Improving CSR in South African companies
by Dr Arnold Smit, a faculty member at USB Executive Development Ltd.
The recent publication of the King Report on Corporate Governance in South Africa in 2009, also referred to as King II, again placed the spotlight squarely on the responsibility of companies to exercise responsibility and accountability for the economic, social and environmental impact of their business decisions and behaviours.
According to King I, 'corporate responsibility is the responsibility of the company for the impacts of its decisions and activities on society and the environment, through transparent and ethical behaviour that: contributes to sustainable development, including the health and welfare of society; takes into account the legitimate interests and expectations of stakeholders; is in compliance with applicable law and consistent with international norms of behaviour and is integrated throughout the company and practised in its relationships'.
This is a very comprehensive view on corporate responsibility and, in the years to come, it will be interesting to monitor its influence on how companies understand, design and manage this aspect of their business operations. The previous two King reports made a significant impact on our business landscape and the same can be expected of King III. Corporate responsibility (previously referred to as corporate social responsibility) is not a new concept in the South African business domain. In this respect we can, apart from the three King reports, refer to the values embedded in our constitution, legislation with specific reference to the B-BEE Act of 2003 and the reporting requirements and industry charters that derive from it, the social responsibility index of the JSE and a variety of industry-based and professional bodies that have committed themselves to the cause. In little more than a decade, the field of CSR has grown from an initially contested topic to common practice in many companies. We can, however, not accept that the majority of South African businesses share a common understanding of the concept and have developed a mature and holistic practice towards the development and implementation of it. In fact, a recent survey indicates that South African companies still have a long way to go towards maturing CSR in their business operations.
The Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) recently released the results of a survey on promoting and hindering factors in CSR in sub-Saharan Africa. The survey included a total of 85 companies selected from Ghana, Kenya, Mozambique, Malawi, Namibia and South Africa. The purpose of the survey was to identify and gain deeper insight into factors that promote or hinder success in CSR development and implementation and, on the basis thereof, to arrive at conclusions and recommendations about enabling instruments that will benefit, strengthen and expand CSR impact in the region.
Fourteen South African companies were included in the GTZ survey. These companies showed the same general trend as their northern counterparts, namely that there is no clear distinction between CSR and CSI (corporate social investment), and what many companies and even CSR practitioners understand as CSR initiatives are either philanthropic activities or can be described as sponsorships or branding exercises. It is interesting to note what the companies in the survey identified as factors that either promote or hinder CSR implementation. Nine such factors were identified, namely: leadership and governance, policy frameworks, project management competencies, monitoring, evaluation and reporting competencies, stakeholder engagement, staff engagement, government support, beneficiation practices and funding. The pattern for South African companies in the survey concurs with that of companies from the other countries.
South Africa seems to be one of the leading agents in CSR development and implementation on the African continent, but we have to admit that it is still a steep journey towards the fulfilment of the King III's vision of what an ideal and mature understanding and practice of corporate responsibility should be like.
This article was published in the PMR magazine vol 20 issue 11 – 2009.