Cor­po­rate so­cial re­spon­si­bil­ity at a cross­roads

From be­ing a ‘mind­set’ it must be­come a ‘heart­set’

Finweek English Edition - - Csi -

WITH A MUL­TI­TUDE of fo­cus points sud­denly start­ing to ap­pear on the agen­das of large com­pa­nies, the broad South African land­scape of cor­po­rate so­cial re­spon­si­bil­ity has now reached a cross­roads, says Pro­fes­sor Der­ick de Jongh, di­rec­tor of Unisa’s Cen­tre for Cor­po­rate Cit­i­zen­ship.

Such items and is­sues come from var­i­ous di­rec­tions and cur­rently have a par­tic­u­larly strong so­cio-po­lit­i­cal bias, es­pe­cially if you con­sider the events ear­lier this year con­cern­ing the Pub­lic In­vest­ment Cor­po­ra­tion and Bar­loworld, as well as Brian Molefe’s latest fo­cus on the JD Group.

“You wouldn’t know what he has in his sights next, but there are se­ri­ous spec­u­la­tions that the face of busi­ness in SA has al­ready changed ir­re­versibly,” De Jongh says.

All the is­sues SA com­pa­nies are cur­rently be­ing con­fronted with are bring­ing them to a point where they’re try­ing even harder to com­ply mind­lessly rather than try­ing to do so mind­ful of the broader leg­is­la­tion and trans- for­ma­tion frame­works, De Jongh says. “The more pres­sure there is on com­pa­nies from dif­fer­ent di­rec­tions the more is­sues con­cern­ing re­spon­si­ble or­gan­i­sa­tions come to the fore, and the more they start get­ting a po­lit­i­cal colour­ing the harder mind­less com­pli­ance will be driven, be­cause it’s a form of risk and rep­u­ta­tion man­age­ment and a com­pany’s li­cence to func­tion is sud­denly no longer leg­is­la­tion-bound. At least that’s cur­rently the case.

“Whereas com­pa­nies were for­merly legally bound to com­ply they’re now con­fronted with as­pects that aren’t nec­es­sar­ily cov­ered by reg­u­la­tions, such as the en­tire is­sue sur­round­ing cli­mate change and global warm­ing, and they find it very dif­fi­cult to cope, be­cause there’s no clear le­gal frame­work yet.”

How­ever, a se­ri­ous call has been sent to the busi­ness sec­tor to be­come much more in­volved in de­bates con­cern­ing the prob­lem and CEOs should take note of that, he em­pha­sises.

Banks’ re­ac­tions to the en­tire is­sue con­cern­ing credit leg­is­la­tion and con­sumer pro­tec­tion against ex­ces­sive credit ex­ten­sion by is­su­ing a code of con­duct are noth­ing but good cor­po­rate so­cial re­spon­si­bil­ity.

“The ques­tion is why it took the bank sec­tor so long to re­alise they had to do some­thing. It looks as if this step isn’t morally mo­ti­vated but purely a com­mer­cial de­ci­sion. The bank sec­tor re­alised that if they didn’t ‘pro­tect’ the mar­ket by ap­ply­ing more re­spon­si­ble credit ex­ten­sion there might not be any mar­ket left for them to sell their prod­ucts to.

“How­ever, if other com­pa­nies can see the re­la­tion­ship be­tween their own cor­po­rate so­cial re­spon­si­bil­ity and what the banks are do­ing then a busi­ness case of re­spon­si­ble cor­po­rate cit­i­zen­ship will in­deed have been cre­ated. That’s im­por­tant, and it im­me­di­ately puts the moral de­bate in fi­nan­cial terms.”

Un­for­tu­nately, SA also lacks con­sumer ac­tivism, says De Jongh. The latest “poi­soned spices” saga is a good ex­am­ple: there’s no ev­i­dence of a sin­gle SA con­sumer protest­ing at a shop or su­per­mar­ket that stocks such prod­ucts. How­ever, the same in­ci­dent in, say, Bri­tain would have re­sulted in large-scale protests. But it’s en­cour­ag­ing to see the me­dia in­creas­ingly play­ing a watch­dog role con­cern­ing cor­po­rate re­spon­si­bil­ity, De Jongh says.

In re­sponse to the neg­a­tive me­dia ex­po­sure a spice man­u­fac­turer placed sev­eral news­pa­per ad­ver­tise­ments em­pha­sis­ing that their prod­ucts are “clean”. The com­pany pre­sum­ably paid thou­sands of rand to con­vey that mes­sage – which it was sup­posed to have done in the first place. That cre­ates mis­trust with con­sumers, De Jongh says.

“You mustn’t spend money to tell the con­sumer how good and eth­i­cal you are – just do it. How­ever, com­pa­nies of­ten get away with mur­der and it’s not as if they now sud­denly want to en­ter the moral high ground. They re­alise it’s a mat­ter of sur­vival.”

For ex­am­ple, con­cern­ing cli­matic change a bank should be re­spon­si­ble for de­ter­min­ing a po­ten­tial busi­ness client’s sense of re­spon­si­bil­ity re­gard­ing as­pects such as waste man­age­ment, pol­lu­tion, re­cy­cling and fair wages be­fore credit ex­ten­sion is granted, De Jongh says.

“In the re­tail sec­tor, Wool­worths is at the fore­front in pro­vid­ing its cus­tomers with en­vi­ron­men­tal in­for­ma­tion con­cern­ing its prod­ucts and fair trade. If all the Wool­worths of this world were in­form­ing and ed­u­cat­ing the con­sumer so that the lat­ter puts his foot down it would be a great step for re­spon­si­ble cor­po­rate cit­i­zen­ship.”

In fact, De Jongh says a pos­i­tive wave is al­ready build­ing up that will force com­pa­nies to go be­yond the cross­roads and ad­vance from mind­less com­pli­ance to do­ing so in a sober and con­sid­ered man­ner.

And in­stead of just a “mind­set” it must be­come a “heart­set”.

From mind­less com­pli­ance to do­ing so in a sober and con­sid­ered man­ner. Der­ick de Jongh

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