What is in it for businesses and why should they invest in improving the environment and alleviating poverty? Companies in the private sector say they just want to do “the right thing” and “give something back” to the community. The sceptics on the other hand believe businesses are using these investments as another form of marketing or public-relations exercise to improve their corporate branding and image. They say companies only care about the media coverage they receive for their “good will” and are not really interested in the sustainability of the projects or whether they actually make a positive impact on the community or environment
There is some truth in both opinions … and there is room for improvement in how we all perceive corporate social responsibility (CSR). Cynicism often prevents the private sector and society from achieving a win-win scenario. CSR should not just be seen as charitable giving by companies, neither should it be seen as purely a marketing and PR tool. If businesses change how they view CSR and how the population at large views their motivation behind the initiatives, they will have taken the first step to ensuring the community development projects funded by companies are sustainable and have a truly positive impact.
So, now the key question. What does this change in perception look like and how can it happen? Most importantly, CSR needs to be seen as something that benefits the company’s financial bottom line, going beyond marketing and PR. Yes, that’s right; companies should invest in CSR in order to make more money, while at the same time helping poorer people generate wealth. If businesses just want to give money to charity without expecting anything in return, then they should be encouraged to do so through a company’s foundation, but companies are in the business of making money and should focus on this in the implementation of CSR too.
Doing anything other than this will fuel the public’s scepticism. If companies can make money while simultaneously alleviating poverty through education, provision of basic amenities and increasing their access to markets and capital, everyone is a winner! This means investing in projects that create a positive impact on the community as well as making business operations more efficient and more sustainable in the long term.
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22 Responses to “Corporate social responsibility, does it work?”
I would agree with the position that you have taken…and have always felt that companies must find a way to address the challenge faced, with balancing the marriage between CSR and ROI…
With regards to the ctitics: the citic’s (and there are many)of Corporate Social Responsibility, Corporate Responsibility, Corporate Sustainability & Governance shall continue there crusade. We live in a global society where everything is tied to the WII-FM and the WHY-DFML (what have you done for me lately) factors..
Multi-naitonal companies must incorporate CSR/CR/CS into the overall strategic corporate plan…this is the rightful plan for this issue and it’s time has arrived. When this becomes the “NORM” csr becomes another way of just doing business…not just another perceived PR/Envogue stunt… Finally, CSR needs to be “Removed” repeat “Removed” from every corporate PR department..this would immediatley improve there image..
It certainly does work in building brand, while consumers are raped and pillaged. I would however prefer less CSR and more value for money when it comes to product and service.
Rather don’t rape - than rape and donate money to crime prevention?
Does CSR work? Of course it does, but only if a company works at CSR. It’s like anything in business you get the best return on investment when you do your homework, act strategically and be innovative.
The change you mention is inevitable and looming on the horizon. The next phase will see greater environmental legislation, then following on (ISO 26000 is due in 2010) will be increased pressure to manage more detailed social impacts.
The reason for the change is the triple crunch of climate change, population growth and reduction in oil supply. The world is already changing and businesses will have to reflect the societies that they operate within.
well, nice topic about corporate social responsibility. As above said, companies should consider the corporate social responsibility and also it has to taken the CSR into accout. Essentially, CSR is the deliberate inclusion of public interest into corporate decision-making, and the honoring of a triple bottom line: People, Planet, Profit.
The practice of CSR is subject to much debate and criticism. (CSR), also known as corporate responsibility, corporate citizenship, responsible business, sustainable responsible business (SRB), or corporate social performance,[1] is a form of corporate self-regulation integrated into a business model.
Kim wrote “CSR needs to be seen as something that benefits the company’s financial bottom line, going beyond marketing and PR”
Half truth or skewed truth. Better, I think, companies should remain profitable with their CSR programmes and for the most part they do so this is not a discovery of the new era.
Companies should know that when CSR are not:
1. Sustainable (continue for a minimum of 12
months per candidate)
2. Contributing possitively towards the skills
development of the youth (Graduates)
3. Remunirating fiarly (consider all basic costs
i.e transport bus-taxi, accomodation (rent) and
the food “basket”)
They become generally exploitative and regressive towards the noble cause of pushing the skills development agenda and the alleviation of poverty.
CSR are very benefitial towards companies from tax benefits to marketing and PR, as you mentioned so, which all work to make good the bottom line.
What exactly is CSR? Should CSR be a stand alone activity that an organisation undertakes or should it be incorporated into all activities of an organisation?
Here is my problem with CSR. A company whose processes and activities cause both social and environmental damage can under their CSR programme cover it all up by building schools and clinics. They spend only a fraction of their profits on ‘CSR Projects’ yet they do more harm in obtaining those profits. Who determines what the most beneficial CSR projects for a community would be? How are they evaluated because undoubtedly a company that is seen to have an active CSR programme is held in favour by authorities.
IMHO, there is still a lot of work that needs to be done to clearly understand what we mean by corporate social responsibility and until then, our efforts will come to nothing.
Corporate Responsibility is really another form of hidden taxation.
Companies will recover expenditure in margins, the consumer pays, government is relieved of social responsibility as a cost to Revenue.
There is an advantage — the Private Sector can often do a better, more efficient job than can government through through Grants etc.
Companies normally get a 18A tax certificate that they can claim back, they are associated as being the good guys giving back to the community. This normally spills over to the employees productivity working for an employer that actually cares resulting in bigger profits.
Community: The reality is that there is people in the community that is desperately looking for a job but can’t find any. They loose everything in the process and are unable to take care of themselves and there families. When a mother are forced to send her kids hungry to bed (that is if they are lucky to have a bed) it is a sad day. The children and old people can’t do anything about their circumstances and it is our duty as community and companies to reach out and help without asking what is in it for me. Even donating R10 means that a family don’t have to go hungry to bed, enables a child to think about learning in school instead of worrying how hungry he/she is.
Instead of having that year end bash,donate that money to a worthy organisation and make a diference. Employees would not mind if they know where the money is going to. Profits are down in the current economic climate but most companies are still making a profit and are paying big year end bonuses so stop making that excuse.
The community should support only the companies that are willing to reach out.
I think you’re taking a rather narrow view of CSR here. I would not describe “community development projects funded by companies” as CSR projects, unless they are directly linked to the environment in which that company does business. (It’s the difference, between say, Absa investing in education in Carletonville [that’s not CSR], and AngloGold [which has a mine there] investing in education in Carletonville.)
But what corporate social responsibility should mean is companies conducting themselves in a way that respects the broader environment in which they do business. Which in the era of globalisation and climate change means respecting people and planet. It’s unacceptable that many companies create pollution for which they are never held accountable, maintain exploitative labour practices, or facilitate the business of governments that abuse human rights. Throwing money at a community project to produce some nice photo-ops doesn’t cut it.
“CSR” activities conducted by companies that do not look to their own conduct first deserve to be pilloried for their cynical efforts at PR. Nedbank, for example, describes itself as “the green bank”, yet there is no environmental auditing of its corporate lending practices.
CSR is not about “investing in projects”; it’s about companies learning to conduct themselves differently. And about the public – and shareholders – holding them to account.
Having driven CSR on behalf of numerous companies for 18 years, I fall in the sceptic camp. Modern CSR has devolved into the smoke & mirrors conjuring act to divert attention from unethical and exploitative corporate tactics.
In this regard Vodacom is a prime example - huge CSR but unethical business practice, mismanagement, exploitation, collusion and client abuse. Absa, Nedbank, FNB, MTN, Sasol, Telkom are others for the same reasons.
Bearing mind all CSR is tax-deductible & thus zero-cost to company, there is no philanthropy involved. Mintors factor in the FGF - feel-good factor - which is just conscience appeasement.
That CSR is vital for global survival is beyond doubt. We will not make it without it.
BUT, in the absence of genuine corporate citizenship and integrity, it has to be independently and credibly monitored to avoid the abuse that is now rampant - especially in SA, where companies leverage CSR to curry govt favour - Murray & Roberts, Bell, AECI, Sanlam, Toyota etc. - and govt in the ANC cosies up to companies for self-enrichment, kickbacks and post-official board appointments.
Fully independent foundations are the only honest ways, but the secret cross-shareholding ties bedevil even that. Maybe Bill & Melinda Gates Foundation is an exception, but still …
We have to create our own opportunities and these will create jobs for others as things grow. If you want to be highly paid without having any ability at all, become a politician.
The rest of us have to make do with what we have, in so doing create opportunities for others.
The government will never eradicate poverty by going the charity route, they should make an environment that makes it possible for people to better themselves. BEE is not the way to go as it holds back those with drive and allows the ‘we deserve’ to get to the fore where they are normally incapable.
I like the way you’re thinking about CSR in this post, but I think you’re missing one important piece of the puzzle.
Yes, CSR has to have a financial return for the company, but that should not be its primary motivating factor. The company leadership needs to commit to a socially-driven mentality in an honest and wholehearted way. That’s often the toughest part, and without it, that’s where real public skepticism comes into play.
Once the values are in place, then finding ways to make CSR financially beneficial is the fun part.
Corporations must act within the law and pay tax. Social responsibilty and policing the law is the responsibility of govenment. Where is our government?
CSR as many point out is tax deductable. An Advertisement with selling potentual with the added benifit of screwing the paying public for that extra Rand profit.
Vodacom spends hundreds of millions in sponsordhip. Who is really paying for that. Their customers.
Pieter Vlietstra has put it in a nutshell, as a business owner I feel that housing ,hospitals and schools for my employees is absolutely nothing whatsoever to do with me.I run my business full stop finish and klaar.I really don’t give a damn how they get to work or where they live, that is NOT MY responsibility, all I want is that they come to work and do the job for which they are paid.Corporate citizenship is just another means by which the government can give up their responsibilities and blame their shortcomings on business.
To say that CSR, as many point out is tax deductable, may not be whole picture. The corporation saves the potential tax portion only. The balance of the expenditure is still a business expense affecting profit. It will be recovered in margins to keep the dividend payouts on the upward trend and shareholders happy.
@Llewellyn who said: “Bearing mind all CSR is tax-deductible & thus zero-cost to company, there is no philanthropy involved.”
The second part of your sentence is not true at all. “Tax deductible” means it lowers your taxable income.
Eg: if out of R100, I normally pay 22% tax = R22
If I spend R10 on CSR, I only pay tax on R90. So I pay R10 to CSR plus R19.80 to the taxman. Total spend R29.80
The social responsibilities applicable for every person in the community and its always works with the corporation of the people . Its work hardly when people commit to work for it…
Corporates (and the cellphones co’s are obvious examples) take a product that costs R1 and sell it for R20. They then give R1 to charity (or some high-profile event) and claim CSR kudos. We need regulation over our greedy corporates. laissez faire has failed (its overwhelming success in the number of billionaires is clear evidence). The fact that they also take R1 and give it to compliant politicians further muddies the water and skews the playing field.
The Corporate social responsibility always worked for the society for the mankind of people. And it always works with the denotation and the corporation of the people that living in the society. The Governments also participate in the local social responsibilities.
The important aspect of CSR is about finding the balance between community upliftment and company’s reason for investment. This is about an intro-spection of why they are doing CSR. This is not an easy process as this means that company’s need find out what is their social responsibility. CSR is not necessarily related to the bottom line in money and cents. Yes is can be related, but there is a wider role that they need to play.
Companies need to realise that it is more than just a PR function. Yes that economic motivation is a springboard, but it needs to be explored is the wider arena of sustainability.
Do companies realise the complexity when they invest in CSR. Do they understand what is means for the spectrum of sustainability?
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I would agree with the position that you have taken…and have always felt that companies must find a way to address the challenge faced, with balancing the marriage between CSR and ROI…
With regards to the ctitics: the citic’s (and there are many)of Corporate Social Responsibility, Corporate Responsibility, Corporate Sustainability & Governance shall continue there crusade. We live in a global society where everything is tied to the WII-FM and the WHY-DFML (what have you done for me lately) factors..
Multi-naitonal companies must incorporate CSR/CR/CS into the overall strategic corporate plan…this is the rightful plan for this issue and it’s time has arrived. When this becomes the “NORM” csr becomes another way of just doing business…not just another perceived PR/Envogue stunt… Finally, CSR needs to be “Removed” repeat “Removed” from every corporate PR department..this would immediatley improve there image..
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