MODULE N0.

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CORPORATE SOCIAL RESPONSIBILITY (CSR).
Introduction
In this module we explore the concept of corporate social responsibility. The
practice of corporate social responsibility has been problematic and differs from
one corporation to the other. There are however certain agreed principles which
can guide corporations. This module suggests a way of thinking about corporate
social responsibility.

The Objective
The objective of the module is to allow participants to appreciate the concept of
corporate social responsibility.

Expected Outcome
Participants have gained understanding of the concept and can ably discuss issues
surrounding corporate social responsibility with managements of corporations.

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1.0 The Definition of Corporate Social Responsibility
Ferrell et al (2004) define social responsibility as “an organisation’s obligation to
maximise its impact on stakeholders and minimise its negative impact” (Ferrell et
al. 2004. P4.) The Stakeholders are defined as customers, owners, employers,
community, suppliers and the government. Ferrell et al (2004) also make four
classifications of social responsibility. Theses are legal, ethical, economic and
philanthropic.

a) The Legal dimension

The legal dimension of social responsibility refers to obeying laws and regulations
established by government. Government may refer to local, national and
international governments. These laws try to set the minimum standards for
responsible behaviour. The laws are set because society does not believe that
business or corporation can be trusted to do what is right especially in areas such
as safety and environmental protection. Business or corporations may take these as
costs, which in some cases maybe deemed to facilitate profit maximisation. This
forms a legal point of view. Laws are made to regulate the behaviour of
corporations. This is society’s codification of what is right or wrong.

b) The Ethical Dimension

The ethical dimension of social responsibility refers to behaviours and activities
expected of or prohibited by organisational members, the community and society.
These behaviours and activities may not be codified as law. Ethical issues have to
do with what is fair or just. For example in a labour abundant economy, it is unjust
to import unskilled labour from abroad or export jobs that ordinarily can be done
by local people. Further, if a corporation is making huge profits it is unjust to pay
very low wages.
c) The Philanthropic Dimension
The philanthropic dimension refers to a corporation’s contribution to society as
business, are expected to contribute to the quality of life and to the welfare of
society. Society expects corporations to contribute to high standards of living and
to protect the general quality of life enjoyed by its members. Business is expected
to contribute to local communities. This can be done through donations to local
and national charitable organisations. It must however be pointed out that
corporate social responsibility does not end at philanthropy. In practice however,
many corporations have defined philanthropy as the basis for the CSR
programmes. They consider donations and works of charity as constituting
corporate social responsibility.

d) The Economic dimension

The economic dimension of social responsibility relates to how resources for the
production of goods and services are distributed within the social system. For
example, forcing small business out of business or sustaining an unfair
remuneration system is not acceptable. Rather large businesses are expected to
help or harness small ones or enter into less repressive partnerships. This way they
may contribute to business generation, employment creation and rising incomes,
in essence contributing to poverty alleviation.

In a nutshell, corporate social responsibility concerns the legal, ethical,

philanthropic and economic dimensions. A corporation must consider these in
maximising its positive impact and in minimising its negative effects. Whatever
the circumstances, sustainability of these activities over a long period is what is
paramount.

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2.0 The Dutch Civil Society Organisation View of Corporate Social Responsibility
The Dutch civil society organisations have developed what is commonly known as
the “CSR platform”. This platform or frame of reference lists relevant standards,
agreements and operational aspects involved in CSR internationally (Coalition of
Dutch Trade Unions 2004). The framework is based on treaties, guidelines and
instruments that enjoy international support.

The CSR platform emphasises that CSR should be a core concern for all companies
and should be part and parcel of the company. According to this understanding,
CSR should focus on three main dimensions of value creation: profit, people and
planet (PPP). As such, CSR is more than mere involvement in social affairs such as
neighbourhood improvement or charity. CSR calls for responsible economic, social
and ecological behaviour. Accordingly, CSR is a process in which corporations
take responsibility for the social, ecological and economic consequences of their
actions, throughout their product and service delivery chains, making themselves
accountable and engaging in a dialogue with all stakeholders.

3.0 The Corporate Social Responsibility Standards1

The CSR standards hinge on many aspects of life such as human rights, treatment
of labour, the environment, consumer protection, health, fighting corruption and
transparency in reporting.

a) Human Rights
Companies are under obligation to respect and promote human rights in their
operations. The Universal Declaration of Human Rights of 1948 recognises the
dignity and equality of all persons as members of the global community. This also
forms the basis for freedom, justice and peace across the world. The Universal

1http://mvo-
platform.tuxic.nl/files/Publicaties/MVO%20Normen/CSR%20frame%20of%20reference.
pdf

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declaration of Human Rights calls on every organ of society to guarantee, by
progressive measure, that human rights be recognised and complied with.
Corporations, as organs of society are under obligation to comply wherever they
may be operating in the world. Corporations are required to:
i. promote human rights in those countries where they operate.
ii. investigate how human rights might be affected by the various types of
business operations.
iii. ensure that all security personnel, whether or not part of national
authority, respect Human Rights and comply with the principles of the UN
Code of Conduct for Law Enforcement Officials and the Basic Principles on
the Use of Force and Firearms by Law Enforcement Officials.
iv. include in their code of conduct, the aspect of respect for human rights

b) Labour
The International Labour Organisation (ILO) has set up a legal and policy
framework for Labour issues. The ILO has since 1919 issued almost 200
conventions on working conditions. Eight of the ILO conventions specify the four
fundamental labour rights. The four fundamental labour standards are:
i. Freedom of association and the right to collective bargaining (C 87, C 98,
complemented by C 135)
ii. A ban on forced labour (C 29 and C105)
iii. A ban on child labour (C 138 and C182)
iv. A ban on discrimination in the workplace and in professions (C 100 and C
111)

There are other standards which the ILO has passed such as the right to security of
employment (Tripartite Declaration, Art. 24-28), the right to a living wage (C 26
and C131), the right to safe and sound working conditions (C155) and compliance
with the maximum number of working hours (48+12) (C 1). These are expected to

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be enforced by national governments. There are also other ILO Conventions and
Recommendations that relate to employment policy such as the handling of
grievances, the obligation to give notice in cases where companies change
operations, lay-offs, discrimination etc. Others include the prohibition of double
standard practices and the employment and training of local staff.

c) Environment
At the Earth Summit in Rio de Janeiro in 1992, the United Nations adopted the
Rio Declaration on the environment and development, and Agenda 21. This dealt
partly with the responsibilities of corporations with regard to the effects of their
processes, products and services on the quality of air, water, soil, climate,
biodiversity and bio-safety and health.

After the Rio Declaration, various protocols have been signed such as the
Cartagena Protocol on Bio-safety (2000), the Kyoto Protocol and the Stockholm
Convention on Persistent Organic Pollutants (POPs; 2001). The OECD has also
passed Guidelines for Multinational Enterprises. A number of principles have
emerged from these protocols, such as:
i. The principle of preventive action (Art. 174 (130 R, section 2) EC Treaty)
ii. The precautionary principle (Rio Declaration, Art.15 and Art. 174 (130 R,
section 2) EC Treaty)
iii. Tackling environmental damage at the source (Art. 174 (130 R, section 2)
EC Treaty)
iv. The polluter pays’ principle (Rio Declaration, Art. 16, Art. 174 (130 R,
section 2) EC Treaty)

d) Consumer protection
Under Consumer Protection, the UN provides guidelines under which
corporations are expected to respect consumer values, to comply with legal

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standards, and to take the initiative in making themselves accountable for their
actions in the light of these standards. The standards include: the right to access to
necessary goods and services (III.D.); the right to safety (III.A, C, H.); the right to
information (III.B.), the right to choose (III.B.); the right to be heard (III.E.); the
right to appeal and lodge a complaint (III.E.); the right to consumer education
(III.F.) and the right to sustainability (III.G.).

e) Health
In terms of health, every human being has the right to health, which implies the
right to the highest possible standard of health. Even though signatories to
international treaties on health are member states, corporations have an obligation
to enforce the right to health. Similarly, corporations’ obligations include:
i. Ensuring access to a minimum of food, a basic level of shelter and
sanitation and an adequate supply of safe drinking water
ii. Non discrimination in ensuring the right to access to health facilities, goods
and services,
iii. Providing education and access to information on the community’s main
health issues, including methods for preventing ill health and checking
whether appropriate measures are taken.

Additionally, corporations have an obligation to provide a sound work

environment as part of their employees’ right to health (Art. 12.2b of the ICESCR).
This obliges corporations to prevent work-related accidents and illness; to
minimise the causes of health risks inherent in the work environment and to
create safe and hygienic working conditions.

f) Fighting corruption and Other CSR Standards

The OECD provides guidelines that cover corporate responsibility in the area of
corruption, stakeholder involvement and transparency and reporting. Basically

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this involves disclosure. Disclosure concerns issues of transparency in the activities
that the enterprise is involved in as well as being accountable for the results of its
activities to the employees, the government as well as communities that are
affected by the activities of the enterprise. Enterprises are expected to apply high
quality standards for disclosure, accounting and audit. These standards should be
equally applicable to non-financial information including environmental and
social reporting.

Using these standards, participants can design a methodology to study CSR

practices in any type of corporation or business entity. This can be in large scale
mining, in the small-scale mining sector and all other business entities producing
goods and services anywhere in the world. As can be seen these protocols and
conventions are not contradictory to the national laws. In fact some national laws
stem from these conventions and protocols.

3.0 Some Examples of CSR From Large Corporations

Case I: Placer Dome Western Areas Joint Venture Care Project (South Africa)
In April 1999, Placer Dome Inc., of Canada purchased 50% of the South Deep Mine
in South Africa’s Witwatersrand Basin and formed the Placer Dome Western Areas
Joint Venture (PDWAJV). This venture represented the first major international
partnership in the SA gold mining industry. Along with expansion and
modernization, South Deep has incorporated several key operational policy priorities
into its operations, including:

i. Safety – A 50% improvement in work-related accidents in just over a

year.
ii. Sustainability – A commitment to integrate principles of social,
environmental and economic responsibility into all aspects of its
operations.

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Ensuring the mines viability as a productive entity and vital employer required
substantial technological modernization and other investments in efficiency. These
changes necessitated reducing the workforce and a retrenchment of 2,560 workers
occurred from July to October 1999. The conventional retrenchment practice in
South Africa has been to provide a cash severance plus a 3-month training period.
Few employees take advantage of such training and counseling, as it requires they
stay at the mine site rather than return to their villages. PDWAJV provided its
employees with this traditional package, but decided it was inadequate and
developed the Care Project to provide a more effective program of support for
retrenched employees and their families. The emphasis here is on doing more for the
communities than the law or any agreement requires.

The Care Project was launched in 1999 as an innovative initiative further to the
company’s social plan and commitment to corporate social responsibility. The short
term goal of the project is for at least 70% of the retrenched employees or their
‘proxies’ to become economically active. Other objectives include: utilizing the Care
Project model as a basis for developing an HIV/AIDS impact mitigation program;
encouraging other private sector firms to follow in Placer Dome’s lead and become
active in this or similar programs. The primary elements of the Care Project are:

Counseling retrenchees and/or their proxies

i. A team of over 20 trained Care Project field workers working
throughout 5 countries meet one-on-one with retrenches and families
to counsel on project benefits;
ii. Retrenchees are counselled on skills training options and local
economic and enterprise development opportunities
iii. After-care counselling and coaching to retrenches or proxies.
Skills and Entrepreneurial Training
i. Skills and vocational training, tuition, travel and accommodation;
ii. Entrepreneurial skills, enterprise start-up and development training to
assist those embarking on micro enterprises.
Institutional Strengthening: Training and Service Providers
i. Enhancing the capacity of the Mineworkers Development Agency
(more courses, improved training, more workers trained etc.);

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 ii. Developing the capacity of The Employment Bureau of Africa
(TEBA) and TEBA Bank to develop and administer micro finance and
other services to small and micro enterprises throughout the region.

Micro Finance and Micro Enterprise Development

i. Facilitating the creation of a facility to provide start-up and working
capital loans and other financial assistance to micro enterprises.
Support to families, Communities affected by HIV/AIDS
i. Providing counselling, assistance and other support to families of
retrenched mineworkers who are victims of HIV/AIDS.

Case II: ESKOM: HIV/AIDS management as a business strategy (South Africa)

ESKOM, a state owned power utility in South Africa, initiated a HIV/AIDS policy in
1988. By the early 1990s ESKOM realized that unless it was more comprehensive
and effectively coordinated it would not be able to deal with the threat to its biggest
asset, the workforce. An HIV/AIDS impact analysis projection of 26% infection rate
by 2005, based on antenatal statistics prompted ESKOM to make HIV/AIDS a
strategic priority.

The ESKOM strategy included formation of a strategic and operational committee as

well as HIV/AIDS cost centre to monitor education, awareness, voluntary counseling
and testing and care costs. Over the years ESKOM have developed a range of
responses to HIV/AIDS within and beyond the workplace. An advanced risk
assessment conducted in 1999 recognized the demographics of employees and
highlighted the economic and financial impact, particularly in terms of productivity,
loss of personnel, training needs and pension and medical costs.

Education and prevention programs have focused on peer-led education who are
seen to have a greater understanding of the working and social environments of
employees. On-going adaptation of the programs based on the experiences as well as
the integration of campaigns into other corporate training and induction programs
promotes best practice. Wider community initiatives include information sharing and

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dissemination with private, government and NGO sectors and developing
partnerships for community action. Awareness programs have been extended to local
communities and contractors and have established joint ventures with NGOs, local
government, the mining sector and UNAIDS.

Case III: Normandy Mining Limited (Australia)

Normandy Mining Limited is an internationally recognized Australian-owned
mining company active in gold mining and zinc concentrate production. Since its
formation, Normandy has taken an active stance in incorporating indigenous
concerns into its operations. It recognizes that the practice of entering a region
uninvited, setting up operations without explanation and ignoring the concerns and
heritage of indigenous communities is inappropriate and unjustifiable.

Normandy is committed to negotiations promoting joint decision making and the

sharing of benefits derived from its activities as well as building relationships that
include cultural awareness programs to develop basic cross-cultural skills among its
employees.

Indigenous People Policy

Normandy’s principles in dealing with indigenous people are:
i. The building of trust and respect;
ii. Respect for human and property rights, and sites of cultural or
religious significance;
iii. A clear and concise approach to negotiations with landholders;
iv. Adherence to acceptable protocols and meeting procedures that are
endorsed by indigenous people;
v. Identification and implementation of commercial enterprises,
employment and career development opportunities.

To achieve these objectives, Normandy operations are required to:

i. Appoint a senior person responsible for coordinating all aspects of
managing indigenous peoples issues;

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 ii. Develop, implement, and monitor Indigenous Affairs Management
Plans;
iii. Monitor and respond to new developments in law and thinking on
relevant matters impacting on the company;
iv. Provide culturally sensitive training to ensure employees recognize the
potential impact of their activities.

Community support
Normandy supports community-level initiatives such as health and education
programs as well as Aboriginal sporting and cultural activities. Within the wider
Australian community Normandy sponsors the Australian Heritage Commission’s
National Indigenous Art Award and the Australian Aboriginal Cultures Gallery at
the South Australian Museum.

Employment and training

Normandy’s aim is to try to match the composition of its workforce with that of
neighboring communities and regions. Aboriginal people are employed and trained
through a variety of programs.

Case IV: PASMNCO Limited (Australia)

PASMICO is a global Australian business with an international customer and
investor base. The company employs around 4,500 people throughout its operations
in Australia and overseas and operates three major underground and two open- pit
zinc-lead-silver mines in Australia and two underground mines in USA.

Indigenous Peoples Policy

PASMNCO’s first corporate Indigenous Peoples Policy was released in April 1996.
All business units, operating entities and joint-venture companies within the
PASMINCO Group are required to implement the policy.
PASMNCO aims to foster an ethos of racial equality throughout its operations and
amongst its contractors. It seeks to develop mutual understanding and respect
between PASMNCO personnel and indigenous communities and organizations by:

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 i. Building relationships with indigenous communities and
organizations;
ii. Educating PASMNCO personnel in an awareness of indigenous
culture and values;
iii. Explaining the benefits of the mining industry in general and
PASMNCO in particular to the relevant indigenous communities.

The company adopts a pro-active approach to indigenous relations by:

a. Consultation with groups that may be affected;
b. Assessing the cultural impact of any program prior to commencement, with a
commitment to minimize any effect;
c. Provision of opportunities for employment, indigenous business and assistance to
local indigenous communities.

Community Relations
PASMNCO Century Mine Limited is located in one of the most remote areas of
Queensland. Mine operations work on a commute basis with the workforce
commuting from various locations up to 250km away. Commute employees are
accommodated on site.
The mine negotiated an agreement with the Queensland state government and three
native title (Aboriginal landowning) groups under the right to negotiate enshrined in
the Native Title Act 1993. The agreement comprises provisions for:
Employment and training;
Business development;
Cultural and environmental protection;
Transfer of pastoral properties.

The agreement is a strategic alliance that forms the basis for working together to
achieve benefits for all parties. Through the agreement the Aboriginal Development
Benefits Trust (ADBT) was established to manage Century mine’s contribution to
business development over the life of the mine. The Trust is a legal company
consisting primarily of local Aboriginal community members. The ADBT manages a
fund of approximately $20m over 20 years for local business development

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contributed by Century Mine at a rate of $1m per annum. The Trust’s current
strategy is to invest one third of the contributed funds in long-term investments with
a focus on sustainability and growth. The remainder of the funds are available for
business development loans.

Education and Training

Century Employment and Training Committee (CETC) was established to
deliver a wide range of commitments from the agreement. These include: the
development implementation and monitoring of the employment and Training Plan;
skills auditing, provision of education, employment and training advice; employment
of support personnel; and the establishment of regional infrastructure and
communications with the communities about the progress of Century Mine. The
CETC monitors and guides Century Mine’s annual expenditure of $1.5m on local
Aboriginal employment and training. The Committee will manage $20m over 20
years for employment and training initiatives.

Case V: Rio Tinto Plc (United Kingdom)

Rio Tinto is an international mining house with headquarters in London. Principal
products include aluminium, copper, diamonds, gold, iron ore, energy minerals (coal
and uranium) and industrial minerals. Rio Tinto operates in more than 20 countries
employing 34,000 people with operating assets of US$16 billion.

Social Policy
Rio Tinto seeks long term commitment to local communities so that social and
economic well-being is safeguarded and, where possible enhanced through the
mine’s life and beyond. In this respect, every operation should understand and
interact constructively with its local communities and assist their development in
ways, which apply principles of mutual respect, active partnership and long term
commitment.
The objectives of Rio Tinto’s social engagement are threefold:
i. Improve the human capital of people working at the operations and in
the communities;

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 ii. Develop and maintain productive relationships between the
community and the operation;
iii. Invest in community development to contribute to stronger regional
economies.

Rio Tinto seeks to achieve these objectives through the following tools:
i. Completion and updating of baseline surveys;
ii. Five year community plans developed by each business and updated
each year;
iii. Support to research into shortcomings and benefits of community
engagement;
iv. Providing third party facilitation of discussion;
v. Assurance programs including audits and reviews reporting ultimately
to the Rio Tinto boards;
vi. Publication of local social and environment reports.

The five cases reviewed here coming from Africa, Europe and Australia point to the
importance being attached to corporate social responsibility practices the world over.
Developing mutually beneficial relationships with communities and managing the
interface between communities and exploration and mining projects is a challenge
that must be met in order to operate effectively in this new era. As many firms have
discovered to their cost, local issues can quickly have global impacts on corporate
reputation, operations and finances. Corporate social responsibility practices need to
extend beyond ad-hoc social problem-solving approaches to become ways of
systematically and cost effectively managing the interface between local
communities and mining and exploration projects.

4.0 Summary
It is important for participants that as they discuss issues of corporate social
responsibility they refer to some standard. It is also important to embrace the four
dimensions of corporate social responsibility as discussed above. It is also
important to note that CSR is all encompassing. It embraces, economic, legal and
ethical issues.

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REFERENCES.

Crook, C. 2005. The Good Company. The Economist. January 2005.

CSO. 2004. Living Conditions Monitoring Survey Report 2002-2003. CSO

Lusaka.

Kangwa J 2005. A Review of Corporate Social responsibility Practices in

South Africa, Australia, UK, USA and India. (Unpublished paper).

Kreitner J R. 1995. Management (6th Edition). Houghton Mifflin Company.

Boston.

Lungu J and Silengo M. 1997. A Specialist Report: The Socio-Economic

Assessment Impact of Privatization on the Zambian Copperbelt. The Case of
Mufulira and Konkola.

Zambia Consolidated Copper Mines. 1996. ZCCM Annual Reports 1991 –

1996. Public Relations Department. ZCCM

ZCCM. 2000. Report on the Privatization of ZCCM.: Process, Progress and

Status of Privatization as at 31 May 2000.

Lungu J and Chomba Mulenga. 2005. Corporate Social Responsibility in the

Extractive Industry in Zambia. Mission Press, Ndola.

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