From philanthropy to shared value
Top trends changing the spirit of corporate giving
Corporate social investment (CSI) and environmental, social and governance (ESG) practices are gaining traction among South African companies despite pressing challenges. According to co-founder and director of the Amekh Group, Khavitha Singh, however: “Each of these challenges — limited resources, compliance with evolving regulations and obstacles in integrating ESG into existing business models — offers opportunities for innovation, enhanced brand reputation and opening of new market segments.”
The future trajectory of CSI and ESG practices in South Africa will likely see an increased focus on climate change mitigation, social equality and ethical governance. “Emerging themes include innovation in sustainability and transparent corporate practices,” says Singh’s business partner and Amekh co-founder and director Merle Kock.
The growing prominence of CSI and ESG is driven by a growing awareness of social and environmental responsibilities, with companies increasingly investing in sustainable practices, community development and ethical governance. “They do this not only to comply with regulations but also to build a sustainable future,” Kock says.
Increasing integration within the company
According to corporate responsibility consultancy Trialogue, one of the major trends is the increasing integration of CSI with the core business. The company’s Business in Society Handbook, released in 2023, states that in addition to utilising the company’s resources and expertise, CSI will grow to be a significant part of the business’s operations, brand and employee value proposition. More companies are expected to elevate their CSI in corporate brand messaging as programmes are increasingly incorporated into business operations.
Singh says many South African businesses are viewing CSI with a greater degree of strategic intent. “This integration has shown benefits such as improved risk management, enhanced corporate reputation and increased attractiveness to investors,” she explains.
Companies with an integrated CSI approach will be better positioned to draw talent and increase employee engagement because of their social impact, which will also increase the prospects for volunteerism. Employees can find meaningful work at a company with a clear mission statement, and these workers may see “giving back” as an integral part of who they are at work, rather than something they do voluntarily.
Towards systemic societal impact
Another trend highlighted by Trialogue is the move towards systemic change in society. Increasingly, businesses are realising that cooperation is key to reaching communal societal goals, taking active steps to share information, exchange expertise and combine resources to jointly effect social change.
Businesses cannot operate in silos, and these collaborations are crucial to ensure a better future for all of humanity. “There are examples of successful collaborations between companies, non-profits and government entities in South Africa, and these partnerships have led to impactful outcomes in areas like environmental conservation and social development,” Kock says, adding that the Amekh Group has already entered into strategic partnerships
and collaborations to enhance the impact of its own CSI and ESG initiatives. “These partnerships focus on areas like sustainable packages solutions and associated circular economy analyses.”
As companies work toward achieving systemic impact in society and promoting social justice — which entails realising people’s rights, defending the interests of their communities, and possibly influencing policy outcomes to improve people’s lives — they will be viewed more favourably as the voice of certain social issues, and more funding will be allocated to networking, applied research and thought leadership in their chosen fields of development.
Evolving regulations and stricter laws
The current trends are transformative and heavily informed by a rapidly changing world and a shifting business landscape, with a significant shift towards enhanced reporting and mandatory disclosures. This is driven by a demand for better corporate transparency, particularly around environmental impact and exposure to the physical and transition risks of a changing climate. New reporting and disclosure requirements will create a new wave of sustainability and ESG reporting for 2024 and beyond.
According to Singh, the evolution of the regulatory environment also influences CSI practices, both locally and globally: “The South African regulatory environment has evolved to emphasise sustainability and social responsibility, with new regulations pushing companies to adopt more responsible business practices, impacting how they operate and strategise for longterm sustainability.”
She says the Amekh Group addresses environmental concerns by implementing strategies for climate change mitigation, resource conservation and carbon footprint
reduction, led by expert associates in the space. “Some of these approaches include supporting companies with their sustainability strategies and ESG reporting,” she explains.
No to greenwashing
In 2024, stronger legal actions and consequences for greenwashing — a practice in which false or misleading information is conveyed about the environmental soundness of a company’s practices and products — are also expected.
This trend of dishonest environmental messaging allows companies to tout ecological stewardship while obscuring unsustainable activities. Catch-phrases such as “eco-friendly”, “net-zero” and “carbon neutral” will need robust thirdparty data to substantiate the declaration of such claims.
The EU has its sights set on a greenwashing ban and set new rules to prevent misleading advertisements, meaning companies will be forced to exercise more caution when it comes to their environmental messaging.
Tighter legislation and legal consequences for misleading claims will bolster accountability, with fines proposed that could be as high as 4% of a company’s annual global revenue for violations; several nations plan to enact similar statutes.
Impact and outcomes-based investing
CSI has evolved from simple philanthropy to a strategic partner and enabler for businesses. Impact investing has emerged as a pivotal trend in reshaping CSI strategies. This growing movement centres on channelling funds into enterprises and projects that generate measurable positive outcomes for people and the planet, alongside financial returns.
Kock says that a company’s ESG profile is increasingly important for investors. “There is a trend towards investing in companies with strong ESG frameworks, as these are often seen as more sustainable and less risky in the long term.”
For companies, aligning societal contributions with revenue-generating sustainability activities creates shared value. It embeds social conscience within business operations instead of remaining tangential to commercial interests. The outcomes are mutually beneficial — profitable solutions moving the needle on environmental and social metrics.
CSI not only enables start-up financing for early-stage social ventures but can also be directed at scale to spur innovation within a corporation’s supply chains and distribution networks. By providing patient capital and market-based solutions, businesses can aid underserved communities to develop affordable access to vital goods and services.
Impact investing’s growing popularity spotlights CSI’S evolution from chequebook charity to a springboard for positive change. By financing self-sustaining social enterprises, corporations can drive development outcomes that transform lives at scale.
Local and community-driven
By creating opportunities for both communities and corporations, CSI has emerged as a key driver of shared value and impact investing, especially when looking into investments that seek both social and financial returns.
This impact, says Singh, is why many businesses engage with local communities regarding CSI: “Effective engagement with local communities involves understanding their specific needs and developing programmes that align with these needs. Best practices include collaborative projects in education, healthcare, and environmental sustainability that have a tangible impact on community development.”
Trialogue’s report also emphasises that new funding models and new ways of giving are on the rise — particularly those that aim to rebalance the power between companies, non-profits and communities, with more voice and decision-making given to those on the ground.
New funding models
There will be an exploration of new financial leverage strategies, with blended and alternative financing arrangements becoming more and more common. Alongside traditional grant funding, attention should be paid to social enterprise, impact bonds, loan financing and crowdfunding; social funding that does not come from typical CSI or trust institutions will become more prominent. There’s a good chance that business units will raise their social spending, and impact investments will rise overall.
Another trend to keep an eye on is outcomes-based finance, where investors make investments subject to the achievement of particular social or environmental goals. This is where ESG reportin is critical: businesses will need to leverage data and technology to quicken their monitoring and learning processes.
These trends highlight the growing importance of CSI and ESG in shaping the future of sustainable business practices. They reflect a global shift towards more responsible and inclusive business models that not only focus on financial returns but also on creating a positive impact on society and the environment.