The social impact of CRM initiatives is often not sustainable
- William Gumede
The result is that stakeholders are resentful, angry and say most of the Corporate Social Responsibility (CRM) is window-dressing.
The Corporate Social Responsibility (CSR) models as practice by many industrial country companies based in Africa and developing countries are often unsuitable for local environments, making them irrelevant, lacking credibility and as a consequence they largely have insignificant social impact.
The dominant CSR model used by industrial country companies based in African and developing countries are often more suited for developed countries. CSR is the idea that companies have a responsibility to operate in such a way they exercise duty of care for wider society, people, economy, environment, and the future.
Corporate social responsibility is a central pillar of corporate governance. Yet, CSR initiatives by industrial country companies in Africa and developing countries are largely public relations focused which are devised by company managers, far removed from the needs of impoverished communities. CSR is often a small unit in many companies, those who run it marginal in the bigger company, rather than integral to the whole business. The social impact of such CSR initiatives is therefore often not sustainable.
The result is that stakeholders are resentful, angry and say most of the CSR is window-dressing. The irrelevant CSR models, undermine the social licence to operate of many companies - the approval to operate by the community, stakeholders and wider society.
Glossy corporate social responsibility reports are in many cases just PR-speak, talking glibly of the “triple bottom line” and “profit, people, planet”, whereby the business is supposedly committed to prioritising social, environmental and sustainability impact in tandem with profit-making, yet except for these “commitments”, there are often very little sustainable projects to show.
In African and developing countries with historical inequalities, where past profits by former colonial or apartheid-era or by developed country origin companies were made by exploiting excluded indigenous communities and where the structural imbalances of the past still impact on the present, companies have greater social, environmental and economic responsibility.
In such contexts, more holistic CSR approaches are crucial for companies to secure the “social licence” to operate from the community, stakeholders and wider society – and victims of companies’ past wrong behaviour.
Companies in developing countries – with their huge developmental needs, need more appropriate CSR models. Countries such as South Africa, Zimbabwe and Namibia, have dominant traditional corporate cultures based on apartheid, which influences their CSR models. Dominant mainstream corporate culture coming from apartheid and colonialism was based on segregation of opportunities based on race, cheap black labour, corporate welfare for whites and stripping the environment.
Many industrial country companies operating in poorer African countries almost operate on the same model, with benefits segregated along expatriates' and locals’ lines, stripping of the local environment and trying to pay as little taxes as possible.
What should the components of CSR in companies operating in African and developing countries be? Broadly, CSR should not be relegated to a marginal unit in a company, but should encompass all the operations of a company. A company-wide approach to CSR must look at the company operating as a responsible democratic corporate citizenship, which models sustainability in its internal as well as its external operations – and consider the future impact of its current operations.
Within companies’ gender equality, non-racialism, diversity and ethical decision-making have to be actively strived. There should be no gender pay gap between women and men for doing the same work. There should not be excessive pay gaps between the highest paid executives and ordinary employees. In countries where historical instances of discrimination against colour, gender or religion – companies should introduce diversity, redress and inclusivity.
The business operations of a CSR model for industrial country companies operating in developing and African countries should be done in a sustainable way, whereby their business practices minimise harm. CSR should include human rights, fair labour practices and fair trade practices. At the core of CSR is the responsibility to ensure sustainable use of natural resources, reducing green has emissions, reducing pollution and rehabilitating the environment.
Critical to CSR is treating customers, contractors and partners fairly – not exploiting the poor, the vulnerable and illiterate with higher fees than those that are more affluent, treating dependent contractors and businesses fairly, including paying them fairly and on time.
A CSR model has to reject a corporate culture that demands extreme profits above everything else, and measure success in more sustainably inclusive ways. The business operations of a CSR model in a developing country should be done in a sustainable way, whereby the business practices minimise harm.
CSR should include human rights, fair labour practices and fair-trade practices. CSR includes a responsibility to ensure sustainable use of natural resources, reducing green gas emissions, reducing pollution and rehabilitating the environment.
CSR involves treating customers, contractors and partners fairly – not exploiting the poor, the vulnerable and illiterate with higher fees than those that are more affluent, treating dependent contractors and businesses fairly, including paying them fairly and on time. In a developing country, CSR has to involve companies providing industry-relevant skills and technical training to employees.
During apartheid and colonialism many corporates treated black employees, customers and contractors in a racist manner. Many foreign companies in African and developing countries treat employees who are local with less care, than expatriates. Unconscious bias, stereotyping and implicit prejudice of black people have become embedded in the culture of many companies. This must change.
CSR in South Africa, Namibia and Zimbabwe and developing countries must prioritise reparations – if they harmed local communities during apartheid and colonialism. Similarly, industrial country companies based in African and developing countries must provide reparations to communities they excluded or harmed and rehabilitate local environments they damaged.
In South Africa, companies should give opportunities to former employees and their families who were excluded from company benefits during the apartheid-era, access to vocational and technical training, bursaries, and housing funding as part of compensation for past exclusion.
In more sustainable developing and African country CSR models, companies must empower communities, stakeholders, and wider society more equitably. It is important to involve local communities in surrounding communities of mines and factories in the value chain of the companies – through the use of local small contractors, farmers for goods and services. Corporates must support local community development projects, support educational programs and fund sport and recreation facilities and community infrastructure projects.
Many corporates in African and developing countries engage in corrupt activities, with some arguing they have no choice, because corruption is endemic in the host country, and that “everyone is doing it”. However, it is crucial for companies to behave as model democratic corporate citizens and eschew corruption, even if it means losing contracts. Many African countries are so desperate for foreign investors, they often allow them to shirk local laws. Corporates must follow country laws, respect democratic institutions and the environment.
William Gumede is Associate Professor, School of Governance, University of the Witwatersrand, and author of Restless Nation: Making Sense of Troubled Times (Tafelberg)
This is an edited version of his keynote address “Reimagining Social Impact” at the Annual Social Impact Symposium of Stellenbosch University.
This article first appeared in The Namibian.