The highlight of the past year for those involved in corporate social investment must have been a business-sponsored project making it on to the front page of a major financial magazine. The oft-praised, high-profile project CIDA City Campus was splashed on the front cover of the Financial Mail.
Those with good memories will know that a former editor of that publication once stated, ”The business of business is business”, neatly summing up the prevailing attitude of the 1970s and much of the 1980s to the role of the private sector in society: making money and creating jobs. Let it be said that a fair number of the Financial Mail‘s readers probably still believe the publication should focus on hard issues, and maybe should dismiss corporate social investment as a distraction from the main task of creating value for shareholders.
The CIDA project illustrated a growing trend for businesses to seek partnerships with the government to maximise their spending. Indeed, in funding education — and perhaps health, especially HIV/Aids programmes — businesses cannot act without government support.
Investec, one of the major sponsors of CIDA, also won respectable plaudits from the Mail & Guardian this year. Its city-centre project, The Business Place, won the M&G‘s prestigious Investing in the Future Awards.
The Investing in the Future supplement, which accompanies the awards, saw competition from other publications putting out social investment supplements. This shows a new interest by companies not only in corporate social investment, but in the spinoff of mileage from their good works.
Of course, the awards and the supplement were designed to do just that — without companies being accused of being more concerned with marketing than corporate social investment. So a different media dynamic is at work here.
The awards, started in 1990, owe their respectability partly to the M&G brand, which is known for its independence, and to the thoughtfulness of both the judging criteria and the judging process.
At the same time as the media have caught on to corporate social investment, the JSE securities index has caught up with the main financial markets in the world in announcing a social responsibility index.
How far we have come — or have we? Around R2-billion to R4-billion is spent on corporate social investment in South Africa. Trialogue’s CSI Handbook puts the figure at R2,2-billion in its latest report.
That is a small fraction of the almost one trillion rand gross domestic product, the main measure of economic activity in South Africa. It is also a drop in the ocean of poverty that laps around South Africa’s mostly white corporate islands of prosperity. South Africa has one of the highest — and still racially divided — income inequalities in the world. Clearly corporate social investment by itself can hope to make a difference only in selected and specific cases — in the sense that individuals too can only make a difference in a limited but important way.
It is strange perhaps then that the year saw the increasing demand that black empowerment companies demonstrate their social commitment through social investment. New Africa Investments Limited (Nail) made the most visible donation during the year, reportedly of around R10-million. That is a sizeable chunk of Nail’s turnover of R83-million, more than many major corporates devote to social investment.
Black-controlled firms make up about 2% of the Johannesburg Securities Exchange total market capitalisation. The only black-controlled company of any size is MTN (formerly M-Cell). And though MTN’s corporate social investment at R22-million for this year is only 0,2% of turnover, it cannot be expected to take up the burden of black empowerment firms’ corporate philanthropy on its own.
That term, corporate philanthropy, is probably a better way of looking at corporate social investment. Indeed, corporate social investment as a corporate phenomenon should be scrutinised more. Critical thinking about the private sector’s role in society was the main task the M&G set itself when the awards were founded in 1990, inspired by trends in the United States and United Kingdom.
That strain of thought resurfaced again in Johannesburg this year, with the staging of the World Summit on Sustainable Development. The South African Grantmakers’ Association (Saga) executive director, Colleen du Toit, says the coverage in the business media of sustainability during the World Summit has started many South African executives thinking about these issues. Saga has had many approaches by firms on integrating corporate social investment with other issues on the sustainable agenda.
Du Toit says in the latest issue of the CSI Handbook: ”Globally the sustainability issue is moving rapidly up the business agenda, and corporate social responsibility is maturing from a philanthropic add-on to an integral part of business strategy.”
Getrud Lomas-Walker, group corporate citizenship manager of BOE, takes a slightly different angle in challenging businesses to make a fundamental corporate culture change. Lomas-Walker asserts in the CSI Handbook that corporate social investment is ”antiquated” and ”obsolete”, and is ”the last outposts for retired (mainly white) businessmen with a penchant for philanthropy”. She goes on to say: ”The problem is that no one, apart from corporate social investment practioners, finds corporate social investment of interest. It remains peripheral to the real business action.”
The beginning of the year also saw author Simon Zadek in the country to promote his book on corporate social responsibility, The Civil Corporation. He too makes an elegant case that the Milton Friedmanite view of the past about the role of business — that the sole responsibility is to maximise profits — and the integration of what we might call behaving as a good corporate citizen are not very different in the end. There is a business case for social responsibility, and it is not the simplistic one that good corporate citizens are automatically more profitable or that profits-with-principles is possible.
Zadek notes that corporations are under intense media and NGO scrutiny about their role in society. That kind of scrutiny makes ”greenwashing” difficult or impossible.
”Greenwashing” — the practise of falsely claiming a higher social responsibility commitment through marketing than is really the case — was brought to light during the World Summit. Such bogus marketing is fairly easy to identify. In South Africa we should go further though, and hold companies accountable for the problems they create through the core of their business.
In a sense the awards have always done that, though perhaps too overtly. It is unlikely that a company with a bad labour record would win an award, even if its corporate social investment project was impressive.
For instance, the recent move by British American Tobacco (BAT) into corporate social responsibility funding has been rightly pilloried as greenwashing.
According to a press release by two UK health researchers, ”in December 2000, amid much controversy, BAT announced a £3,8-million donation to create an International Centre for Corporate Social Responsibility at the University of Nottingham. This was followed earlier this year by the publication of BAT’s first annual report to society which, although pilloried by public health groups, was warmly received by FTSE4Good, an organisation tracking the performance of socially responsible equities. BAT has subsequently become the first tobacco company to be included in the Dow Jones Sustainability Indexes.”
The press release, compiled by Jeff Collin and Anna B Gilmore, both of the London School of Hygiene and Tropical Medicine, goes on to say:
”We believe that it is extremely difficult to reconcile proclaimed social responsibility with the manufacture of products that kill around half of their consumers and that will, according to the World Health Organisation, account for 10-million deaths worldwide each year by 2030.
”The ongoing practices of tobacco companies in developing countries confirm that their discovery of corporate social responsibility is merely an attempt to rehabilitate themselves in the eyes of the public and with the financial markets; it does not indicate any significant change in the appalling way they do business.”
Corporations open themselves up to all sorts of attention by claiming social responsibility or having a corporate social investment programme. Firms such as Anglo American, which routinely score high in the social investment perception survey done by Trialogue, are an obvious target for examination of their operations. Anglo’s size and its London listing mean that the more sceptical London-based analyst community and media international civil society are likely to examine the firm’s operations vigilantly. Locally, we need to do the same to the high-profile grantmakers.
Crucially, we need to look at the role South African companies play in the rest of Africa. Are any using mercenaries to displace communities, as was alleged in March 2000 by three civil rights groups of a South African gold mining company. We need to look at what companies actually do, to integrate social investment in social responsibility and help bring both into the heart of the business.
Take the gambling industry. Can firms in this industry hope to present themselves as socially responsible? When ethical investment funds rule out putting money into such companies, this is called ”negative screening”. The Community Growth Fund set a trend in ”naming and shaming” companies that did not perform from a union point-of-view, though it has been low profile in recent years.
Investing in the Future will hopefully broaden its scope in the year to come to look at some of the more interesting debates around social investment and social responsibility. Corporations need to make ethical and responsible behaviour the heart of the business, not put their faith in what amounts too often to an old-fashioned form of charity.
Reg Rumney is the information services director of The BusinessMap Foundation