Topic 1: Social Responsibility and Corporate Citizenship /
Corporate Social Responsibility and Corporate Social
Investment
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Introduction: The way in which business operations are
conducted has changed over the last two decades. Businesses have
not always been as committed to corporate social responsibility as
they are today. Corporate Social Responsibility (CSR) became a
popular topic in the 1990s when the political environment in South
Africa began to change.
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Introduction: The word social refers to society and to the
public at large. The word responsibility refers to accountability
and duty. Social responsibility refers to the publics duty to
further the interests of society. Businesses are corporate
citizens- this means that businesses have a responsibility towards
society. Corporate Social Responsibility (CSR) refers to a
businesss responsibility to further the interests of the community
in which it operates. CSR is about making profit in a responsible
way- i.e conducting business by taking into account the impact of a
businesss operations on the environment, employees and the
community in which it operates.
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Introduction: Triple bottom line( people, planet, profit)
serves as a guideline for responsible business practice:
Environmental sustainability (planet) Business operations have an
impact on environmental resources. Businesses must attempt to
strike a balance between impacting the environment and maximising
profit. Economic sustainability (profit) Business should aim to
achieve ling-term growth and sustainability, instead of maximum
short-term profit. Social sustainability (people) Businesses have a
responsibility towards employees and towards the community in which
they operate. This is achieved by, for example: Ensuring that
business operations are not harmful to the community. Ensuring that
employees are working in a safe and healthy working
environment.
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Introduction: CSR includes advancing the well-being of
employees and other stakeholders: Initiative to advance the
well-being of others in a business context: Employees Employee
motivation initiatives: Offer incentives when performance targets
are met. Create opportunities for promotion. Provide employees with
job security. Employee development initiatives: Skills training.
Learnership programmes. Mentorship programmes. Rehabilitation and
wellness initiatives: Assist employees who suffer from addiction
problems with rehabilitation. Offer counselling to employees who
experience personal trauma. Stress management initiatives: Provide
employees with access to recreational facilities such as gyms.
Create awareness of the correlation between stress and disease.
Arrange wellness-days for employees to have their cholesterol and
blood pressure measured by medical professionals. Organise team
building events Treat employees fairly and with respect.
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Introduction: Initiatives to advance the well-being of others
in a business context: Clients Ensure that prices are
market-related and fair. Advertising should not be false,
misleading or deceptive. Ensure production and delivery of quality
goods and services. Society A business should consider the impact
of its operations on society. A business can contribute to the
well-being of society through CSI projects, such as: IADS awareness
projects. Projects to raise funds for less fortunate people.
Projects to raise awareness of violence against women and children.
Projects to provide shelter for homeless people. Anti drug abuse
campaigns. Environment A business should consider the impact of its
operations on the environment, by: Complying with all environmental
laws. Contributing money towards environmental research. Refraining
from testing products on animals. Minimising pollution. Finding
alternative energy sources.
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Definition of Social Responsibility: It is an ethical objective
aimed that all individuals and organizations have a responsibility
to benefit the community as a whole. It also includes the awareness
of the consequences of actions for the community and environment.
This responsibility ma be in the following forms: Passive:
avoidance of any actions that may damage the community and
environment. Active: take steps that can benefit the community by
initiating projects that have a positive impact on individuals,
community and society.
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CORPORATE SOCIAL RESPONSIBILITY (CSR): Definition: The way in
which businesses manage their time to influence their stakeholders
(individuals, organizations who somehow made a commitment to the
business) in a positive way. To ensure the business own survival in
the future the business should take care of the well-being of its
stakeholders. A continuous objective of the business to behave
ethically in order to make a positive contribution to economic
development. CSR implies that businesses recognize the need to give
back to the community in a sustainable manner. The focus will vary
from business to business because the focus of the business CSR
initiatives differs, e.g. some businesses focus on community
involvement, while others focus on the manufacture or distribution
of socially responsible products.
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CORPORATE SOCIAL RESPONSIBILITY (CSR): The basic principles of
CSR are: Businesses accept their responsibility for their impact on
society and the environment. Businesses react responsibly to the
behaviour of their stakeholders, e.g. ensure that they support
ethical suppliers. The relationship between the business and the
broader community must be managed effectively to increase profits,
but also to add value to the community. Primary social
responsibility: meet the needs of the stakeholders who are directly
connected with the business, e.g. owners, employees, customers,
suppliers and competitors. Broad social responsibility: refers to
the broader community, not just clients, which also include various
levels of government.
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Corporate Social Responsibility (CSR) Nature of CSR: Businesses
implement CSR programs for various reasons: Some see it as a sign
to promote their image of the fulfilment of social responsibility,
others are driven by the philanthropic culture (do something
positive in the lifting of the community). Most businesses,
however, are motivated by a combination of factors to implement
their specific CSR programs, e.g.: The community expects it from
the business and businesses would like to see that they fulfil
these expectations. Economic benefits for the business (avoiding
penalties and legal expenses and acceptance of credit because they
do something good, e.g. reducing the carbon footprint). Ethical
considerations such as responsible business agreements and
relationships in the workplace.
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CORPORATE SOCIAL RESPONSIBILITY (CSR): The nature of CSR: We
can say: CSR aims to protect the natural environment in which a
business operates. CSR means not pursuing profit at any cost. CSR
aims to be sustainable. CSR aims to create a safe working
environment for employees. CSR is transparent. CSR builds a
businesss reputation. CSR is relevant. CSR is ethical. Claims from
government because of limited resources available to the
government: The CSR programs that the business undertakes should
positively contribute to the lifting of the community in which they
work. It must be strategic in nature and not just random attempts
without a positive impact on the community. Social Responsibility
and Corporate Citizenship / Corporate Social Responsibility and
Corporate Social Investment
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Corporate Social Responsibility (CSR) Process of CSR: Assess a
business in terms of financial, economic and social sustainability.
Identify areas for improvement in terms of the extent to which a
business considers the impact of its operations on the environment
and community. Devise a strategy to address the weaknesses
identified in the previous step. Businesses must then decide what
Corporate Social Investment to make: Identify a need in the
community which can be addressed through CSI. Register CSI-projects
and programmes with relevant institutions. Draw up a budget for the
chosen projects. Ensure beneficiaries are legitimate.
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Corporate Social Responsibility (CSR) Benefits of CSR for
businesses: CSR helps build a businesss reputation. Businesses with
good reputations attract good candidates. CSR contributions are
awarded BEE points. Employees feel more positive about employers
who look after employees and conduct business in a responsible way.
CSR-programmes help build customer loyalty. CSR-programmes help
create a positive image of businesses among consumers. Many
investors prefer investing in businesses that conduct business ins
a responsible way. CSR creates employee opportunities, e.g. if a
school is built, teachers must be appointed.
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Corporate Social Responsibility (CSR): Benefits for the
Community: CSR improves a communitys standards of living, e.g. By
providing healthcare services. CSR can create employment
opportunities by appointing members of local communities. CSR
benefits communities by providing education and training through
skills development. CSR teaches Communities to become
self-sustainability, for example growing vegetable gardens. CSR
focuses on sustainability- ensuring that resources will be
available for future generations. CSR focuses on protecting the
environment. Infrastructure is often improved as businesses expand.
Product safety for customers because laws are strictly enforced.
Safe disposal of pollutants by the community benefit the
community.
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CORPORATE SOCIAL RESPONSIBILITY (CSR): Problems and challenges
relating to Corporate Social Responsibility for businesses: CSR
costs money that could have been invested more profitably
Businesses carry a heavy load- businesses a tax intended for
building infrastructure and addressing socio-economic problems. On
top of this, businesses are expected to make CSR contributions
Businesses are required to prepare detailed CSR reports- this is
time consuming. Employees are often expected to participate in CSR-
programmes in their free time. Production time is lost when time is
spent on CSR-programmes during business hours. Many CSR-programmes
are not successful, because businesses tend to focus more on
implementation than on maintenance e.g. a business budgets to equip
a school with computers, but does not provide for the maintenance
of these computers. Small businesses do not always have enough
employees to implement CSI-initiatives.
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CORPORATE SOCIAL RESPONSIBILITY (CSR): Problems and challenges
relating to CSR for community: Communities do not always enjoy the
intended benefits of CSR-programmes, because business tend to focus
on implementation only not on maintenance as well. Businesses are
not always equipped to address social problems. Communities can
avoid taking responsibility for themselves, because they expect a
businesss CSR- initiatives to provide for them.
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CORPORATE SOCIAL RESPONSIBILITY (CSR): Components of CSR:
Components of Corporate Social Responsibility: Environment Business
must take into account the impact of their operations on the
environment. Business operations must be conducted in a manner that
ensures that natural resources are available for future
generations. Ways in which business can be environmentally
responsible: Contribute money towards research aimed at finding
alternative sources of energy. Recycle, e.g. paper, empty
cartridges and dated equipment. Use energy saving globes Reduce
paperwork by keeping correspondence digital.
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CORPORATE SOCIAL RESPONSIBILITY (CSR): Components of CSR:
Components of Corporate Social Responsibility: Ethical corporate
social investment Corporate Social Investment (CSI) is an extension
of a businesss, Corporate Social Responsibility. CSI mainly
focusses on addressing socio-economic issues such as poverty and a
lack of education within the community in which a business
operates. Ethics and CSI are complementary concepts. The point od
CSI is defeated when it is not implemented in an ethical manner.
Ways in which businesses can contribute towards ethical social
investment: Ensure corporate social investment projects have
legitimate track records. Ensure that the purpose of CSI is to
benefit the community, and not to raise profit.
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Health and safety Businesses have a responsibility to ensure
the safety of employees at work and of people who visit their
premises. Businesses operations must not pose a risk to the health
and safety of communities.. Ways in which businesses can contribute
towards the health and safety of role players and people who visit
the business( employees, consumers, suppliers, government
officials): Adhere to health and safety requirements as per the
Occupational Health and Safety Act( No. 85 of 1993). Provide
protective gear to workers who work with dangerous materials.
Employers who employ more than twenty employees must appoint at
least one health and safety representative for every 100 employees(
shops and offices) ;and at least one health and safety
representative for every fifty employees in the case of all other
workplaces. Do regular maintenance of machinery and office
equipment. Devise an emergency plan in case of an emergency, e.g.
fire.
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Socioeconomic development (SED) Although socio-economic
development (SED) is not a component of CSI, SED is closely related
to CSI. Like CSI, SED aims to further the interests of communities,
but the difference is that SED is specifically aimed at promoting
access to the economy for black people. SED comprises four
elements: Infrastructural development Educational development
Community development Healthcare development Businesses receive
BEE-points for qualifying for SED contributions. Businesses make
SED contributions according to the industry in which they operate.
Ways in which businesses can contribute towards socio- economic
development: Infrastructural development, e.g. programmes that
provide communities with solar power. Educational development, e.g.
providing a disadvantaged school with computers. Community
development, e.g. programmes that develop arts, culture and sport.
Healthcare development, e.g. HIV/ Aids programmes.
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CORPORATE SOCIAL RESPONSIBILITY (CSR): Issues that challenge
CSR: Businesses aim to further the interests of the communities in
which they operate through CSR. However, some problems just seem
too big to be solved. Examples of such problems include: HIV/AIDS
South Africa has one of the highest HIV-prevalence rates in the
world an the infrastructure to deal with this problem is lacking.
Although businesses are making a contribution, the effects of
HIV/Aids are overwhelming: Children become orphans when their
parents die. These children, often very young, drop out of school
because they simply cannot cope with running a household and going
to school. Parents cannot take care of their children in the final
stages of the disease. Employees who live with HIV/Aids are absent
more often.
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CORPORATE SOCIAL RESPONSIBILITY (CSR): Issues that challenge
CSR: Examples of such problems include: Unemploymen t Although
government has devised several strategies to address unemployment,
it is still a very big problem. Businesses contribute towards
solving this problem by offering learnerships to unemployed people.
However, in many businesses there are simply not enough positions
available for businesses to make a significant contribution.
Poverty Many businesses try to alleviate poverty by donating
clothes or other valuable items to underprivileged communities.
Although these contributions are extremely helpful, it is not
really addressing the root of the problem.
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Corporate Social Investment (CSI) : Definition: CSI forms part
of Corporate Social Responsibility. It refers to the time, money
and other resources businesses spend on improving the standard of
living of the community in which they operate. The main aim of CSI
is not to increase a business profits, but to use a business
resources to benefit a community. Not seen as a marketing activity.
CSI is a business contribution to communities over and above their
normal business activities.
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Corporate Social Investment (CSI) : Definition: Projects aimed
at development and lifting of the community and operated out of the
companys resources. Addressing specific socio-economic issues such
as poverty, HIV/Aids, illiteracy, etc., by making the business
resources available to non-profitable organizations which are
involved in lifting programmes in the community or by getting self-
involved in lifting programs. The original goal of CSI was
philanthropic, but later it became clear that the reputation of the
business can be promoted through CSI. Originally SCR and CSI was
seen as the same thing but it is now defined differently. Where CSR
refers to the business overall responsibility to the business
environment in which it operates, CSI is a sub-component of CSR and
the goal is the lifting of the community through ways that will
improve the quality of life through direct investment.
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Corporate Social Investment: Nature of Corporate Social
Investment: The nature of Corporate Social Investment refers to the
characteristics of CSI : CSI contributes towards sustainable
development. CSI is enforceable by law and government requires
businesses to make CSI contributions. CSI plays a positive role in
the development of communities. CSI reveals a businesss attitude
towards the community in which it operates.. CSI is a long-term
investment. CSI is relevant to the South African context where
socio-economic upliftment is such a priority. The main focus of CSI
is not to increase profit, but to support communities
Slide 27
CORPORATE SOCIAL INVESTMENT: Nature of Corporate Social
Investment: Although South Africa is behind the rest of the world
regarding CSI, the King Code largely contributed to CSI practices
in South Africa. It does not matter what the nature is that the
business chooses, but it should aim to lift the society and the
environment in which it operates. The nature of CSI depends on the
CSI policy of the business and the specific needs that exist within
the community.
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CORPORATE SOCIAL INVESTMENT PROJECTS: Businesses are free to
decide their level of involvement is CSI. Examples of CSI projects
include: Projects that focus on nature conservation, e.g. cleaning
up a polluted area or creating awareness of the dangers of
pollution. Providing education and training to disadvantaged
people, e.g. bursaries, providing resources to schools, fund
appointment of extra teachers ore renovating dilapidated school
buildings. Expanding infrastructure, e.g. by being involved in
building a community centre or renovating rundown houses. Investing
in the well-being and advancement of employees, their families and
communities, e.g. by providing employees with housing subsidies,
creating jobs or teaching a community to become sustainable by
cultivating small vegetable gardens. Projects that focus on human
rights, e.g. initiative that support early childhood development (
right to education), initiatives that help communities with housing
( right to shelter) or initiatives that help to restore the dignity
of communities. Initiatives that help to combat crime, e.g.
starting a neighbourhood watch or counselling for substance
abusers.
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Corporate Social Investment: Responsible business practice:
Businesses should be good corporate citizens. Corporate citizenship
suggests that businesses do not pursue profit at any cost, but
consider the impact of their operations on the community. The
cornerstones of responsible business practice are: Transparency
Fairness Accountability The JSE launched a Social Responsibility
Index (SRI) to identify listed companies that implement the
principles of responsible business practice.
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Corporate Social Investment: Responsible business practice: The
SRI measures the performance of listed companies against the
criteria of the triple bottom line: Social sustainability Economic
sustainability Environmental sustainability Examples of responsible
business practice include: Creating a safe and healthy working
environment Fair and equal treatment of all employees. Limiting or
eliminating the impact of a business operations on the environment.
Launching Corporate Social Investment initiatives to give back to
society Paying fair wages Manufacturing products that are safe to
use.
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Challenges to the business regarding the long-term needs of
society: Businesses face the following challenges regarding CSI:
Sustainability Sustainability refers to a business long term
commitment to a community and to CSI. However, it may be possible
that a business cannot continue with a CSI-initiative (e.g. when a
business goes bankrupt). Maintenance Many great CSI contributions
have already been made and many of these contributions focused
mainly on implementation, for example a business donating computers
to a school. The success of initiatives like these, is compromised
if the business does not also provide for computer training,
maintenance and security of the new computers. It is therefore
possible for a business to spend millions of Rands on CSI, yet a
community never enjoys the benefit of the initiative.
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Challenges to the business regarding the long-term needs of
society: High cost of CSI CSI requires a commitment form businesses
to be actively involved in a community. This commitment requires
both employees time, who work hard as it is, as well as money. CSI
can distract a business attention form its core activities.
Businesses need to remain focused on their core activities in order
to be profitable and at the same time make corporate social
investments. Making a true difference South Africa faces a variety
of socio-economic problems. Many businesses spend fortunes on
initiatives to uplift a communities. However, it appears that much
of this effort is not yet visible, as many South Africans remain
illiterate, poor, uneducated and homeless.
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Challenges to the business regarding the long-term needs of
society: Keeping up with societys long- term needs Businesses need
long-term CSI strategies for communities where people are poor and
unemployment is high. Handing out food parcels, for example does
not uplift a community in the long run. Instead, businesses must
strive to address the core issues (education and skills training).
Building a clinic is easy, but making sure that the clinic
functions optimally is a much harder task. Hence, businesses must
do comprehensive long-term planning in order to make sure that the
needs of societies are addressed over the long-term.
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Legislative requirements: Some legislation has an impact on
businesses CSR and CSI. In May 2004, the JSE launched South Africas
first CSI 0ndex Public companies must apply to be listed on this
index. There are 94 different criteria that businesses must comply,
including commitment to BEE, dealing with HIV/AIDS in the
workplace, fair labour practices, environmental sustainability,
contribution to reduce global warming, etc.
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Legislative requirements: Public companies must report on the
following: Environmental Issues: Business policy, how it is
managed, reporting, etc. Employee issues: training,
employee-employer relationships, equal opportunities, health and
safety, HIV/AIDS. etc. Other social issues: Black Economic
Empowerment, community involvement, stakeholders involvement,
reporting to stakeholders, etc. Management issues: Practices of the
Board of Directors, code of ethics, risk management, etc. The JSE
requires all public companies listed on the JSE, regardless of
whether they are listed on the CSI index, to submit an annual
integrated report on environmental, social, economic and financial
achievement.
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Legislative requirements: Employment Equity Act Aims to promote
equal opportunities in the workplace and to eliminate unfair
discrimination. CSI must be inclusive. Skills Development Act Aims
to redress past imbalances through education and training. Many CSI
initiatives are aimed at skills development, education and
training.
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Legislative requirements: BEE and BBBEE Aims to empower black
South Africans by encouraging black ownership of businesses.
According to the BBBEE Act and the new BEE codes (effective April
2015), businesses are assessed against the five pillars of BBBEE:
ownership, management and control, skills development, enterprise
and supplier development and socio-economic development. Businesses
are rated according to the amount spent on CSI and SED. National
Skills Development Strategy The National Skills Development
Strategy is a strategy that focuses on redressing past imbalances
through skills development. Many CSI initiatives concentrate on
skills development, education and training.
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Legislative requirements: Human Resources Development Strategy
A long-term strategy that aims to empower people through skills
development and education. SETAs act as vehicles to provide skills
development and training. Many CSI initiatives concentrate on
skills development, education and training.
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Differences between CSI and SED: Similarities between CSI and
SED: CSI and SED both depend on time, money and other resources
from businesses. CSI and SED both aim to improve the standard of
living of communities. CSI and SED both have a positive impact on
society CSI and SED both address socio-economic issues CSISED Aim
to improve the standard of living of the greater society. Directed
at improving the standard of living by making any contribution to
the community Specifically aim to promote access to the economy for
black people. Directed at: Infrastructural development Educational
development Community development Healthcare development