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SA’s companies can lead the rest in CSI

16 February 2010

South Africa's private sector can show how an interconnected humanity works best

Written by Gina de Villiers, Tsihkululu Communications Specialist.

South African corporate social investment has the potential to have its “ke nako” moment this year, particularly when considering the movement of CSI trends in 2010, locally and abroad.

The global recession of 2008/9 will remain a main consideration in these trends, but recession or not, arguably public opinion of big business began to sour years ago with the collapse of Enron in 2001. This continued through the decade into 2009 following the collapse of corporate stalwarts in the banking, insurance and motor industries in the US, UK and Europe. Perhaps there are some downfalls to the interconnectivity of the global economy.

Under scrutiny by governments and by consumers, the spotlight is on corporate affairs like never before. In terms of the CSI landscape, this new reality brings us to our first trend shift, the death of corporate philanthropy.

In addition to external legislative and consumer demand for reform in environmental and social sustainability policy, in ethical conduct and in sound governance, companies must balance natural internal pressure from shareholders to produce positive financial results – no matter what the economy is doing. As a result, some companies are cutting back on philanthropy and 2010 may well be the year in which it begins to disappear altogether.

This does not mean that companies are reducing or eliminating their CSI programmes. Rather, there is a shift from corporate giving driven by the heart, to corporate giving driven by the head, strictly aligned to company policy.

In other words, an increasing number of South African CSI programmes are likely to talk strategy, and mean it. In this, CSI spend is distributed in a way that supports several sectors, matched to both the company and the state’s development priorities.

Despite being the largest economy on the continent, South Africa is still a developing economy and such nations traditionally have different priorities to developed ones.

Here, redressing the inequalities stemming from the past remains a primary purpose of CSI. At least, legislation suggests that this should be the case. The introduction of the Black Economic Empowerment (BEE) and Broad-based Black Economic Empowerment (BBBEE) codes of 2003 and 2007 respectively are supposed to drive upward economic mobility for Black South Africans. Statements made by President Jacob Zuma at his inauguration and on later occasions make it clear that the fight against poverty is government’s primary objective.

By creating CSI funds that are strategy-focused, with an eye on government’s aims and cognisant of the fact that internationally, “sustainability” is decidedly green, South African companies stand a good chance of building long-lasting CSI programmes that have tangible, measurable impact. At the same time, they can cement mutually fulfilling relationships with both their customer base and with government.

It should not be inferred that strategic CSI programmes are out of reach of smaller enterprises. Indeed, any company when considering a degree of social involvement should first consider their demand and supply chains, related industries, business environment and the social consequences of their product. This may provide the strategic direction for their CSI spend.

Mirroring what is being seen in consumer studies conducted worldwide, the South African consumer is concerned about global and local developmental issues, and is prepared to put money where their mouth is. This is the subject of a third CSI trend shift, power is the people.

Numerous surveys suggest that consumers, when selecting products and services, are influenced by company environmental and social policies more than ever before. This trend means that South African consumers have the potential not only to influence corporate policy, but also to actively contribute to a better South African outcome.

Interestingly, consumers are not demanding that the corporate sector save the planet on their own. In a national survey incorporated into the book Giving and Solidarity, written in 2008 by Adam Habib and Brij Maharaj, 3 000 South Africans from all walks of life were interviewed regarding their personal charitable giving. Fully 93% had donated time, money or goods in the month immediately preceding the interview. The same survey revealed that individuals donate as much as R12 billion per year – an astonishing figure that well eclipses presumed CSI spend.

This spirit of giving is by no means restricted to the upper classes or to any particular race group – and it is growing in strength. TIME magazine calls it the “responsibility revolution” and Trendwatching.com talks about “Generation G” (for generosity). Whatever the term used, the point is that consumers in South Africa and elsewhere are using their economic clout as a weapon against injustice and to support the causes that are relevant to them as social citizens.

Much is said in CSI circles about creating partnerships – with governments, with NGOs, and so on. South African companies can harness the “responsibility revolution” by creating partnerships with their staff and customers for social good. One such programme is the FirstRand Group Volunteers programme. In this case, the corporate partner co-donates with their customers and staff to schools and charities selected by employees. And staff know what they’re attracted to – an internal FirstRand survey has found that almost a quarter involve themselves in some or other form of charitable work or giving.

Whether innovative local companies match customer donations with money or products, or encourage consumers to donate their purchases, time or unwanted goods, one can hope that more socially conscious South Africans are made aware of relevant opportunities to do good.

Perhaps it will be South Africa’s developmental “watershed”, or maybe just a month of increased patriotism. Either way, there is little doubt that the upcoming Soccer World Cup tournament will have some positive effect on the country’s psyche. South Africa’s government is hoping for the so-dubbed “Barcelona effect”, which describes the 15-year high that city experienced in its tourism levels following the 1992 Olympic Games. Can we better that with the South Africa effectand will there be any impact on the CSI landscape?

Barcelona invested heavily in infrastructure prior to the Games, and leading up to the World Cup, this is the case in South Africa as well. Billions of rands have already been spent on transport networks (airport upgrades, roads, Rea Vaya, the Gautrain and the like), telecommunications, stadia and power utility upgrades. Again similar to Barcelona’s tactics, South Africa is trying through numerous marketing campaigns, targeted at citizens and international visitors, to become a magnet for both tourists and professionals during and after the event.

Without question, the Olympic Games revived Barcelona as a city and the ripple effect was felt throughout Spain, but nowhere does one read that the event was expected to bring financial relief to the entire European region. In contrast, some on the broader African continent are counting on the 2010 World Cup to launch and build “Brand Africa”. They are likely to be mostly disappointed as South Africa’s brand strength derives partly from this country being experienced as exceptional to Africa, not typical of it.

Like any modern and dynamic company, South Africa will increasingly have to show the savvy international consumer – whether an Chinese investor, German tourist, or British housewife buying products online – that our sustainability goals are being met. Historic issues of poverty, inequality and questionable democracy cannot be swept under the proverbial carpet to present a shiny face for one moment of attention, but could partly be addressed through integrated CSI programmes.

These cannot end with the World Cup but must continue for as long as we hope for the South Africa effect to continue.

A final trend shift concerns CSI gone global.

Our international culture, made ever more so through globalised business activity, cheap international travel, interconnected formal and informal communications and such phenomena as “citizen journalism”, means that no country’s private sector can assume that its CSI programmes are of interest only to itself.

Corporate entities are not restricted to supply chains based in their city, distributors located in their neither country, nor indeed investors or consumers restricted to home base. A negative media report is easily – almost instantly – and virally distributed to every continent. It is not impossible that a potential customer in Peru or Germany or India wants to know about YOUR sustainability policies and CSI initiatives.

The world is watching, and while this may feel like Big Brother turned particularly nasty, it could also be thought of as an exciting challenge to the integrity of South African companies in every area. You could say that opportunities resulting from South Africans being the best we can be are endless. It is enough motivation to continually evolve and improve our CSI programmes with an initiative born of revelling in the world’s interconnectedness, heightened consumer sensitivity, and greater ethical consciousness. As with so many other things, there is no need for South African companies merely to react or to follow – they can happily take the lead.

De Villiers is communications specialist at Tshikululu Social Investments.