The Gautrain Management Agency’s commitment to sustainable development demonstrates the power of shared value.
What is shared value and how does it empower communities? Nompumelelo Runji explored this topic on Wednesday, 6 November, at the Financial Mail Private Lounge, in association with Gautrain Management Agency (GMA). The panellists were Jack van der Merwe, CEO of Gautrain Management Agency; Cindy Langeveld, Director of Shift Social Development and Shared Value Africa Initiative; Firoze Bhorat, Chief Marketing Officer at Discovery; and Nozipho January-Bardill, Chairperson of the UN Global Compact.
What is shared value?
Michael Porter and Mark Kramer first introduced the concept in an article for the Harvard Business Review. They argued that companies need to look beyond the corporate bottom line to include social and environmental motives in their core business. Langeveld explained that shared value operates on three pillars:
• Reconceiving product and market – innovating and creating products that deliver a social and environmental need, and looking at markets in underserved areas
• Redefining productivity in the value chain – looking at where to draw efficiencies from employees and suppliers to drive productivity in the value chain
• Local cluster development – supporting institutions inside community where businesses operate
Van der Merwe said that South Africa faces two crises: poverty and unemployment. The Gautrain not only provides reliable public transport – but also facilitates continued economic growth and improves communities’ livelihoods. In addition to its technical, legal and financial objectives, GMA added a fourth – socio-economic development – and appointed an independent socio-economic monitor to make sure it adheres to its own values.
“We have to think of planet, people and profit,” he said.
How does shared value help people?
“We mustn’t get scared by the size of the problem,” Van der Merwe said. “In the case of Gautrain we created 34 800 direct jobs during construction (87 000 indirect and induced jobs) and 922 sustained jobs during the start of operations.” “If you spend money on infrastructure it has a ripple effect on communities,” he said, explaining how the transport project’s demand for cement revitalised the town of Lichtenburg. Bhorat explained how Discovery’s approach to shared value though its Vitality programme has helped members get healthier by offering them incentives to get active and drive well. But it’s also benefiting the insurer by improving its claims ratio and society as a whole, as people become healthier and the roads become safer.
Everyone has a role to play
“Shared value says we must recognise ourselves as actors in an ecosystem,” Langeveld said. We need a multisectoral approach to solving South Africa’s problems that looks beyond profit (corporates); restraints of resources (NGOs) and policy framework (government).
“We need to step back from pointing out each other’s shortcomings and failures – we all have a role to play,” she said. The private sector brings innovation, efficiencies and resources; government has experience of running complex, large-scale projects; and civil society organisations give exposure and legitimacy to projects in communities.
“We have some excellent examples of partnerships in South Africa,” said January-Bardill. She remembered how South Africa won the bid in 2004 to host the 2010 Soccer World Cup. “We all came together,” she said. “In six years we built all of this infrastructure.” “The key to success is to approach big, impactful projects bit by bit … like the Gautrain,” Van der Merwe said, explaining that it takes time to build trust and partnerships, and when it comes to building infrastructure, you need:
• A long-term vision,
• A team of skilled people,
• Passion for what you do,
• Commitment and patience, and
• Support from the communities that your project will impact upon.
“We have the most resourceful people living in South Africa,” Van der Merwe said. Now let’s work together to build a better future.