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Exploring Shared Value in Global Health and Safety: Workshop Summary (2016)

Chapter: 4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value

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Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
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4

The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value

Shared value creation is one of several approaches that companies use to engage in health promotion. As Jane Wales, founder of the Global Philanthropy Forum and Vice President of Philanthropy and Society at the Aspen Institute explained, there are multiple arrows in the corporate quiver that are used to engage in social initiatives. Three primary ones are corporate philanthropy, corporate social responsibility (CSR), and shared value. While there are parameters that define each of these approaches, in reality, companies use varying language and operationalize them differently. More important to companies than defining their approach, Wales explained, is the outcome of their engagement. Thus, companies are happy to switch among the three approaches based on the task at hand.

Before describing the conceptual differences in these approaches and then, through a facilitated panel discussion, illuminating how they are applied in practice, Wales reflected on the changing landscape of philanthropy broadly and the role of partnerships in meeting social needs. Her reflections were through the lens of her two primary affiliations: The Global Philanthropy Forum and the Aspen Philanthropy Group. Key messages from Wales’s presentation and the subsequent panel discussion are included in Box 4-1.

The Global Philanthropy Forum is a learning network of high net-worth individuals who are committed to international causes. Wales described these individuals as audacious and results oriented in their philanthropy, with philanthropic ambitions that outstrip their capacity.

Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×

Therefore, they are enthusiastic about any form of leverage and partnership that can bring capabilities and resources to complement their own. The Aspen Philanthropy Group is an agenda-setting body of heads of major foundations that recognize the world is changing and with it the role of foundations, including the decentralization of decision making and authority, greater expectations for accountability and transparency, and emergence of many new actors who are able and willing to effect social change.

In considering these recognized changes, foundation leaders were asked during a recent meeting to identify who their potential partners might be 10 years hence and if their foundation has the right culture and capabilities to take advantage of the opportunity to partner with them. The group identified four categories of potential partners—high net-worth individuals, private-sector corporations, the public sector, and the engaged public—but most then admitted that they were not set up to start engaging them as partners. Wales mentioned this set of potential allies considered by the Aspen Philanthropy Group to highlight the number of capable actors recognizing social change as an important part of their mission, so much so that it seems nearly inevitable that a culture of health and well-being will be achieved. But Wales stressed that the necessary environment is not currently set up to act and expressed her hope that the panel would illuminate how to seize this opportunity.

Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×

DEFINING THE CONCEPTS OF CSR, PHILANTHROPY, AND SHARED VALUE

From her point of view, Wales described CSR as an approach with two goals and a focused view of the relationship between these two goals. The first goal is serving stakeholders, employees, and communities in which companies operate and have a consumer base. This first goal contributes to the second goal, which is to enhance the efficacy and profitability of the company itself. Within CSR, there may not be a clear direct connection between these goals, but there is an understanding of the relationship. Although CSR is often driven by building reputations and relationships, it also focuses on results in terms of real outcomes and benefits.

Wales identified the energy company Hess’s CSR framework as an example of a well-articulated CSR strategy that is based on two clear concepts. The first is the concept of being a guest in the local communities in which it operates, which Wales suggested is much like being a good house guest. Good guests come with a house present, they offer to help do the dishes, they do things that make people want them in their guest room, and they will continue to be welcome in that guest room particularly if the room they leave behind is even tidier than it was found. The second concept that Hess embraces is a notion of global corporate citizenship. As a global corporate citizen, Hess works beyond the communities that it directly serves and embraces the norms of human rights, worker rights, and environmental standards and takes part in shaping and advancing those norms.

Shifting the focus to philanthropy, Wales introduced Paurvi Bhatt, Senior Director for Global Access at Medtronic Philanthropy, who provided context on the company’s approach, describing it as strategic philanthropy rather than corporate philanthropy. Wales clarified the differences between these types of philanthropy. Traditional corporate philanthropy involves setting an objective, devising a strategy, and then measuring the outcomes, all without regard to the interests of the company. However, strategic philanthropy taps into the expertise of the company, bringing to bear the company’s specialized knowledge. In Medtronic’s case, it has set the goal, in line with the globally set priority, of a 25 percent reduction in mortality due to noncommunicable diseases (NCDs). Wales noted that for a long time, the development community focused only on infectious diseases, so Medtronic’s initiatives in this regard are an important next step.

Shared value has already been well defined in the workshop, and Wales noted that GE is an example of a company that has created significant shared value. GE has invested billions into research and development (R&D) and start-ups, with the goal of producing innovative products to lower cost, enhance quality, and expand access to products that are well

Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×

designed for an environment in which the infrastructure is limited. For example, GE has developed an affordable, portable, and battery operated electrocardiogram machine to serve parts of the world where electricity is not always reliable. But Wales noted that what is most interesting about GE is not the new products they have introduced and the investments they have made in doing so, but GE’s manner of producing those products and their notion of working. GE is placing the focus on “in country, for country” innovation, recognizing the importance of understanding the health needs of the local environment in order to innovate inside a market, for that market. Wales noted that perhaps this is also an opportunity that can contribute to keeping some brain power in country.

To further illuminate these strategies and how companies move between them, individuals from the three mentioned companies—Hess, Medtronic, and GE—described how they are being operationalized.

CSR FROM THE PERSPECTIVE OF HESS

In describing Hess’s CSR strategy, Paula Luff, Vice President of Corporate Social Responsibility, noted that it is similar to the strategy of Indra Nooyi, CEO of PepsiCo, in that social responsibility is not about what the company does with its profits, but rather how it makes them. For Hess, CSR is about operational and corporate excellence driving behaviors and company decisions and is focused into three areas: stakeholder engagement, risk management, and social investment. As an energy company operating in countries and communities where they do not own the oil and gas fields, but rather operate through licensing, Luff explained, the real foundational element of the CSR strategy is stakeholder engagement because the company relies on stakeholders to access the resources that the company develops. This is not a social license-to-operate issue; it is simply a license-to-operate issue. If Hess did not maintain and cultivate strong relationships with national oil companies and governments, regulators, and land owners, they would lack access and could not produce.

Luff acknowledged that as part of Hess’s core business operations, the company has social and environmental impacts and potential impacts that must be managed well in order to retain a license to operate. Thus, social and environmental risk identification and management are critically important, not just from a reputational standpoint, but also from an operational standpoint. Hess can point to real dollars in terms of potential value erosion when it does not get things right and is asked by a community to stop operations.

With regard to the risk management of Hess’s CSR strategy, Luff explained that human rights concerns are significant issues for the energy industry and have been a mainstay of the industry work. She stressed

Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×

that human rights risk management is considered across their operating environments, including in the United States. For example, the company recently rolled out a new human rights training program for all employees that includes training related to human trafficking, noting that trafficking happens not only overseas, but also in places such as North Dakota.

The third area of Hess’s CSR strategy is social investment, which Luff suggested is highly connected to both stakeholder engagement and risk management. When Luff joined Hess in 2007, the company had a traditional philanthropy approach to social investment. Over time the company has moved to a more shared value approach. The focus is now on how Hess can use philanthropy dollars, which will always be part of the mix, while leveraging the core activities of a company. For Hess, when implicit social value is being created, if the company can gain a better understanding and define through metrics the business value such efforts are more likely to be sustained. When asked about whether impact sourcing has a place in Hess’s strategy, Luff described the potential to increase shared value in the oil industry’s supply chain through impact sourcing, meaning the notion of sourcing the supply chain with a consideration of where jobs are most needed. To affect impact sourcing, Luff suggested procurement processes need to move beyond traditional bidding that makes decisions based only on the least cost provider and sometimes vetting for environment health and safety indicators. Instead, processes should consider working with small- and medium-sized enterprises in host communities as suppliers and understand what is needed in terms of technical assistance and access to capital to make impact sourcing a viable option.

Luff concluded by noting that at Hess, the CSR strategy is strongly supported by the senior leadership at the company, which adds to its success. CSR is viewed as a competitive advantage for a company the size of Hess. It is not the largest competitor in the industry, but it can point to a strong social accountability record. Luff also noted that another reason why she believes CSR is fundamental to Hess is because it is a family business; the CEO is the son of the founder and the company bears his name. When a CEO’s personal and corporate reputation are inextricably linked, support for social accountability can be powerful and in this case has become part of the DNA of the company.

STRATEGIC PHILANTHROPY FROM THE PERSPECTIVE OF MEDTRONIC

Bhatt explained that while Medtronic does engage in traditional corporate philanthropy—through activities including matched giving, chari-

Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×

table contributions, volunteerism, and product donations—her role at the company is focused on strategic philanthropy and strategic investments. Strategic philanthropy moves from a passive to an active approach in philanthropy. It is a strategic partnership linking the resources that the company has to offer with a variety of partners on the ground. It implies a shift from volunteerism to sharing technical expertise; from product donation to unlocking a more efficient system together with partners. Furthermore, strategic philanthropy and investments are tied to larger global standards and goals, often those set by the World Health Organization (WHO) or, now, through the Sustainable Development Goals. Linking Medtronic’s expertise to global standards and goals, the company is making strategic investments in NCD prevention to set the pace and standard for reaching WHO’s goal of a 25 percent reduction in NCDs globally. Medtronic recognizes that choosing to align with an international standard allows the company to bring its expertise to the collective action to work toward this goal.

Being part of a collective movement toward an internationally set goal, Bhatt emphasized the importance of partnerships to advance Medtronic’s strategic philanthropy objectives. At the local level, the company has set the table for its partnerships through a staggered set of advisory groups that are made up of local governments and individuals affected by NCDs. At the global level, Medtronic maintains partnerships with organizations such as the Institute for Health Metrics and Evaluation (IHME) to deliver the needed data to determine the baseline for underserved communities where cardiovascular disease and diabetes exist. The data is reflected back to the advisory groups that determine the next steps in advancing toward the strategic investment goal.

Emphasizing the strategic investment process, Bhatt explained that Medtronic’s involvement with the advisory groups and partnerships goes beyond writing a check. Their involvement entails stewarding the advisory groups and building up partnerships with local governments, using the company’s resources to unlock the resources of their partners.

One of Medtronic’s strategic philanthropic investments is HealthRise, a multiyear, multimillion-dollar effort in partnership with a variety of local governments, particularly focused on Brazil, India, South Africa, and the United States. The initiative seeks to address barriers around continuum of care, specifically in the chronic management of hypertension and diabetes, in these different geographic areas. Despite the geographic differences, the barriers for the underserved are likely to be very similar. For example, programs that might be working in one community based in South Africa may actually be very germane to an underserved community outside Minneapolis. It can be difficult to apply lessons from such a cross-exchange, but HealthRise is set up to allow for it. HealthRise also

Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×

builds off platforms that already exist for maternal child health and HIV, tuberculosis, and malaria, especially outside the United States. Within the United States, HealthRise seeks to connect what might be happening in a health care system with what is happening in the community.

SHARED VALUE AND PHILANTHROPY FROM THE PERSPECTIVE OF GE

To frame the work of the GE Foundation, Chief Medical Officer, David Barash first described some of what GE as a company has done from a shared value perspective. Healthymagination is one example. It is a commitment GE made in 2010 to invest $6 billion in reducing cost, improving access, and improving quality and care, each by 15 percent. To date, approximately 100 products have been released that are Healthymagination-certified by an independent auditor, meeting these set standards. Ecomagination is GE’s parallel business strategy to deliver improved economic and environmental outcomes for their customers and in their own operations.

While these initiatives, Healthymagination and Ecomagination, are core shared value initiatives of GE, Barash suggested that the third leg of the shared value stool is the work of the GE Foundation. Historically the Foundation’s work was traditional corporate philanthropy, through programs such as matching gifts and scholarships. However, about a decade ago, the Foundation became more programmatically involved in health and education initiatives, creating what are now robust programs, both globally and domestically.

In the evolution to more strategic philanthropy, the GE Foundation has started to leverage the value of the company and its assets to better enable the work of the Foundation. As the foundation was moving toward more strategic philanthropy, it recognized that its impact and sustainability would be far better if it leveraged the enormous talent, assets, and resources of the company. Stronger engagement between the Foundation and GE’s commercial businesses, in health care and otherwise, helps the Foundation to be more impactful on the ground. For example, the GE Foundation recently launched the Safe Surgery 2020 initiative to address the need for access to safer surgery around the world. Barash explained that 5 billion people do not have access to safe surgery and 16 million people die each year globally because of this global deficiency. As a result, the economic consequences are also extraordinary. In recognizing these circumstances, the GE Foundation studied the problem and evaluated its core competencies and capability to address the global need for safe surgery. Through this assessment, the Foundation has developed a program with the goal of positively impacting the surgical ecosystem in low- and

Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×

middle-income countries over the next 5 years. The Safe Surgery Initiative takes an approach of addressing the continuum of care where philanthropic dollars are used efficiently for noncommercial investments. Commercial capability and expertise across the GE businesses coupled with the support of the team on the ground enables more impactful, strategic, and sustainable models.

Barash also noted that GE is working to develop partnerships with other private companies to further increase the impact of its initiatives. These types of partnerships would bring together multiple players from the private sector, often along with the public sector, to increase impact. Partnerships could be formed between companies in the same industry, such as GE Healthcare and Medtronic, or across different industries, such as GE Healthcare and Hess. Barash suggested that bringing together private-sector companies, allowing more collaborative rather than competitive action, could help build greater trustworthiness of the private sector. If companies come into the same space separately, each can be perceived as doing so for its own advantage rather than as a collective initiative to effectively develop solutions. Barash noted that these collective initiatives can present challenges with measuring the value of these partnerships to the company, sharing credit, and ensuring proper compliance mechanisms are in place. However, he also emphasized that it is worth navigating that challenge for the greater global benefits that can be achieved.

DISCUSSION

Clarion Johnson, Co-Chair of the Forum on Public–Private Partnerships for Global Health and Safety (PPP Forum), asked Barash if he has encountered challenges in private–private collaboration based on external concerns that could arise from perceived “huddling” of private-sector companies. Barash acknowledged that this can be a challenge. As an example, GE has decided that there is a need for an independent agency to operate the partnership. This secretariat will run the partnership with a steering committee to provide leadership, ensure compliance and direction, and enable a broader membership to influence the direction.

They know they may not get it right the first time, but they have decided to try it and figure it out along the way. A few issues with which they have started grappling are brand value and the involvement of partners outside of the private corporate sector. Companies engage in philanthropic work in part for brand value. How brand value is created if the companies are all in collaboration is still being determined. James Allen from Chevron commented on this point, and explained that Chevron has done some research on brand benefit through a multiplayer versus solo

Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×

approach. According to their research, there is no negative impact and potentially a more positive impact. Allen encouraged others to consider replicating these studies and studying the data instead of allowing branding issues to be an assumed barrier.

When asked about the ecosystem perspective on creating shared value-based partnerships in health, Barash and Bhatt provided divergent responses. Both agreed that ultimately the goal is to build and move toward a collaborative ecosystem; however, Barash mentioned that he intentionally leaves the word “ecosystem” out of the discussion because the word can be intimidating for those who perceive it as too big to tackle. Instead, he focuses on simple interventions as a starting place, where it is clear where investments and resources are going. These simple interventions are, however, designed to build or impact the greater ecosystem. Bhatt said she is fairly upfront that Medtronic’s strategic investments are intentionally orchestrated to build an ecosystem that does not exist today.

Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×

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Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×
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Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×
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Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×
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Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×
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Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×
Page 53
Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×
Page 54
Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×
Page 55
Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×
Page 56
Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×
Page 57
Suggested Citation:"4 The Roles of Corporate Philanthropy, Corporate Social Responsibility, and Shared Value." National Academies of Sciences, Engineering, and Medicine. 2016. Exploring Shared Value in Global Health and Safety: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/23501.
×
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Companies today are operating in a more complex and competitive environment where traditional models for doing business are no longer sufficient and expectations of business are growing both internally and externally. Many companies have long and robust histories of contributing to their communities as well as to more global societal needs, but this has been done primarily and historically through philanthropy and more traditional corporate social responsibility. However, companies are increasingly seeking greater alignment of these activities with their business interests in order to increase their value proposition. These same companies are also under increased pressure to build their business in a sustainable manner through innovative approaches.

The National Academies of Sciences, Engineering, and Medicine convened a workshop to explore the concept of shared value for global health and safety stakeholders in both the public and private sectors; roles, responsibilities, incentives, and opportunities for different stakeholders engaging in global health and safety initiatives in low- and middle-income countries; and the potential of partnerships and collaboration for improved outcomes for all stakeholders, including the communities they serve. Participants considered potential opportunities for creating shared value for all organizations, specifically the creation and impact of shared value through an organization’s core products and services, through employee health and wellness programs, and through community or population health investments. This report summarizes the presentations and discussions from the workshop.

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