CORPORATE SOCIAL INVESTMENT: The Future of Responsible Business Practice

By Lenox Mhlanga

The spate of financial and ethical scandals in Zimbabwe and elsewhere in the world clearly
demonstrates the amount of damage that can be done to an organisation’s image and
reputation. It is particularly significant because the more diverse and physically spread an
organisation is, the more it becomes immune to risk, and yet the more it becomes exposed to
the possibility and consequences of damaging its reputation.

We have seen how once an organisation has done something that reveals or even gives the
possibility that its products or services are unsafe or unreliable, or that they are incompetent,
corrupt or self-serving people in key positions, the fallout almost ever leads to loss of sales.
This invariably leads to loss of sales, share value decreases and the breakdown of
relationships.

However, there lie opportunities for organisations to build, restore or maintain a positive
image and reputation in the community and with its stakeholders by displaying good
Corporate Social Responsibility (CSR). According to the World Business Council for
Sustainable Development, Corporate Social Responsibility (CSR) is the continuing
commitment by business to behave ethically, contribute to economic development while
improving the quality of life of the workforce and their families as well as of the local
community and society at large.

This is borne from the belief that trade brings certain obligations. CSR, therefore, is a
potentially radical agent of change that challenges businesses across the globe to reduce the
democratic deficit by being the leader in economic, environmental and socially sustainable
development.

Andrew Wilson, the director of the Ashridge Centre for Business and Society in the
United Kingdom, says that people nowadays increasingly judge a company according to
what it does and how it does it, not just what is says about itself. A number of well respected
international opinion polls show that a significant proportion of the public believes that
business does have wider responsibilities beyond simply making profits, paying taxes,
creating jobs and staying inside the law.

As opposed to plain philanthropy or just donating to charity, CSR is essentially about enjoying
the benefits of positive relationships. Depending on a number of market variables, CSR takes
many forms such as investing in the local community. This involves the organisation actually
taking the lead in projects that not only add value to the community but are sustainable in
nature. A chemical company that pledges to supply laboratory chemicals to the local
secondary school or seconds some of its staff to tutor students is an example.

Other areas include customer care programmes, offering quality and choice of products and
establishing a charitable foundation as opposed to yearly contribution that create a
dependency syndrome among recipients. A local international bank and a mobile phone
service provider are leading in this area.

The environment has been brought to the fore by government legislation that ensures
reduction in waste, emissions and pollution. This offers opportunities for organisations to be
demonstrate exemplary responsible corporate behaviour and best practice. The long term
benefit for such actions usually translates into goodwill and builds trust between the
organisation and the community within which it operates.

Job creation, training, and the creation of equal opportunities are another area of focus. This
coupled with employee benefit schemes in the area of pension and health provision for
workers and work-life balance and child-care programmes contributes positively to an
organisation’s profile as one that takes care of its own.

Profit and principles are not mutually exclusive. Benefits of positive relationships include
improved financial performance, enhanced brand value and reputation and better risk and
crisis management. Research has also found that CSR can positively contribute to reduced
operating costs and increased productivity and longer term return on investment. The
organisation is therefore able to attract the best recruits. All this points to the fact that on the
whole CSR should graduate from being ‘a nice to have’ to ‘a must have’ in corporate policy.

Part 2

In Zimbabwe, Corporate Social Responsibility is yet to be universally accepted as a

necessary benchmark for best practice in corporate governance. In other parts of the globe,
particularly among rich nations, CSR has been steadily climbing the corporate agenda, with
organisations increasingly expected to engage with the world beyond their immediate
commercial interests. "Companies need to take up social responsibilities" is a message
which echoes across Europe among ministers of national governments and members of the
European Union, pressure groups and even many corporate executives.

Corporate Social Responsibility or CSR refers to the continuing commitment by business to

behave ethically, contribute to economic development while improving the quality of life of the
workforce and their families as well as of the local community and society at large.
Unfortunately, CSR is often defined as a voluntary activity – over and above that required by
legislation – by which companies deliver benefits to society either through good business
practice or pure philanthropy. This argument that CSR should be adopted on a voluntary
basis is disingenuous.

To date, its development has been relatively unfettered with a general acceptance that it is a
good thing. In actual fact, the indications are that CSR is increasingly becoming expected of
organisations, rather than a pleasing added extra. This change appears to be externally
driven, with organisations responding to stakeholder expectations, particularly the perceived
importance of CSR to customers. In addition, a whole raft of legislation compelling business to
behave responsibly, for example through health and safety legislation, environmental
protection acts and company law, exists.

A further indication of the perceived importance of CSR is the fact that its ownership should
lie right at the top of the corporate ladder, with the Board, CEO and the executive of an
organisation. However, while Public Relations (PR) professionals are happy for ultimate
ownership of CSR to lie elsewhere, they see a strong role for PR in terms of initiating ideas,
managing issues and crises, and in the implementation of communications strategy.

An overwhelming majority (in PR) believe that clients tend to underestimate the importance of
PR in driving socially responsible corporate behaviour within the organisation. The largest
discrepancy between current and ideal allocation of CSR responsibilities is a perceived over-
reliance on human resources in instigating cultural change within an organisation. Without
taking anything away from human resources, I sometimes feel that HR ha tended to become
the dumping ground of less than glamorous programmes that don’t meet the CEO’s fancy

There are also indications that certain types of organisation are thought to have stronger
obligations towards CSR than others. In a survey by the Institute of Public Relations (IPR)
almost a quarter of respondents felt that financial services companies have more CSR
obligations than say the technology industry, while a fifth believe financial services have less
obligations than the health sector.

The other area of contention is how to measure CSR's contribution to the organisation. It
should be noted that financial measurements such as the bottom-line and share price are not
necessarily seen as the best ways to evaluate CSR. In terms of evaluation, respondents to
the IPR study saw ‘primary evidence’ such as stakeholder opinions (or changes in
perceptions) and media evaluation as providing the most relevant forms of measurement.
Third-party judgements are not thought as useful, with award ceremonies and sustainability
indices rated the least relevant tools in the same IPR report.

Trends indicate that corporate social responsibility will be a permanent feature on the
corporate landscape as a critical measurement of business value, and not a ‘nice-to-have’ as
is the case at the moment. It is agreed that it should be an integral part of business strategy
and not a marketing or Public Relations gimmick. The future for CSR is that of a strategy led
by consumer expectations, but with willing corporate participants as indicated by increased
efforts within existing budgets, possibly leading to more imaginative approaches.

ABOUT THE WRITER

Lenox Mhlanga is writer and communications consultant. He is Industrial Liaison Officer and
teaches Public Relations at the University of Science and Technology. He is former Corporate
Communications Manager at Dunlop Zimbabwe and ZITF, and Senior Public Relations Officer of
the City of Bulawayo.