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Creating Integrated Value (CIV)

Creating Integrated Value: Beyond CSR and CSV to CIV

Paper by Wayne Visser & Chad Kymal

Abstract

Creating Integrated Value, or CIV, is an important evolution of the corporate responsibility and sustainability movement. It combines many of the ideas and practices already in circulation – like corporate social responsibility (CSR), sustainability and creating shared value (CSV) – but signals some important shifts, especially by focusing on integration and value creation. More than a new concept, CIV is a methodology for turning the proliferation of societal aspirations and stakeholder expectations – including numerous global guidelines, codes and standards covering the social, ethical and environmental responsibilities of business – into a credible corporate response, without undermining the viability of the business. Practically, CIV helps a company to integrate its response to stakeholder expectations (using materiality analysis) through its management systems (using best governance practices) and value chain linkages (using life cycle thinking). This integration is applied across critical processes in the business, such as governance and strategic planning, product/service development and delivery, and supply and customer chain management. Ultimately, CIV aims to be a tool for innovation and transformation, which will be essential if business is to become part of the solution to our global challenges, rather than part of the problem.

 

Creating Integrated Value (CIV) is a concept and practice that has emerged from a long tradition of thinking on the role of business in society. It has its roots in what many today call corporate (social) responsibility or CSR, corporate citizenship, business ethics and corporate sustainability. These ideas also have a long history, but can be seen to have evolved primarily along two strands – let’s call them streams of consciousness: the responsibility stream and the sustainability stream.

Two Streams Flowing into One

The responsibility stream had its origins in the mid-to-late 1800s, with industrialists like John D. Rockefeller and Dale Carnegie setting a precedent for community philanthropy, while others like John Cadbury and John H. Patterson seeded the employee welfare movement. Fast forward a hundred years or so, and we see the first social responsibility codes start to emerge, such as the Sullivan Principles in 1977, and the subsequent steady march of standardization, giving us SA 8000 (1997), ISO 26000 (2010) and many others.

The sustainability stream also started early, with air pollution regulation in the UK and land conservation in the USA in the 1870s. Fast forward by a century and we get the first Earth Day, Greenpeace and the UN Stockholm Conference on Environment and Development. By the 1980s and 1990s, we have the Brundtland definition of ‘sustainable development’ (1987), the Valdez Principles (1989, later called the CERES Principles) and the Rio Earth Summit (1992), tracking through to standards like ISO 14001 (1996).

Weaving Together a Plait

As these two movements of responsibility and sustainability gathered momentum, they naturally began to see their interconnectedness. Labour rights connected with human rights, quality connected with health and safety, community connected with supply chain, environment connected with productivity, and so on. The coining of the ‘triple bottom line’ of economic, social and environmental performance by John Elkington in 1994, and the introduction of the 10 principles of the UN Global Compact in 1999 reflected this trend.

We also saw integration start to happen at a more practical level. The ISO 9001 quality standard became the design template for ISO 14001 on environmental management and OHSAS 18001 on occupational health and safety. The Global Reporting Initiative and the Dow Jones Sustainability Index adopted the triple bottom line lens. Fair Trade certification incorporated economic, social and environmental concerns, and even social responsibility evolved into a more holistic concept, now encapsulated in the 7 core subjects[1] of ISO 26000.

Thinking Outside the Box

At every stage in this process, there have been those who have challenged our understanding of the scope and ambition of corporate responsibility and sustainability. Ed Freeman introduced us to stakeholder theory in 1984, John Elkington to the ‘triple bottom line’ in 1994, Rosabeth Moss Kanter to ‘social innovation’ in 1999, Jed Emerson to ‘blended value’ in 2000, C.K. Prahalad and Stuart Hart to ‘bottom of the pyramid’ (BOP) inclusive markets in 2004, and Michael Porter and Mark Kramer to ‘creating shared value’ (CSV) in 2011.

Typically, these new conceptions build on what went before, but call for greater integration and an expansion of the potential of business to make positive impacts. For example, Hart’s ‘sustainable value’ framework (2011) incorporates pollution prevention, product stewardship, base of the pyramid (BOP) and clean tech. Emerson’s ‘blended value’, much like Elkington’s ‘triple bottom line’ looks for an overlap between profit and social and environmental targets, while Porter and Kramer’s CSV focuses on synergies between economic and social goals.

Figure 1 – Sustainable Value

susval

Source: Hart, Stuart L. (2011). Sustainable Value. Retrieved from http://www.stuartlhart.com/sustainablevalue.html

The ‘How To’ of Integration

Creating Integrated Value (CIV) takes inspiration from all of the thought pioneers that have gone before and tries to take the next step. CIV is not so much a new idea – as the longstanding trend towards integration and the ubiquitous call for embedding of standards testifies – but rather an attempt to work out the ‘how to’ of integration. When companies are faced with a proliferation of standards (Standards Map alone profiles over 150 sustainability standards) and the multiplication of stakeholder expectations, how can they sensibly respond?

We have analysed some of the most important global guidelines, codes and standards covering the social, ethical and environmental responsibilities of business – such as the UN Global Compact, OECD Guidelines for Multinational Enterprises, ISO 26000, GRI Sustainability Reporting Guidelines (G4), IIRC Integrated Reporting Guidelines, SA 8000, UN Business & Human Rights Framework and Dow Jones Sustainability Index.

What we see are large areas of overlap in these guidelines, codes and standards across what we might call the S2QE3LCH2 issues, namely:

  • S2: Safety & Social issues
  • Q: Quality issues
  • E3: Environmental, Economic and Ethical issues
  • L: Labor issues
  • C: Carbon or Climate issues
  • H2: Health and Human rights issues

Our experience of working with business shows that most companies respond piecemeal to this diversity and complexity of S2QE3LCH2 issues (let’s call them SQELCH for short). A few large corporations use a management systems approach to embed the requirements of whatever codes and standards they have signed up to. Even, so they tend to do this in silos – one set of people and systems for quality, another for health and safety, another for environment, and still others for employees, supply chain management and community issues.

Knocking Down the Silos

CIV, therefore, is about knocking down the silos and finding ways to integrate across the business. In short, CIV helps a company to integrate its response to stakeholder expectations (using materiality analysis) through its management systems (using best governance practices) and value chain linkages (using life cycle thinking[2]). This integration is applied across critical processes in the business, such as governance and strategic planning, product/service development and delivery, and supply and customer chain management.

And what about value? Most crucially, CIV builds in an innovation step, so that redesigning products and processes to deliver solutions to the biggest social and environmental challenges we face can create new value. CIV also brings multiple business benefits, from reducing risks, costs, liabilities and audit fatigue to improving reputation, revenues, employee motivation, customer satisfaction and stakeholder relations.

Pursuing Transformational Goals

Our experience with implementing and integrating existing standards like ISO 9001 and ISO 14001 convinces us that, in order for CIV to work, leaders need to step up and create transformational goals. Without ambition ‘baked in’ to CIV adoption, the resulting incremental improvements will be no match for the scale and urgency of the global social and environmental crises we face, such as climate change and growing inequality.

One of the most exciting transformational agendas right now is the Net Zero/Net Positive movement[3], which extends the ‘zero’ mind-set of total quality management to other economic, social and environmental performance areas. For example, we see companies targeting zero waste, water and carbon; zero defects, accidents and missed customer commitments; and zero corruption, labour infringements and human rights violations. These kinds of zero stretch goals define what it means to be world class today.

Stepping Up To Change

In practice, CIV implementation is a 6-step process, which we can be described as: 1) Listen Up! (stakeholder materiality), 2) Look Out! (integrated risk), 3) Dig Down! (critical processes), 4) Aim High! (innovation & value); 5) Line Up! (systems alignment); and Think Again! (audit & review). Each step is captured in Figure 2 and briefly explained below. Of course, the process must also remain flexible enough to be adapted to each company context and to different industry sectors.

Figure 2 – Creating Integrated Value

civ

Source: Wayne Visser and Chad Kymal (2014)

Step 1: Listen Up! (Stakeholder Materiality)

The first step of the CIV process is Stakeholder Materiality Analysis, which systematically identifies and prioritises all stakeholders – including customers, employees, shareholders, suppliers, regulators, communities and others – before mapping their needs and expectations and analysing their materiality to the business. This includes aligning with the strategic objectives of the organization and then driving through to result measurables, key processes and process measurables.

The stakeholder materiality analysis is the first level of integration and should be conducted simultaneously for quality, cost, products, environment, health and safety and social responsibility. The analysis helps to shape a comprehensive set of goals and objectives, as well as the overall scorecard of the organization. When conducted holistically as a part of the organization’s annual setting of goals, objectives and budgets, it seamlessly integrates into how the business operates. A similar approach was developed and fine-tuned by Omnex for Ford Motor Company in a process called the Quality Operating System.

Step 2: Look Out! (Integrated Risk)

In parallel with the Stakeholder Materiality Analysis, the risks to the business are analysed through an Integrated Risk Assessment. This means the identification and quantification of quality, cost, product, environment, health and safety and social responsibility risks, in terms of their potential affect on the company’s strategic, production, administrative and value chain processes. The risk measures developed need to be valid for all the different types of risks and different entities of the business, and mitigation measures identified.

The first two steps of Stakeholder Analysis and Risk Assessment are requirements of the new ISO 9001, ISO 14001 and ISO 45001 (formerly OHSAS 18001) standards slated to come out in the next few years. For example, in the new ISO 9001 that is planned for release in 2015, it is called ‘Understanding the Needs and Expectations of Interested Parties’ and ‘Actions to Address Risks and Opportunities’. The evolution of the ISO standards is indicative of a shift in global mind-set (since ISO represents over a 100 different countries) to prioritising stakeholder engagement and risk management.

Step 3: Dig Deep! (Critical Processes)

In step 3, the Stakeholder Materiality Analysis and Integrated Risk Assessment are used to identify critical business processes, using the Process Map of the organization. It is likely that the most critical processes – in terms of their impact on SQELCH issues – will include Governance & Strategic Planning, Product or Service Development, Product or Service Delivery, Supply Chain Management, and Customer Chain Management. There may also be others, depending on the particular business or industry sector. This Critical Processes list should also include the most relevant sub-processes.

Step 4: Aim High! (Innovation & Value)

Step 4 entails the Innovation and Value Identification element. Using the Net Zero/Net Positive strategic goals, or others like Stuart Hart’s sustainable value framework, each of the critical processes is analysed for opportunities to innovate. Opportunity analysis is followed by idea generation and screening and the creation of a Breakthrough List. This is the chance for problem solving teams, Six Sigma teams, Lean teams, and Design for Six Sigma teams and others to use improvement tools to take the company towards its chosen transformational goals. The improvement projects will continue for a few months until they are implemented and put into daily practice.

Step 5: Line Up! (Systems Alignment)

In Step 5, the requirements of the various SQELCH standards most relevant for the organization, together with the transformational strategic goals, are integrated into the management system of the organization, including the business processes, work instructions and forms/checklists. Process owners working with cross-functional teams ensure that the organizational processes are capable of meeting the requirements defined by the various standards and strategic goals. This is followed by training to ensure that the new and updated processes are understood, implemented and being followed.

Step 6: Think Again! (Audit & Review)

Integration has one final step, Internal Audit and Management Review, which creates the feedback and continuous improvement loop that is essential for any successful management system. This means integrating the value creation process into the governance systems of organization, including Strategic Planning and Budgeting, Management or Business Review, Internal Audits, and Corrective Actions. This is what will ensure that implementation is happening and that the company stays on track to achieve its transformational goals.

Words Count, Actions Matter

To conclude, we believe Creating Integrated Value, or CIV, is an important evolution of the corporate responsibility and sustainability movement. It combines many of the ideas and practices already in circulation, but signals some important shifts, especially by using the language of integration and value creation. These are concepts that business understands and can even get excited about (whereas CSR and sustainability tend to be put into peripheral boxes, both in people’s heads and in companies themselves).

More critical than the new label or the new language is that CIV is most concerned with implementation. It is a methodology for turning the proliferation of societal aspirations and stakeholder expectations into a credible corporate response, without undermining the viability of the business. On the contrary, CIV aims to be a tool for innovation and transformation, which will be essential if business is to become part of the solution to our global challenges, rather than part of the problem.

Article reference

Visser, W. and Kymal, C. (2014) Creating Integrated Value: Beyond CSR and CIV to CIV, Kaleidoscope Futures Paper Series, No. 3.

Endnotes

[1] Organizational governance, human rights, labour practices, environment, fair operating practices, consumer issues, and community involvement and development

[2] It is interesting to note that the revised ISO 14001 being planned for release in 2016 includes a life cycle perspective for all aspects of operations including product design and delivery.

[3] This is captured eloquently in John Elkington’s book, Zeronauts (2012)

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Related pages

[button size=”small” color=”blue” style=”info” new_window=”false” link=”http://www.omnex.com/”]Page[/button] Omnex (website)

[button size=”small” color=”blue” style=”info” new_window=”false” link=”http://www.kaleidoscopefutures.com”]Page[/button] Kaleidoscope Futures (website)

Cite this article

Visser, W. and Kymal, C. (2014) Creating Integrated Value: Beyond CSR and CIV to CIV, Kaleidoscope Futures Paper Series, No. 3.

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Meeting water and energy challenges in agri-food sector with technology

Meeting water and energy challenges in agri-food sector with technology

Article by Wayne Visser

Part of the Sustainable Innovation & Technology series for The Guardian.

Innovations in sugar cane processing to reduce water use and produce energy will help to meet future agricultural product demands

Worldwide, the overall growth in demand for agricultural products will require a 140% increase in the supply of water over the next 20 years compared to the past 20 years. While the bulk of this demand will be from irrigation, food processing plants can also be water intensive. So, any technological innovations in the industry that save water are welcome.

One such innovation is by Mars Petcare, which has developed a recirculation system that reduces the potable water used for cooling in its pet food production process by 95%. Wastewater is also down by 95% and gas by 35% through the use of a treatment method that keeps the water microbiologically stable.

In Brazil, water used in sugar cane processing has gone down from 5.6 to 1.83 cubic metres (m3) per tonne in recent years, due to improved technologies and practices in waste water treatment.

Further reductions can be made by replacing the standard wet cane washing process with a new technique of dry cane washing. Costa Rican company Azucarera El Viejo SA has found that this switch has resulted in more than 6m gallons of water being saved each day during the harvest season, netting savings of approximately $54,000 (£32,000).

Of course, in food processing, it is not only volume of water that is important, but also the quality of water effluent associated with the manufacturing process. In Brazil, sugar cane is partly processed into ethanol. Vinasse is a byproduct of this process that pollutes water. Technological innovation shows that, while in Brazil emissions of 10-12 litres of vinasse per litre of ethanol are standard, levels of 6 litres can be achieved.

Other examples of innovative water quality solutions in the agri-foods sector are Briter-Water, which has been piloted in the EU and uses intensified bamboo-based phytoremediation for treating dairy and other food industry effluent; and the Vertical Green Biobed, developed by HEPIA, a school from the University of Applied Sciences of western Switzerland, to improve water treatment of agricultural effluents.

Generating energy from agricultural waste

Besides water issues, agriculture is also very energy intensive, accounting for 7% of the world’s greenhouse gas emissions, according to 2010 figures. Even carbon emissions associated only with direct energy use by the sector stand at 1.4% of the world’s total. Energy efficiency technologies will certainly help, but there is an equally big innovation opportunity in generating energy from agricultural waste.

It is estimated that the global biofuels market could double to $185.3bn (£110.5) by 2021 and that next generation sugar cane bagasse-to-biofuels technologies could expand ethanol production in key markets like Brazil and India by 35% without land or water intensification. Experiences in this rapidly growing industry suggest some lessons which can be applied to sustainable technology innovation more generally.

Lesson 1: technologies must be ready-for-market

There are always competing technological solutions at the Research and Development (R&D) phase, but a critical test is which ones are ready to scale commercially. In the case of cellulosic biofuel technologies, despite early research into wheat straw and corn stover, sugar cane biomass ended up being more commercially attractive to big investors like Blue Sugars, Novozymes, Iogen, Beta Renewables, DSM and Codexis.

Lesson 2: partnership is critical for success

There have been few standalone projects announced. Instead, technology companies from the US and the EU have generally teamed up with large aggregators of bagasse like Raizen and Petrobras. Apart from technology transfer benefits, access to already-aggregated bagasse is economically essential.

Lesson 3: policy support and market demand attract investment

Brazil is especially attractive as a technology transfer destination due to a combination of policy certainty and strong ethanol demand. This combination is also stimulating parallel next generation biofuels. Most notably GraalBio and Praj have significant projects targeting other feedstocks such as straw.

Investment in biofuels can also generate significant economic value for agri-food processors. During the sugar cane harvest, the left over fibre is burned and converted into energy via bagasse-to-biogas production. During the 2011-12 harvest, approximately 38m kWh of energy derived from bagasse-to-biogas production was sold by Azucarera El Viejo to the Costa Rican Electricity Institute, bringing over $3m (£1.79m) of income to the company.

In Nepal, the Biogas Support programme installed over 250,000 domestic biogas plants in rural households between 1992 and 2011, using cattle manure to provide biogas for cooking and lighting, replacing traditional energy sources such as fuel wood, agricultural residue and dung. Besides health benefits from less indoor smoke, the project has cut 625,000t of CO2.

And in Rwanda, there is a proposal – yet to be approved and implemented – for two biofuels companies, Eco-fuels Global and Eco Positive, to invest $250m (£149m) and grow 120m jatropha trees, helping to make Rwanda self-reliant in biodiesel by 2025 and bringing jobs to 122 small oilseed-producing cooperatives with over 12,000 members.

 

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[button size=”small” color=”blue” new_window=”false” link=”http://www.waynevisser.com/wp-content/uploads/2014/10/article_sustech3_wvisser.pdf”]Pdf[/button] Meeting water and energy challenges in agri-food sector with technology (article)

Related websites

[button size=”small” color=”blue” new_window=”false” link=”http://www.waynevisser.com/books/the-quest-for-sustainable-business”]Link[/button] The Quest for Sustainable Business (book)

[button size=”small” color=”blue” new_window=”false” link=”http://www.kaleidoscopefutures.com”]Link[/button] Kaleidoscope Futures (website)

[button size=”small” color=”blue” new_window=”false” link=”http://www.csrinternational.org”]Link[/button] CSR International (website)

Cite this article

Visser, W. (2014) Meeting water and energy challenges in agri-food sector with technology. The Guardian, 13 August 2014.

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The Sustainability Movement Faces Extinction – What Could Save It?

The sustainability movement faces extinction – what could save it?

Article by Wayne Visser

Part of the Unlocking Change series for The Guardian.

We all want to change the world, but where to begin? A good start would be getting as far away from sustainability as possible. If you are already in its clutches, don’t despair: it’s not too late to turn around, walk away and never look back. Forget you ever heard the s word and take a vow of silence never to speak it again. Once you’ve done that, you might consider joining a tech company (infotech, biotech, cleantech – it doesn’t matter which; they will all be indistinguishable soon). I’m betting that would be a good way to kickstart your world-changing mission.

I say this after 20 years as a professional in sustainability (capital S if you’re a devotee), which I’ve discovered to be many things, but certainly not an effective strategy for change – at least, not yet. The reason is fairly simple: the essential idea of sustainability – that we must endure, perpetuate, hold on to the past and drag it into the future – is about as exciting as watching lettuce wilt under the midday sun. As Michael Braungart, co-author of Cradle to Cradle, likes to say: “sustainability is boring”.

I imagine your expressions of shock and horror, but it’s true. Sustainability has won many battles – for best-new-jargon-inventor, for most-likely-to-make-you-feel-good – but has lost the war for the hearts and minds of the people. It has pinned its colours to the mast of scarcity and survival, when most of the world is far more interested in prosperity and thriving. I’d go so far as to say that the sustainability movement has failed to understand what it means to be human.

Let me explain. As human beings, our lives are all about change – about growth and development. At best, life is about making things better. Even as a civilisation, we’re all about evolution, although we prefer to call it progress. Now, as it happens, sustainability wonks believe that they are all about Progress with a capital P. Unfortunately, the rest of the world remains unconvinced.

Sustainability is like a geeky, pimply teenager who has come to our party, turned off the music and told us that we would really be much happier if we stopped having so much darn fun! The key to having a good time, declares our party-pooper, is to practice a lot more self-restraint. All those on board the austerity train, say “Hell, yeah!” … What, no one?

Make no mistake; if we are to survive (let alone thrive), the world is going to have to change – dramatically, radically and irreversibly. The question is: how will it happen? In this “unlocking change” series for the Guardian, I’ll be digging into the nature of change and what role we play in making it happen – in our societies, our organisations and as individuals. And when change does turn our lives upside-down (as it will), how can we become more resilient?

To begin, let me plant a seminal idea, which is that change is all about connection. In other words, connectivity is the underlying catalyst for change.

We are living proof of this. The first neurons in our brains, called predecessors, are in place 31 days after fertilisation. In the early stages of a foetus’s brain development, 250,000 neurons are added every minute, and, by the time a baby is born, there are about 100bn neurons, which remain roughly constant through life. Learning only happens when synapses are formed: they connect the neurons to each other. At birth, the number of synapses per neuron is about 2,500; by age two or three, it has risen to 15,000 and some neurons later develop up to 50,000 connections each.

Hence, the dramatic changes in the early years of a child’s life – all those remarkable feats of learning and development – are due to increasing connectivity, or, as scientists like to call it, complexity. And we see this same pattern at work in society. The first computer, Charles Babbage’s analytical machine of 1837, would have had the equivalent of 675 bytes of memory. By comparison, according to Cisco, between 1984 and 2012, the internet generated 1.2 zettabytes of data – that’s 1.2 with 20 zeros after it.

The point is that scaling the number of networked relationships is at the heart of almost all change, including biological and social evolution. My contention is that, if we wish to save the sustainability movement from an ironic fate of extinction, we will have to get much smarter about change: better at riding the waves of science and technology, better at becoming intelligently connected, and better at designing change efforts that align with evolutionary dynamics.

 

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[button size=”small” color=”blue” style=”download” new_window=”false” link=”http://www.waynevisser.com/wp-content/uploads/2013/10/article_unlocking_change1_wvisser.pdf”]Pdf[/button] The sustainability movement faces extinction – what could save it?  (article)

Related websites

[button size=”small” color=”blue” style=”tick” new_window=”false” link=”http://www.waynevisser.com/books/the-quest-for-sustainable-business”]Link[/button] The Quest for Sustainable Business (book)

[button size=”small” color=”blue” style=”tick” new_window=”false” link=”http://www.csrinternational.org”]Link[/button] CSR International (website)

Cite this article

Visser, W. (2013) The sustainability movement faces extinction – what could save it? The Guardian, 30 September 2013.

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CSR 2.0: Part 5 (Video)

Extract from a presentation by Dr Wayne Visser at the Korea Social Responsibility Institute (KOSRI) 2012 conference in Seoul.

CSR 2.0: The Future of CSR — Part 5 (What is CSR 2.0?)

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