What is the difference between CSR and CSV in concept and practice? Why is the CSR concept not considered enough to adapt to company practices about social problems? Is it true that CSV provides more opportunities for commercial practices that are more integrated with the development of various problems in the company's external environment? What are the consequences for the company's business wheels? The Olahkarsa team will summarize all from several sources.
The role of the business world is very needed to maintain environmental sustainability and improve social welfare. Especially in the extractive sector, which has the responsibility of resources processed from nature. The government has regulated this role through Law Number 40 of 2007 Article 74, paragraph (1). It is stated that Companies that direct their commercial activities with natural resources must carry out Social and Environmental Responsibility (TJSL). Then, to implement the previous provisions, the Government Regulation of the Republic of Indonesia Number 47 was established in 2012. This regulation is related to the limited social and environmental responsibility of the Company.
Over time, the model of social and environmental responsibility must also have implications for the company's future sustainability
Companies must integrate economic interests and carry out social and environmental responsibilities. So, Creating Shared Value (CSV) is a concept that requires companies to play multiple roles. First, we have to create economic value (economic value). Second, we also use social values together (shared), without being liked or thrown away.
In 2011 in Harvard Business Review, Michael E. Porter and Mark R. Kramer introduced a new concept developed from CSR, namely the concept of Creating Shared Value (CSV).
The CSV concept has been widely applied by large companies. So, what is Creating Shared Value?
CSV is different from CSR, where CSR is more focused on compliance with relevant regulations. The main goal is to improve the company's reputation. While the role of CSV is a thorough integrity between the company and its social environment for promising investments in the future.
Companies that implement Corporate Social Responsibility (CSR) are included in the "Good Corporate" category. However, to achieve better results, companies must become "Smart Corporate". In what way? By prioritizing business ethics to increase social benefits, while maintaining the company's benefits. To form "Good Corporate" into "Smart Corporation" needs a strategy that can carry out social and environmental responsibility obligations. Therefore, related to economic interests as well, the company's strategy must make a planning for Creating Shared Value (CSV).
The main difference between the two is that CSR talks about responsibility, while CSV is more about creating shared social values.
The difference between CSR and CSV
Porter and Kramer (2011) mentioned that the implementation of CSV is different from CSR which generally focuses on reputation. The CSV concept places the community including stakeholders (suppliers) as partners, fellow "subjects". While the CSR concept tends to place stakeholders as "objects".
According to Porter and Kramer, CSV is not the same as CSR. Both of them have the same foundation which is doing well by doing good. The main difference between the two is that CSR talks about responsibility, while CSV talks about shared value or creating value.
If the implementation of CSV is driven by internal factors and the company must be proactive. Different from the CSR perspective, a responsive company is a company that is driven by external factors. The main purpose of the CSV concept is to form advanced capitalism and make social responsibility not a burden. The company makes it a profitable long-term investment for the company.
Several companies that have successfully implemented the CSV concept
So that we can easily understand the difference between the concept of CSR and CSV, Olahkarsa Team provides real cases from several large companies in Indonesia. They are:
1. Danone – Aqua in Klaten
Danone - Aqua in Klaten forms a relationship of interdependence with local governments and communities due to limited resources. Of the three actors, the presence of Danone-aqua helped the government increase regional revenue first. Second, the community will be helped by the absorption of labor and income through Aqua retribution. Third, Danone itself has the main interest which is to obtain water resources for the continuity of the company. Through the implementation of the CSV concept that focuses on the environment, Danone Aqua gets a social license to operate from the community around the factory. The public already believes in the positive benefits brought by Danone (Elfajri, 2019).
2. PT Semen Gresik in Rembang
PT Semen Gresik Rembang Factory has unconsciously implemented the concept from CSV. For example, there is a partnership program with 6 BUMDes around the company to improve the welfare of the community. Through PT owned by BUMDes can support the factory operational process either directly or indirectly. For example, providing cleaning staff, security personnel, garden maintenance services and so on. The benefits that companies can get are economically and socially because they can reduce unemployment. Labor is prioritized from the community around the factory. In addition, there is a cooperation between the company and the local community, because there is a mutually beneficial relationship.
3. LNG Rhino in Bontang
The CSV approach by Badak LNG is not only successful in overcoming social problems in the form of the difficulty of Bontang welders finding a job. At the same time, it also solves the company's problem in the form of a guarantee of the availability of welders who meet oil and gas standards. From the welder side, there is a significant improvement in the quality of welding results (output) obtained from the ownership of oil and gas worker certificates. CSV has increased the bargaining power of welders in the city of Bontang, so that they can get an increase in monthly income (outcome). The capacity improvement program for Bontang City welders by Badak LNG has developed the awareness of welders about their own potential (impact). This is characterized by their needs and desires to establish a Welder Cooperative. So, the capacity of the Bontang Welder Association (IWB) is expanding from the institutional side.
Fitrianti (2017) revealed that the CSV concept is based on the idea of a interdependent relationship between business and social welfare. CSV emphasizes the existence of opportunities to build a competitive advantage. This concept tends to include social problems as the main consideration in designing a company strategy.