THE concept of corporate social responsibility (CSR) means that organisations have moral, ethical and philanthropic responsibilities in addition to earning a fair return for investors in compliance with the law.
Report by Bhekumusa Maboyi
A traditional view of the corporation suggests that its primary, if not sole, responsibility is to its owners, or stockholders.
However, CSR requires organisations to adopt a broader view of their responsibilities not only to stockholders, but other constituencies as well, including employees, suppliers, customers, the local community, local and national governments, environmental organisations and other special interest groups.
There is recognition that corporations leave a social, environmental and economic footprint in the areas they operate and as such they need to be accountable for these impacts. There are a number of factors driving the call for social responsibility by the corporate sector and when understood correctly can help companies appreciate the need for corporate social responsibility.
The push for CSR originated in developed economies as a result of rapid economic growth and stability of those economies. With stability came the luxury of choice and socially responsible activism. The increasing concern about ecological matters and sustainability, particularly pollution, natural resource depletion and climate change have also pushed for proactive corporate action.
Various principles such as the “polluter pays” principle have come to the fore as a way of calling for responsibility towards the environment.
The impact of globalisation on the CSR debate has also been considerable. The corporation has increased in wealth and power as it expanded globally to the extent that some of the world’s top corporations have revenues many times larger than most governments in the world. Such power must be accompanied by equal or greater responsibility on the part of the corporations.
In addition to globalisation the flow of information through various media has meant that citizens are better informed to make decisions about issues that affect them on a day-to-day basis. An increasingly important driver for CSR is the power of the brand. CSR is being driven from the corporate level through the desire for brand protection. The brand forms the focal point of a corporation’s success and is influenced by public perception of the reputation of the corporate.
Clearly, the corporate sector is intrinsically linked to the well-being of society hence the increasing expectations of society, as organisations continue to grow. There is a demand for organisations to demonstrate their social responsibility.
The growing influence of the corporate on the social sphere means that they, in addition to the role played by governments, are increasingly expected to interface with social, economic and environmental issues. In other words they are considered key players in delivering sustainable development.
The globally adopted Millennium Development Goals (MDGs) offer a framework for integrating social, economic and environmental considerations in business strategy by corporations and other organisations more effectively. The MDGs are a set of targets that countries throughout the world have agreed to work towards fulfilling by 2015. Eight goals have been set and are as follows:
- Reducing poverty and hunger by half by 2015;
- Ensuring all children complete primary education;
- Increasing gender equality and empowering women;
- Reducing child mortality by two thirds by 2015;
- Reducing maternal mortality by 75%;
- Halting and reversing the spread of HIV/Aids and combating malaria and other diseases;
- Ensuring environmental sustainability;
- Develop a global partnership for development.
Private sector and MDGs
While the burden of achievement of the MDGs lies with governments supported by the donor community, the private sector has an increasingly important role to play. The private sector is now seen as an important repository of skills, technology and financial capability that should be harnessed for sustainable development.
- To achieve the MDGs, economic growth and wealth creation is needed and the private sector is well suited for this role. But for the MDGs to be met, governments need to enable, regulate and partner the private sector. The quotation from the MDGs Africa Steering Group highlights the high expectations placed by governments and their citizens on corporations:
“The private sector is the engine of innovation and growth providing incomes for rural and urban populations. It is also a tremendous repository of organisational and management expertise that can increase the effectiveness of service delivery. Where possible, countries should draw on the private sector to complement governments in designing, delivering and financing interventions to achieve the
- Business involvement
For the private sector investing in CSR is sound business practice given the multiple benefits business can derive from it. By getting involved in CSR, companies are investing in a sound environment in which to do business (stability, security, non-discriminatory trading and financial system, minimum corruption). They are also managing the direct costs and risks of doing business (environmental degradation, climate change, HIV — all of which can increase the cost of doing business if ignored).
Investing in CSR can also provide a platform for harnessing new business opportunities (new products, processes — many developing countries offer potentially lucrative business opportunities, eg mobile phones).
Increasingly, companies are selling more of perception rather than product. Being seen to be socially responsible improves the customer’s perception of the business and may support the business’ social licence to operate in that area.
Relationships with stakeholders can also improve as the company understands the expectations of society better.
The company can also improve its ability to recruit a certain calibre of employee by being seen as socially responsible. The right employees in a company can make the difference between success and failure of that company.
- A call to get involved
CSR is often seen as an add-on for a company to consider once it has met its obligations to the shareholders and is often the last item to be budgeted for, and the first to suffer a cut when the operating environment becomes difficult. Experience,
however, shows companies that stick to their CSR even in difficult situations emerge stronger at the end of day.
CSR is not about the size of the company, but about the ethos that governs that company. When a company begins to appreciate its stakeholders it can invest in the stakeholders in more creative, non- monetary strategies.
While CSR is voluntary, the increasing awareness of such principles as fair labour practices, environmental protection and human rights, among others, will put pressure on companies to adopt sustainable social responsibility programmes.
It would no longer be enough to donate a large cheque or deliver some goodies to the needy at Christmas, but increasingly the demand will be for interventions that change lives for the better.
Admittedly, CSR is a new subject for many companies in Zimbabwe and as a result companies may neither be aware of the best way to get involved, nor the best strategies to adopt.
Non-profit making organisations like the Regional Centre for Social Responsibility offer companies guidance on the best ways of integrating CSR throughout an organisation through public dialogues and conferences, training seminars, on-site advisory services and specialised publications.
Bhekumusa Maboyi is a trustee of the Regional Centre for Social Responsibility and writes in his own capacity. He can be contacted on firstname.lastname@example.org.