/ 26 April 2013

Looking back to where it started

Looking Back To Where It Started

Corporate social investment has undergone enormous change since the Investing in the Future Awards was launched 25 years ago. The awards have changed too, but I like to think not in spirit.

For the first few years we sent out questionnaires based on a United States survey. One of the questionnaires sent out to businesses to fill in came back empty with a note: "This sounds like it was designed by the unions!" It was not a compliment.

The awards and the accompanying supplement back then recognised companies's overall impact on society, rather than separate projects — in other words their corporate social responsibility, rather than CSI and corporate charity.

The first Investing in the Future supplement featured a "shit list" of the companies unionists considered the most unco-operative and prone to union-bashing.

When the then-Weekly Mail launched the awards, with the help of Myra Alperson, an American who had contributed to a book on ethical buying in the US, it was a natural fit: the newspaper was regarded as left-wing and unlike the rest of the commercial press not in thrall to powerful business interests.

We were expected to be more likely to look at business impact with the jaundiced eye of labour and communities.

The project was aided by a change in the business atmosphere. The 1990s was the era of capitalist triumphalism, but it also saw an end to the dominance of monetarism and Milton Friedman, who had famously argued: "The business of business is business".

Socially aware citizens began to look at different ways of doing business and in different types of business. A good example was the Body Shop, in its original incarnation. Its founder, the late Anita Roddick, emphasised fair trade with developing countries and banned the sale of products tested on animals.

By contrast, some South African businesses began the 1990s outdated in many ways, having been isolated by sanctions. Some had actively supported apartheid and most had not dared to challenge government policy. The Sullivan Codes forced US-owned companies to try to improve the lot of black workers and to resist apartheid.

Many disinvested eventually anyway, but the pattern of active corporate responsibility was set. Shell must be acknowledged as a CSI pioneer in South Africa — and an early supporter of the Weekly Mail. Some weeks Shell supplied the only sizeable advertisements in the paper.

Entering the era of the new South Africa, domestic business was keen to assume a new mantle of caring for the society and environment. CSI had been around for some time, initially in the form of money going to the chairperson's pet projects.

It was seen as an easy way to polish tarnished reputations perhaps, but certainly, along with voluntary black economic empowerment (BEE) deals, as a way to buy a "licence to operate" in the new South Africa. All these elements contributed to the successful reception of the Investing in the Future Awards.

But what did we hope to achieve in those early awards?

Looking back, I realise that our extensive questionnaires, which asked questions not only about social spend but also about employment equity and company impact on the environment, presaged the various BEE charters, the codes of good practice of broad-based BEE and the Employment Equity Act. What they shared with the codes and charters was an interest in areas outside of profit and loss, and of forward-thinking social engagement by management.

They were tentative ventures into what was to become the ethical investing and buying movements, and the various social responsibility indices that have sprung up since then.

The awards evolved, partly through the intervention of the independent judging panels that actually decide on the awards, to focus on CSI rather than CSR and shifted to recognise projects and programmes rather than companies — though obviously the companies behind the projects were recognised as well.

CSI can be derided as too small and too ad hoc to bring about real change, but the same can be said of any philanthropy. The Weekly Mail's survival testifies to the power of strategic donations and investment for social rather than business reasons.

Even the Shell adverts that were almost the only ones in the Weekly Mail in the first years of the paper, when it was struggling to survive in an unfriendly advertising environment, could be seen as a form of social investment.

At the same time as Investing in the Future moved towards awarding CSI rather than judging CSR, BEE itself was evolving into broad-based BEE, which in effect calls on businesses to do some of what could be considered corporate social investment.

Enterprise development, for instance, is not usually considered normal or necessary activity for businesses. Most of all, the so-called socioeconomic development pillar of the broad-based BEE scorecard is CSI. In any case, government policy began to drive some of the change we were looking for in the early incarnations of Investing in the Future.

Just as BEE has moved from innovation and creativity — along with some questionable early deals — to compliance, so has CSI become more businesslike in both the positive and the negative senses.

And since spending on socioeconomic development can boost BEE points, it has to some extent been subsumed in broad-based BEE compliance. CSI expert Margie Keeton comments that businesses want their CSI to be much more aligned with their activities, their market sector and their geographical footprint. They are much more concerned with self-sufficiency and want proof of efficacy.

This evolution is not in itself bad but, as with the move from early BEE to BEE compliance, it comes at the cost of some creativity. Also, there is pressure to align CSI with government objectives.

A good example is the draft BEE Bill, which according to CSI specialist Trialogue's latest review of CSI, "seeks to direct CSI funds to income-generating projects and 100% black beneficiaries". Trialogue describes this as a step in the wrong direction. It is hard to disagree.

Keeton points out that the change in CSI thinking by business mirrors that of the thinking around development, driven by frustration at the obvious inefficacy of years of wasted aid. It has had some results, but there is no simple solution.

"If development was easy, we would have done it," Keeton says.

Michelle van Diggelen of consultancy CSI Solutions, though conceding there has been some change, believes that "CSI practioners still have too little say" and that those ultimately in charge do not adequately understand the developmental imperatives. The benchmark of 1% of profit going on CSI projects persists, though some spend more.

She says there is a lot of "box-ticking" and though actual spending may have increased slightly, too much money is still not being spent effectively.

One aspect of CSI that became important to acknowledge early in the awards was whether the spending involved was adequately thought out.

The awards were designed to recognise those projects that actually made some sustainable difference, rather than spending money in a flashy way without any long-term effect. This is more difficult to judge, however, and is an issue for all development work. In a sense, what Investing in the Future does reward is far-sighted, clever, committed community development work funded by business.

Although sound developmental approaches such as careful monitoring of spending were always acknowledged, at an early stage the judges of the Investing in the Future Awards decided that innovation and creative solutions would be defining characteristics of winning programmes.

Innovation is important because otherwise new ideas for tackling our social problems would never see the light of day. Solving social problems cannot all be left to government planning or the latest fashion in development circles. The chairperson's whim, after all, might serve a bigger purpose.

This point of view was put forward strongly some years back by academic luminary Steven Friedman, who strongly opposed professionalisation, pointing out that most progress was achieved by trial and error, and that crushing innovation would seriously undermine attempts to solve social problems.

In BEE, the "equity equivalents" that foreign companies with South African subsidiaries were allowed showed the kind of creativity that can be unleashed to attack problems such as skills backlogs or unemployment. Such schemes replace complex BEE deals, which have so often been criticised.

The financial services industry charter has now been gazetted as a sector code, and retains the financial inclusion provisions that some wanted sacrificed for higher ownership requirements. Instead, these are retained in return for allowing financial services companies "equity equivalents" even though they are not foreign-owned.

What has not changed over the years is a contradiction in the Investing in the Future Awards, one they share with business awards in general. No one does business to win awards; they do so to make a profit. No one invests in communities to make a profit or even to get marketing mileage. As with giving to charity, publicity may be a welcome but unintended consequence. It was always a defining feature of the awards that sponsorship engaged in for marketing purposes would be separated from genuine corporate philanthropy.

In the same spirit, the judges tended to want to avoid recognising what seemed to be excellent CSI projects funded by companies whose main business in some way contradicted those projects. A company with an excellent environmental education initiative whose factories polluted the rivers, for instance, was not likely to get the nod. So monitoring CSR was never entirely absent from the awards, and the need to inquire seriously into the impact of individual businesses in society is something I would hope continues to inspire the general reporting of the Mail & Guardian.

Celebrating the silver anniversary
In 2013, the Mail & Guardian Investing in the Future Awards celebrates 25 years of investment in the social development of South Africa and its citizens.

This innovative and high-profile annual competition was designed to encourage social investment and responsibility in business, government and civil society.

Over the past 25 years, Investing in the Future has lead the way in raising awareness about the often unsung contributions made to the future of South Africa.

It has celebrated projects that make the right kind of difference and fostered strategic engagement in the recent tough economic climate. The competition is judged by a panel of forward-thinking and experienced individuals involved in shaping social development. The awards are publicised in two special supplements published in the Mail & Guardin.

This first supplement looks at how far CSR/CSI has come since Investing in the Future was launched, the latest trends in the sector and new thinking on how to make development spend effective. It encourages corporate South Africa, civil societies and government to become part of our silver anniversary. The 2013 winners and finalists will be fêted in the second supplement on October 31 2013, to coincide with a glittering evening banquet to honour their achievements.

Reg Rumney, a former business editor at the Mail & Guardian, is the director of the Centre for Economics Journalism in Africa at Rhodes University

Although this article has been made possible by the Mail & Guardian's advertisers, content and photographs were sourced independently by the M&G supplements editorial team. It forms part of a larger supplement.