is capable of adapting its corporate strategy to be impactful and mutually beneficial to shareholders and stakeholders alike. In 2009, the definition of CSR was narrower than it is today, but as the world changed and the definition of CSR expanded to include CSV, Disney’s business model did too.
Here are some other real examples of CSR and CSV strategies from well-known companies.
- Dow Chemicals made impactful product changes by altering their oil product line to include more heart-healthy food products to combat rising obesity and hypertension rates throughout the world.
- LEGO made impactful product changes by updating its packaging. Now, around 75% of their cardboard boxes are sourced from recycled materials and their stores no longer use disposable plastic bags.
- CISCO shows us cluster development through its remote IT training program. The program broadens its employee force and creates jobs that support families and economies around the world.
- The LEGO brand uses cluster development through its partnership with the Forest Stewardship Council (FSC), an NGO promoting positive environmental practices. By purchasing packaging exclusively from the FSC, LEGO is reallocating funds into environmental causes.
What is the Difference between CSR and CSV?
CSR and CSV are similar because they both follow the triple bottom line approach, but they are not the exact same concept.
The primary difference between CSR and CSV is that CSR is about using a business's resources to respond to social and environmental problems in the world, whereas CSV is about incorporating that positive social and environmental impact into the company's business model in a way which generates economic value.
These two ideas are not contradictory, but are rather two different methods for achieving the same goal of using business as a force for good in the world. As such, both concepts are useful for businesses and often work together hand in hand. The combination of CSR and CSV creates an ideal balance where corporations take responsibility for their effect on the planet and society, both through outward-facing acts of charity and through inward-facing changes to the company's business model.
In Summary
Corporate Social Responsibility (CSR) and Creating Shared Value (CSV) are both concepts created to help businesses have a positive impact on communities and the environment. CSR generally refers to specific actions that a company takes to create a positive social or environmental impact. CSV, on the other hand, refers to a concept wherein a company's positive social and environmental impact is integrated into the company's business model in a way which is beneficial both to the community and to the company's profit goals.
These two concepts are not necessarily competing ideas and can both be useful ideas for framing a company's commitments to society and the environment. Both CSV and CSR strategies can also affect consumer decision-making, as consumers prefer to purchase products from companies that are contributing back to society.
Now that you understand the difference between CSR vs. CSV, show your customers that your business walks the walk with Prodigium Pictures. Establish trust and tell your organization's CSR story through high-quality videos. Get in touch with a producer at Prodigium Pictures for a no-obligation quote today.
