South African businesses invested R8.1 billion in corporate social investment (CSI) during the 2014/15 financial year, an important financial quantum on the triple bottom line that continues to grow. Typically, South Africa’s largest JSE firms approach CSI as well-engineered, strategic and sustainable initiatives that tie back strongly to the business objectives, Broad-Based Black Economic Empowerment (B-BBEE) and community stakeholder relationships.
“But for a huge mid-section of firms, CSI is often knee-jerk, unsustainable, non-aligned to the strategic imperatives of the business and the important touch points of the local communities, customers and employees. As a result, the real grass roots impact of such CSI projects are lost and unrealised, despite significant investments of money, time and resources,” says Michelle Govender, Director: Strategic Marketing at B-Cause, SA’s only dedicated consultancy focused on cause-related marketing. Whilst the aim of commercial marketing is financial and the aim of social marketing is ‘social good’, the two are not mutually exclusive. The reality is that if correctly deployed and entrenched throughout the business, CSI provides an opportunity for improved profitability, growth, employee engagement, consumer loyalty and competitive advantage.
“The pressure is on all businesses—and especially given South Africa’s massive social challenges and economic disparities for well-managed CSI strategies that deliver social currency, uplift and empower beneficiaries on a sustainable basis, and support business objectives by enhancing relationships with key stakeholders and customers. There is an opportunity to do good that has real impact and effect, and at the same time, provides the business with a distinct competitive advantage in a parity market,” explains Govender.
Is CSI investment realising tangible, grass roots results?
According to the CSI Handbook 18th Edition (Published by Trialogue, total CSI in South Africa in 2014/15 was R8.1 billion. This only measures the CSI spend of enterprise organisations, but when you factor in tier two and three companies, it’s likely that this figure is well over R10 billion. And yet it is very hard to track the impact that this investment is having and the kudos the companies are receiving for the hard-earned money they are spending. So where is the cause and effect? This massive disconnect means that those still in need and brands are missing out on the opportunity to ‘do well by doing good’.
“In many companies, we see initiatives that are dispersed throughout the company with no over-arching, sustainable plan for ongoing engagement. Each year, we see hastily co-ordinated staff field trips on Mandela Day or a ‘global day of service’ to paint, garden or spend time with CSI beneficiaries, only to pack up again and head back to the office until the next year. What real impact, if any, is this having for the firm, the beneficiaries, communities and employees? Surely, collectively if we all do our part, we should achieve more than simply painting a wall or building a fence once-off?” says Govender. In embarking on a sustainable CSI strategy, B-Cause helps companies to identify NPOs that align with the strategic imperatives and nature of the business, and ensure that there is a good fit for the cause and beneficiaries that would be best served by the partnership. “We focus on creating and sustaining mutually beneficial relationships between corporates and NGOs and build relationships that will last and become deeply ingrained in the mind of the organisation, the employees as well as the public,” she adds.
Strategic philanthropy is more important than ever for employees and customers and Govender says the CSI strategy needs to be an entrenched part of the business, headed by a senior management person who can ensure that it receives corporate oversight, a role that is typically headed by the head of human resources or operations. Strong leadership and support for CSI initiatives at C-suite level is crucial, not only from a commitment perspective, but from a budget allocation too. Top-level support is fundamental to reinforce the intrinsic value of CSI programs for the business, and to ensure that both short term and long term goals are achieved in achieving a partnership where true transformation can occur for South Africa’s most disadvantaged citizens. Within the South African context, B-BBEE ties in strongly with corporate social investment. CSI initiatives that assist black beneficiaries can favourably affect your BEE Scorecard. CSI spend is regulated at a target of 1% of net profit after tax as part of the revised B-BBEE. It is important to note that CSI and SED (socio-economic development) are two different elements of the scorecard. Socio-economic development is more than just assisting the disadvantaged with a meal or a warm bed. It refers to access to the economy. CSR departments need to bear this in mind when developing programmes with their scorecard in mind.
Companies can continue to earn points through charitable giving as before, but there is additional emphasis on developing skills, preferential procurement, enterprise development and socio-economic development. In fact, research by Trialogue shows that the growth in CSI development is linked to three main reasons—moral imperative, reputation and the Department of Trade and Industry’s (DTI’s) Broad-based Black Economic Empowerment (B-BBEE) codes.
“It’s also an important factor in employee engagement and positioning the company as an employer of choice. According to a 2015 Cone Communications study, millennials are more engaged with social causes than their older counterparts and they will easily hop online to condemn a brand that they felt was behaving socially irresponsibly. Millennials are also more likely to work for a company based on its corporate social responsibility commitments, and will even be willing to take a drop in salary in order to work for a socially responsible company that they admire when deciding where to work. Millennials are also the generation that easily migrate to social media in order for their voices to be heard.
“Consumers are equally demanding more accountability from brands for their social impact. Consumers increasingly expect brands to integrate sustainable and responsible practices into all that they do. For example, many companies are starting to make procurement decisions around socially responsible behaviour and corporate values. Strategic social responsibility and cause-related marketing are very effective marketing tools that help to grow your social impact as well as your business. Brands are embracing CSI as a business-imperative strategy, not only because it’s the right thing to do, but because it’s also the profitable thing to do. "When done right, with integrity and commitment to actually making a difference, brands tend to receive a greater share of the consumers wallet,” she adds.
With the growing trend in cause-related marketing, companies will do well to bridge the gap between growing their reputations by aligning and committing to the charities that would make a good fit. By positioning the right products and services with the right cause and designing, developing and deploying strategic corporate social responsibility (CSR) and cause related marketing (CRM) efforts, B-Cause helps achieve the brand’s reputation growth and broaden the positive social impact.
“CSI is here to stay and when one considers the social and economic landscape South Africa currently finds itself in, the need for cohesive, integrated CSI strategies from South Africa's corporate sector has never been more crucial. By strategically managing what is essentially a philanthropic venture, every business can maximize its purpose and benefits to society, create real, grass roots societal value where it is needed most, and fulfil on all its stakeholder mandates,” concludes Govender.