/ 12 March 2018

How corporate social responsibility projects can be derailed

Big companies operating in developing countries often use corporate social responsibility initiatives to position themselves as development agents and friends of the host communities.
Big companies operating in developing countries often use corporate social responsibility initiatives to position themselves as development agents and friends of the host communities.

Big companies operating in developing countries often use corporate social responsibility initiatives to position themselves as development agents and friends of the host communities.

But in places like South Africa – and within the mining sector in particular – initiatives aren’t achieving the objectives they were designed to meet. Animosity between corporations and hosting communities persists.

The Marikana massacre is a case in point. A labour dispute between platinum mining company, Lonmin, and its workers, spiralled out of control, resulting in the death of 34 miners after police opened fire on a demonstration. The events at Marikana show how animosities continue to exist, and the damage they can cause.

One of the factors that’s emerged in the intervening four years is that there were major gaps in Lonmin’s corporate social responsibility programme. An analysis of the Marikana events show that the company failed dismally to meet its housing plans for workers. This left a significant portion of the workforce living in dehumanising conditions.

The Lonmin case illustrates two key areas of failure that are common in approaches taken companies. These are a failure to appreciate the cultural sensitivities of host communities and poor communication.

In our paper we review various approaches taken by companies. The paper uses key dimensions of corporate social responsibility – moral, ethical, economic, cultural and consultative and legal. The aim was to identify which the weakest links in the strategies pursued by big corporates.

The research could contribute to a theoretical framework that can be used to develop negotiated and mutually acceptable outcomes. This could potentially reduce the friction and tension that are often present when corporate social responsibility projects are implemented.

Communication is key

Why do companies engage in corporate social responsibility projects? The main reason is a growing realisation that they have a compelling moral, ethical and legal obligation to protect their operating environment as well as stakeholders. They’re also motivated by strategic and economic imperatives.

Our study confirms two key factors. The first is that communication plays a huge role in corporate social responsibility projects. The second is that many have been derailed by uninformed assumptions about the needs and priorities of host communities. 

Adopting a consultative decision making approach is essential. If initiatives are viewed as being community oriented, then it makes sense to involve the intended beneficiaries – both in initiation and implementation.

Our study encountered a case where a company encouraged farmers in the community to form themselves into a cooperative society. The company was collaborating with a university faculty of agriculture to train cooperative farmers. The training focused on the use of modern technology and the cultivation of high yielding crops. The idea was that the company would then purchase the crops at prevailing market prices.

The initiative generated a reasonable amount of employment and sustainable income for the community members. But community leaders reacted with hostility. They dismissed the project because they argued that it was fraught with nepotism and favouritism. They also saw it as an attempt to divide and rule. The project, they said, was devised

to cause confusion amongst our people so that we do not speak with one voice against the operations of the company.

They charged that distributors were selectively appointed by the company without consultation. They added that:

Most of the distributors are relatives or extended family members of a major shareholder of the company, who is a native of our neighbouring village.

The cooperative project became moribund.

The community leaders’ reaction points to poor communication and consultation. A participatory decision making approach would have resolved the community’s allegations and perceptions.

Cultural sensitivities

Our study also shows that corporations should consider cultural and traditional values when initiating projects. Not doing so could prove expensive.

Cultural and property rights practices differ from one jurisdiction to the other. In most African societies, land is central to people’s existence and identity. Cultural beliefs and traditional practices are often tied to the land.

People’s homes, and the land around them, are considered to be a heritage from ones ancestors and must therefore be preserved and sanctified through rituals. These cultural beliefs and practices don’t always make business sense to multinationals. They, perhaps even unconsciously, underestimate the significance attached to ancestral lands.

Land is sometimes appropriated by government, while businesses are required to pay compensation and relocate people. From our interviews, it was inferred that a company does not see anything untoward in acquiring graveyards and compensating families to exhume and re-bury their ancestors.

But communities consider this to be taboo and a process that could invoke the wrath of their ancestors.

It’s therefore imperative for corporations – particularly multinationals – to foster cultural understanding with local communities.

Overall, we found that companies were willing to embrace corporate social responsibility. This was often expressed in their vision and mission statements and through considerable monetary allocations towards corporate social responsibility initiatives. But many fail due to cultural insensitivity and misplaced communication strategies.

Olorunjuwon Samuel, Associate Professor, University of the Witwatersrand

This article was originally published on The Conversation. Read the original article.

The Conversation