How CSV can link sustainable development to long-term growth

By Suranga Herath

Many in the business world believe sustainability and profit are like oil and water: they just don’t mix. So, while businesses know they should be more socially, environmentally and financially sustainable, they often can’t quite find the motivation to make it a priority.

Which is completely understandable. But I’d like to put forward an alternative view which says that growth can be achieved because of sustainability, not despite it. At my company, we do this by applying the principle of Creating Shared Value (CSV). This is a revolutionary approach developed by Harvard Business School’s Professor Michael Porter that businesses such as my own are putting into practice with exciting results in terms of growth

Creating Shared Value – a definition

CSV is about finding opportunities for growth in sustainable development. It’s about creating value for the business while creating value for the world at large. In short, it’s about win-win situations. Whereas CSR (Corporate Social Responsibility) is only about giving back, CSV is a two-way street making business much more sustainable and meaningful in the long-run.

CSV in action

From my own industry and my own experience, I’d like to offer two simple examples of CSV in action:

  1. Sharing value with producers. A big part of our business model is to develop close and long-lasting relationships with the farmers who grow our tea in Sri Lanka. This entails paying well over the Fairtrade minimum price. In addition to this, we offered a grant of £38,000 to the organic Sri Lankan small farming associations enabling them to increase the yield and value of their crops, driving value into the local economy. We recently made all of our teas 100% organic, and this too has driven up the prices the farmers can command.   What’s in it for us? Increasingly exceptional quality tea that gives us a competitive advantage of making our customers happy, and coming back for more.
  2. Building a business of business people. We have 400 individuals in our factory in Sri Lanka, and we recently launched an initiative called the Big Game to help them think more entrepreneurially. Through the Big Game, we pay our employees a share of the profits every quarter and also get them involved in programmes like open book management. This ultimately drives employee engagement, and increases productivity too – there has now been a 30.76% increase in value order ativan added per employee since Big Game was introduced.

These are just two examples of how we use CSV in our business, and business is booming. We have had remarkable growth in UK, Sri Lanka and internationally; with UK revenues soaring to £8.5m in 2016/17[1]. Group turnover for 2016/17 was approximately £22m having grown by 22% over 2015/16.

Three final reasons that show why now’s the time to embrace CSV

  • Over 70% of consumers say they are more likely or much more likely to buy from companies with strong and proven policies on sustainability and ethics[2].
  • Employees at sustainable companies are 16% more productive than the average business, bucking the trend that environmentalism dampens economic performance[3].
  • According to Unilever, brands could be missing out on £820bn by not pushing sustainability[4]

Top tips on putting CSV into practice

Every business is different, and incorporating the idea of CSV will be easier for some than others. But whatever your business, here are some pointers to start from:

  1. Take stock. From a business point of view, CSV is about identifying growth opportunities. Review all aspects of your business – are there areas of waste that could be reduced? Are there ways of helping others that also benefit you?
  2. Develop a long-term plan. Set yourself long-term objectives and work backwards from there. Include CSV in your business plan.
  3. Enter the CSV mindset. CSV is strategic, and should be factored into everything you do.
  4. Focus on what’s in it for you. This will make it easier to stick to your plan in the long-run.

The end or the beginning of a journey

Putting the principles of value sharing at the heart of your business model can inspire strong long-term growth across the supply chain. It’s not just for companies who are firmly entrenched in the developing world or a specific sector – it’s for everyone. These days, businesses have more of a responsibility to go above and beyond mere profit making models and show that they can use their influence to better the wider community. Businesses who open themselves up to this new perspective will reap the myriad benefits.

Suranga Herath is CEO of English Tea Shop

[1] At a 60% CAGR since we launched in 2010

[2] tradeextensions, 2017

[3] UCLA newsroom, 2017

[4] Marketing Week