CSI spend more than a drop in the ocean

The controversial "call to action" by 33 business leaders last week rekindled debate on the role of corporate social investment (CSI) in the country's development, ending off a turbulent year in the CSI sector.

Although the business leaders committed "aggressively to promote and prioritise appropriate education, skills development and work-related internships through CSI and other initiatives", commentators noted that corporate South Africa contributed at most R6.9-billion to CSI in 2012 but had accumulated savings of roughly R520-billion by the middle of the year, the highest level since 1995.

Ebrahim Fakir, political analyst at the Electoral Institute of Southern Africa, told the Mail & Guardian that business had been "complicit" in the country's economic decline because it had shied away from local investment despite corporate savings being at a multi-decade high.

Companies could assist in turning around the country's economic fortunes through the expansion of services, more concentration on research and development, the introduction of new products and a focus on job creation, he said.

According to Trialogue's CSI Handbook, published in November, the CSI spend of around R6.9-billion in 2011/12 was a mere 1.1% of the government's R615.7-billion yearly budget for social services, which included education, health, housing and social protection.

"Government simply has more money and spends it. Whether it does so wisely is a moot point: the question at issue is how does business, with its comparatively small budget, really contribute to socio-economic development in South Africa and leverage government resources and relationships effectively?" wrote Trialogue researcher Alex O'Donoghue.

If CSI spend is to be more than an insignificant drop in the ocean, she said, working with government may be the best way to go about it. CSI should focus on enriching existing government programmes, rather than filling in government service gaps.

The Southern Africa Trust's Shirley Moulder, who is a member of the judging panel of the M&G Investing in the Future Awards, said that although a close working relationship with the government may be necessary, the CSI sector needed to find relevant models to address development problems, and particularly the crisis in education.

"Business is not using its muscle strategically. There's more than enough money to meet the challenges mentioned in the call to action, but we need to encourage leadership with integrity that will deal with corruption and get past the patronage system," she said.

In an open letter published in weekend newspapers, the 33 business leaders undertook to work with the government and civil society to "overcome our nation's most pressing challenges" and to promote a "zero-tolerance approach towards bribery, fraud, corruption and anti-competitive business practices".

Government corruption was not the only challenge that needed to be tackled by the CSI sector, said Tracey Henry, another Investing in the Future judge and chief executive of Tshikululu Social Investments, which manages grant-making funds and trusts for companies such as Anglo American, De Beers, Discovery and the FirstRand Group.

"In the past two years we have seen an increase in fraud in the sector," she said. "Many civil society organisations don't want to talk about it for fear of compromising funding streams, but we need to sort it out."

Funding for non-profit organisations (NPOs), many of which operate at the coalface of implementing corporate and government development plans, has been drying up since 2008. Trialogue research indicated almost 40% of South African NPOs experienced a decrease in income in 2011/12, due mainly to the global economic slump and over-subscription for funding from the national lottery.

Henry said various solutions were being discussed in the sector, including the pooling of resources and standardised reporting mechanisms.

"There are no silver bullets to deal with the crunch," she said. "We need to focus on building capacity within organisations and optimising limited resources."

NPOs were dealt another blow in October when the department of trade and industry launched revised broad-based black economic empowerment (BEE) codes. The code relating to socio-economic development contained a clause stipulating that companies would only receive points towards their broad-based BEE scorecards if they funded organisations with 100% black beneficiaries.

Amid criticism that this clause was potentially unconstitutional, unethical and practically impossible to implement, the department withdrew it and retained the present clause that stipulates organisations need to have 75% black beneficiaries to qualify for scorecard points. CSI organisations that submitted comment to the department on the revised codes by the cut-off date in early December noted that any changes that would discourage private-sector investment in socio-economic development would have dire consequences for NPOs. Points for socio-economic development needed to be given greater weighting on the scorecards to realise the broad-based transformation intended by the revised codes.

The top 100 companies accounted for 69% (close to R4.8-billion ) of total CSI spend in 2011/12, and companies in the mining sector were some of the biggest contributors, according to Trialogue. Their contributions came under critical scrutiny during upheavals in the platinum mining belt in the second half of the year.

Six mining companies in the platinum belt were hauled over the coals in a report based on five years of research released by the Bench Marks Foundation in August that highlighted gaps between promises the companies made and their practices on the ground.

"Overall, we have seen very little improvement in the performance of the companies surveyed on corporate social responsibility," said the foundation's chairperson, Reverend Jo Seoka. "What we have seen is a large increase in corporate advertising, large spreads in newspapers and billboards stating how responsible mining is. Instead, all the companies should respond to community concerns over jobs, health care and a safe and healthy environment."

Henry said these events had helped to focus the CSI sector on improving processes for monitoring and evaluating the impacts of socio-economic investment. Strengthening governance in organisations working in the sector was a trend that would continue into 2013, she said.

"This has been a tough economic year and NPOs, business and the government are all experiencing similar pressures," she said. "Strategic engagement is critical to understand what is working and what isn't. We don't have to agree on a single plan, but we do need to share a long-term vision of where we want the country to be."

M&G's flagships come of age

Two of the Mail & Guardian's flagships that focus on corporate social investment and responsibility celebrate their own achievements in 2013: Greening the Future turns 10, and Investing in the Future commemorates its silver jubilee.

These cutting-edge flagships were designed to encourage social development and environmental sustainability in business, government and civil society.

Both include high-profile annual awards programmes judged by forward-thinking, experienced individuals in their respective fields.

In 2013 Greening the Future celebrates a decade of honouring environmental best practice. For the past 10 years it has showcased efforts to create a cleaner planet without compromising progress, including innovation in renewable energy, action to combat climate change and strategic management of natural resources.

To mark its Decade of Greening, several new categories will be added to the awards in 2013. These will include Future Leaders, Rhino Rescue, Community Conservation and Biodiversity Stewardship. Awards are also given for Business, Non-Profit Organisations, Water Management, Energy Efficiency, Innovation in Renewables, and Schools and Institutions.

Investing in the Future's silver jubilee celebrates 25 years of honouring investment in the social development of southern Africa and its citizens.

This prestigious flagship has led the way in raising awareness about the often unsung projects that make the right kind of difference in society, and has fostered strategic engagement in the CSI sector during the recent tough economic climate.

Its awards programme in 2013 will include Future Leaders, Business, Non-Profit Organisations, Government and Parastatals, Corporate Employee Community Involvement, Company Partnerships, Enterprise Development, Investing in Life, Education and Sports Development. Both flagships are publicised in special reports featured across the M&G platforms, and the award winners and finalists are fêted at gala banquets attended by thought leaders and the movers and shakers in their respective fields.

Amid the gloom and doom expected around climate change and global economic woes in 2013, the flagships provide positive insights and inspiration for creating a better world for the people who live in it. The M&G invites you to join the celebrations.