MNB1501/1/2018–2020

Learning Unit 5
Corporate social responsibility

INTRODUCTION AND AIM OF THE UNIT

Welcome to the challenges of corporate social responsibility, also known as corporate
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citizenship! This is a field characterised by many tensions and uncertainties, but it is im-
mensely important. Businesses operate in a wider social environment causing both good
and bad impacts on the communities and environment around them. They therefore have
a responsibility towards these communities and the environment, and as a result need to
become involved in solving problems faced by society, such as poverty, unemployment
and pollution. Please note that for the purposes of the learning unit and prescribed book
we will refer to the term “corporate social responsibility”. However, the terms “corporate
social responsibility” and “corporate citizenship” can be used interchangeably.

25 STUDY CHAPTER 5 (sections 5.2–5.5) IN ITBM

Contents of the learning unit:

 Introducing corporate social responsibility

 The citizenship imperative
 The business case for corporate social responsibility
 Corporate governance
 Stakeholders and stakeholder engagement
 The link: How does CSR relate to the various business functions?
 Sustainable development
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26 Learning objectives

When you have worked through learning unit 5, you should be able to

 distinguish between the different terms and concepts in the field of corporate social
responsibility
 discuss the imperatives for good corporate social responsibility in South Africa
 draw up a stakeholder map for an organisation, indicating the different categories of
stakeholders
 explain the business case for corporate social responsibility as it relates to the various
business functions
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 KEY TERMS

corporate social responsibility sustainable development

corporate citizenship
triple bottom line
citizenship imperative
corporate governance
stakeholder engagement
stakeholder mapping
the business case for implementing corporate social
responsibility

Refer to the end of chapter 5 in the prescribed book to familiarise yourself with the key
430

terms for this learning unit before continuing.

5.1 INTRODUCING CORPORATE SOCIAL RESPONSIBILITY

(CSR)

Study section 5.2 in ITBM.

What is corporate social responsibility and how do different companies implement its
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principles? Generally speaking, corporate social responsibility is about proactive efforts

by companies to make a positive contribution to society. There is a combination of reasons
why companies implement corporate social responsibility programmes and these are
influenced by certain social, governmental, market and ethical drivers. Refer to section
5.2 of your prescribed book for a detailed explanation of these drivers.

5.1.1 Citizens and citizenship – what is the link?

We are all citizens of some or other country, in this case mostly of South Africa. And be-
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ing a citizen brings with it certain rights and responsibilities. For instance, we have the
right to vote, to associate with whomever we please; we enjoy freedom of religion and
political orientation; and so forth.

At the same time, we must observe a few basic rules – our responsibilities. We must obey
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law and order, we must respect other people’s privacy and possessions, we must not
interfere with the rights of other citizens, and so forth.

In the corporate sector, the same basic principles apply. Corporates – just like ordinary
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citizens – have particular rights and responsibilities.

Abiding by the laws of a country is an important component of corporate social respon-

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sibility. But corporate social responsibility goes beyond legal compliance. Being a citizen
means being part of a community. As a good citizen, you want to contribute to the

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welfare of people in your community, because you realise that your life will be better if
people around you are having better lives. Within the business context, corporate social
responsibility is a concept that recognises that (i) companies have a responsibility for their
impact on society and the natural environment; (ii) companies have a responsibility for
the behaviour of others with whom they do business; and (iii) business needs to manage
its relationship with the wider society.

Nowadays businesses consider corporate social responsibility as a fundamental piece of

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a company’s business plan, affecting its bottom line, share price and long-term viability;
and companies that do not have a strong corporate responsibility strategy find themselves
at a competitive disadvantage.

5.2 TERMS AND TRENDS

A number of terms are applied to corporate social responsibility, and the differences and
437

overlaps can become quite confusing! Let’s have a look at some of the more common
terms and what they refer to:

 While a company’s bottom line traditionally refers to its financial profit or loss, the
triple bottom line refers to the need to consider the social and environmental impacts
as well. What effect do the operations of the company have on the people it comes
into contact with (the social side) and on the physical environment in which it oper-
ates? This approach is known as the triple bottom line: it measures the financial, social
and environmental impacts of business. All are equal and all are interconnected.
 The overarching aspiration and framework for corporate citizenship is sustainable
development. Sustainable development refers to development that meets the needs
of the present without compromising the ability of future generations to meet their
own needs.
 The term “corporate social responsibility” can be considered as synonymous with
corporate citizenship. However, the emphasis on “social” may be misleading, since
it emphasises one element of the triple bottom line above the others.
 Do not confuse corporate social responsibility with corporate social investment (CSI).
CSI is primarily a South African term that refers to companies’ philanthropic initiatives,
such as sponsorships for students or support to health clinics in areas surrounding
a company’s factory. CSI is only one component of corporate citizenship; corporate
citizenship is much more than that. One way to describe this is that CSI is about
spending a small part of your profits (such as 1% of pre-tax profit) on good causes,
while corporate citizenship is about how you make your profits in the first place.
 Sustainability reporting refers to the increasing expectations for companies to pub-
licly report not just on financial matters, but also on social and environmental issues.
 Corporate governance refers to how a company’s objectives, and strategy and deci-
sion-making structures are developed, implemented and monitored. It also relates
to the extent and way a company is accountable to its shareholders, as well as its
other stakeholders. Good corporate governance is an important aspect of corporate
social responsibility.
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 Activity 5.1

Write a paragraph in which you explain what you understand by the concept of corporate
social responsibility and what the key elements of this concept are.

27 Feedback:

Contact your e-tutor via myUnisa for the answer to this activity.

5.3 THE CITIZENSHIP IMPERATIVE

In this section we look at what the South African and global drivers for corporate social
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responsibility are and the reasons why organisations need to embrace corporate social
responsibility.

5.3.1 Global drivers

Over the past 10 years, the pressure on companies to demonstrate good social corpo-
440

rate responsibility practices has increased dramatically. Initiatives such as the AA1000
Framework (www.accountability.org.uk), the Dow Jones Sustainability Index (www.
sustainability-indexes.com), the United Nations Global Compact (www.unglobalcompact.
org) and the Kyoto Protocol (http://unfccc.int/2860.php) constitute a global shift towards
greater accountability of business to a wider range of stakeholders on issues relating to
the environment, social justice, human rights, labour rights and climate change.

441 Let’s look at a number of initiatives that play a role at an international level.

442 The United Nations Global Compact

The United Nations Global Compact was first proposed by the then UN Secretary-General
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Kofi Annan in early 1999 in an address to the World Economic Forum, which is a meeting
of some of the world’s most important economic leaders.

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446 Source: https://www.unglobalcompact.org/what-is-gc/mission/principles

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Today, hundreds of companies from all regions of the world, international labour and civil
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society organisations are engaged in the Global Compact. As far as South African compa-
nies are concerned, the following are included (note that this is not a comprehensive list):

 Bell Products
 Eskom
 Health Management Institute
 PG Group
 Sasol
 Tru-Lite
 Waymark Infotech
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450 The Global Reporting Initiative (GRI)

The Global Reporting Initiative (GRI) was launched in 1997 and has pioneered the de-
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velopment of the world’s most widely used sustainability reporting framework. Its aim
is to provide a set of reporting guidelines and indicators that cover all the key issues of
concern regarding corporate citizenship. By developing these guidelines, the GRI wants
to encourage companies worldwide to be more systematic and comprehensive in their
approach to sustainability reporting (see www.globalreporting.org). It currently consists
of 507 organisational stakeholders from 55 different countries (GRI, 2008).

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453 AA1000 Framework
The AA1000 Framework was launched in 1999 by AccountAbility, a UK-based membership
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organisation advising and advocating on corporate social responsibility issues. The pur-
pose of the framework is to help “users to establish a systematic stakeholder engagement
process that generates the indicators, targets, and reporting systems needed to ensure
its effectiveness in overall organisational performance” (see www.accountability.org.uk).
It does not describe what should be reported on, so its guidance is considered comple-
mentary to that of the GRI Reporting Guidelines.

455 A number of other relevant initiatives

 ISO 14000 series. This is a series of standards issued by the International Organization
for Standardization; it focuses on corporate environmental management systems.
 Organisation for Economic Co-operation and Development (OECD) Guidelines on
Multinational Enterprises. The work of this organisation concerns the disclosure of
information, employment relations, environmental management, bribery, competi-
tion, consumer interests, and science and technology diffusion.
 SA 8000. This standard focuses on labour conditions and was developed by Social
Accountability International.
 South African initiatives and imperatives, which we discuss next.
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5.3.2 South African initiatives and imperatives

457 Legislation
The foundation of corporate social responsibility is compliance with all relevant national
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legislation. The following list includes some of the laws that are relevant in South Africa
for corporate social responsibility. Note that this is only a small selection; the total number
of relevant laws is much higher.

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460 King Code on Corporate Governance in South Africa

The third King Report on Corporate Governance for South Africa, better known as the “King
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III Report”, was launched by the Institute of Directors on 1 September 2009. The King III

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Report is very important for corporate social responsibility for South African companies
and is internationally recognised as being a progressive document. The report provides
organisations with guidance on good corporate governance practices and explicitly defines
and substantiates concepts such as “corporate citizenship”, “social responsibility”, “triple
bottom line” performance, “stakeholder engagement” and “sustainability reporting”. The
King III Report differs from the previous two reports (King I and King II) as it applies to
all entities regardless of the manner and form of incorporation or establishment (www.
pwc.com/za/en/king3/index.jhtml#).

462 JSE Socially Responsible Investment Index

A further recent development in South Africa, which also impacts on other African coun-
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tries, relates to the role of investors in corporate social responsibility and the emerging
requirements of investors and civil society for companies to demonstrate more socially
responsible behaviour. The JSE Socially Responsible Investment Index was launched in
2004. This index comprises criteria to measure the triple-bottom-line performance of
those companies in the FTSE/JSE All Share Index that choose to participate. The criteria
are provided in terms of the triple-bottom-line categories of environmental, economic
and social impacts, as well as a separate category for corporate governance.

464 Industry charters

Over the past few years, a number of sector-specific charters were adopted to promote
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socio-economic transformation and establish an equitable economic playing field. For

example:

 Charter of Empowerment and Transformation in the Tourism Industry

 Financial Sector Charter
 BEE Charter for the South African Mining Industry
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Ensuring operational legitimacy or a “licence to operate” requires more than simply a busi-
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ness licence. Non-compliance with these codes and guidelines will have a serious impact
on the future position of businesses in local and global markets, and every organisation
has to take note of the specific relevance of these imperatives to their business.

Activity 5.2

List three international and three local imperatives that promote the implementation of
corporate social responsibility in organisations. Briefly explain the significance of each
factor.

Feedback:
28

Contact your e-tutor via myUnisa for the answer to this activity.

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 5.4 THE BUSINESS CASE FOR CORPORATE SOCIAL
RESPONSIBILITY
Corporate social responsibility is not about being nice. The potential to limit expendi-
469

ture, maintain or improve employee and community relations, control risk and promote
reputation means that applying corporate social responsibility strategies is simply good
business sense (www.lse.ac.uk/Depts/global/Yearbook).

The business case for corporate social responsibility refers to the argument that being a
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good corporate citizen can contribute to a company’s profitability.

The business case, therefore, argues that incorporating good corporate social responsibility
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practices will, at the end of the day, have positive implications for the financial bottom
line. These benefits can come in a variety of forms:

 For example, a company that uses energy-saving technology will save money on its
monthly electricity bill. This benefit is often referred to as cost savings.
 Being a good corporate citizen can also have positive implications for a company’s
reputation. This reputational gain can also have positive financial benefits through
customer loyalty, attracting higher-quality employees or improving relationships
with investors.
 Eco-efficiency can save a company costs by, for example, using recycled materials in
building design, employing solar panel technology to generate energy and the use
of fuel-efficient technologies in vehicles.
 Competitive advantage and value creation. A company that ignores ethical, environ-
mental or social issues may actively destroy value through the inadequate manage-
ment of risks, but may also limit value through missing opportunities. While focusing
on the risks will protect existing business interests, and thus conserve value, such a
purely defensive approach will not open up new opportunities to create value.
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By performing a simple SWOT analysis of the strengths, weaknesses, opportunities and

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threats facing an organisation, management can identify areas where risks should be
managed (threats) and areas where there is the potential to create value (opportunities).

Table 5.1 below identifies the key strategic opportunities and threats in the environmental
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and social field.

Table 5.1: Opportunities and threats in the environmental and social field
Threat Opportunity
Labour shortages Access to new pools of labour from education
and training programmes and community
involvement
Low productivity and quality because of poor Higher productivity levels because of better
labour practices and skill levels trained staff and higher standards
Missing new market opportunities and the New markets through an improved
erosion of traditional markets understanding of consumer needs

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Product obsolescence through low levels of
innovation and inappropriate technology
Failure to anticipate new social and regulatory
requirements
Vulnerability because of low investor confidence
Higher cost levels from increased regulation of
old technology
Recruitment, customer retention problems
through poor reputation
New products and markets through the
application of new technologies
First-mover advantage by anticipating the
impacts of social pressures
Lower cost of capital because of greater investor
confidence in company’s ability to manage
change
Lower compliance costs by being ahead of
regulations
Enhanced reputation leading to greater staff,
sustomer and investor loyalty

Some aspects of corporate social responsibility may not have any economic benefit
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for companies. This is why the business case for corporate social responsibility cannot be
the only reason why companies should be good corporate citizens – national laws and
ethics also play an important role. In the South African environment in particular, compa-
nies have a huge role to play in making socio-economic progress, and compliance with
these rules, regulations and codes will go a long way to ensuring that companies retain
their license to operate.

5.5 CORPORATE GOVERNANCE

Study section 5.3 in ITBM.

Corporate governance refers to the way in which an organisation makes decisions and
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decides on how to manage its affairs. The King III Report on Corporate Governance was
published on 25 February 2009 and includes the following important principles:

 Good governance is about effective leadership.

 Sustainability is the primary moral and economic imperative for the 21st century.
 Innovation, fairness and collaboration are important regarding sustainability.
 Integrated sustainability and social transformation will give rise to greater opportuni-
ties for the company and society.
 Sustainability reporting is a key facet of good corporate governance.
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5.6 STAKEHOLDERS AND STAKEHOLDER ENGAGEMENT

Study section 5.4 in ITBM.

Stakeholders are those groups or people who are affected by or who can have an effect
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on a company.

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Business is about people. Stakeholders can be found either inside the organisation (called
480

internal stakeholders, such as executive board members, management, other employees)

or outside the organisation (external stakeholders – here we are thinking about sharehold-
ers, the consumer public, customers/clients, suppliers and the wider community in the
area where the business operates, etc). Primary stakeholders are those whose ongoing
support of the company is vital to the company’s survival. These stakeholders commonly
have some contractual or financial relationship with the company, that is, shareholders
and employees. A company cannot survive if shareholders or employees withdraw their
support of the company.

Often government is also a primary stakeholder. Local communities can also be a pri-
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mary stakeholder, especially if they own the land that a company needs. For instance,
local community opposition or sabotage may make it impossible for a mine to operate.

Secondary stakeholders have less direct impact on the company and include environ-
482

mental NGOs or the media. A secondary stakeholder can become a primary stakeholder
if the conditions change. For instance, a local group that is small and powerless probably
has little impact on a company, but if it gets more local support or if it has a convincing
legal argument, it may quickly become a primary stakeholder.

Stakeholder engagement is at the heart of good corporate social responsibility. The

483

stakeholder engagement process allows stakeholders to determine what they want from
the company and what they consider to be the issues and culture of the company. The
stakeholder engagement process consists of six basic steps:

484 1. Prepare
485 2. Plan
486 3. Design
487 4. Engage
488 5. Evaluate
489 6. Apply
490

A company wishing to embark on a stakeholder engagement process should start by

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mapping all external and internal stakeholders, defining their role in and impact on
the organisation and determining the most appropriate methods to engage with each
stakeholder group. The methods can include the use of questionnaires, focus group
meetings, surveys, market research, personal visits, joining existing networks, and so on.
Refer to section 5.4 of the prescribed book for a detailed explanation of the six steps of
the engagement process. It is also important that you learn the principles that guide and
govern the entire stakeholder engagement process.

5.7 SUSTAINABLE DEVELOPMENT

Study section 5.5 in ITBM.

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In 1987 the Brundtland Report emphasised the importance of sustainable development

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and defined it as “development that meets the needs of the present without compro-
mising the ability of future generations to meet their own needs”. Some of the most
important meetings and agreements that have brought sustainable development to the
mainstream include the

 Rio Earth Summit 1992

 United Nations Global Compact
 Millennium Development Goals (MDGs) 2000–2030
 World Summit on Sustainable Development (WSSD) 1992–2015
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It is important to understand how CSR can contribute to sustainable development as is

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explained in section 5.3.

5.8 THE LINK: DOES CSR RELATE TO THE VARIOUS BUSINESS

FUNCTIONS?
If we look at the various business functions in more detail, it becomes clear that corporate
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social responsibility touches on every single business terrain and management function.
In this section, we will briefly refer to some of the areas of the impact of social corporate
responsibility on the different business functions.

5.8.1 CEO/top management

The CEO and the top management team are responsible for managing issues that pertain
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to the entire organisation, such as strategy, financial performance, mergers and acquisi-
tions, and governance. In addition, they oversee all the functional areas. Accordingly, the
CEO and the top management team will be concerned both with the issues presented
above and with specific ways that more corporate social responsibility practices can be
helpful, for instance by improving stock price, financial performance, corporate reputation
and risk management. These elements will be discussed in more detail below.

5.8.2 Operations
Operating managers are responsible for ensuring that their organisations can produce
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products and services in a timely, cost-effective way and can beat their competitors on
price, innovation and quality.

Good corporate social responsibility practices can create market opportunities and
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increase the competitiveness of companies that use innovation to develop products or

services based on sustainability criteria. Recognising and responding to emerging niche
markets allow companies to translate good corporate social responsibility into corporate
social opportunity. Organic coffee, ecotourism, sweatshop-free clothing (e.g. Nike) and
fuel cell technologies are but a few examples of product innovations that have success-
fully penetrated new markets. These products have successfully responded to changing
consumer preferences.

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Total quality management (TQM) forms an integral part of the operations function and
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focuses on the development and delivery of quality products by involving the entire com-
pany. Total quality should be defined not only with reference to financial considerations,
but should also include products’ social and environmental characteristics. Similarly, pri-
orities for continuous improvement should be determined with reference not only to the
preferences of clients/customers and the activities of competitors, but also to constant
monitoring of the product’s impact on society and the environment.

5.8.3 Finance
Companies must ensure that their traditional focus on corporate profits and shareholder value is
accompanied by equal concern for the needs of society and the environment (www.bmw.co.za).

Generally speaking, the financial director is a very powerful individual and has significant
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influence in an organisation. This implies that he or she will also indirectly exercise a
strong moral influence on behaviour or employees in the workplace. Strategic priorities
(profit maximisation, expanding market share, cutting costs, etc) can also be very strong
influences on morality. Traditionally, the finance manager is the most difficult to convince
of the advantages of implementing good corporate social responsibility practices in an
organisation, since not all benefits can be converted into rands and cents.

When it comes to the role of the finance function with regard to the investment deci-
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sion, one must acknowledge that access to capital is critical for any company wanting to
invest and grow. Good corporate social responsibility practices – particularly corporate
governance structures and risk management systems – provide important opportuni-
ties to unlock capital. Investors, financial institutions and multilateral lenders will invest
in and lend to companies that have a good reputation. This reputation is built up not
only through sound financial performance but also through demonstrated transparency,
disclosure, integrity with regard to shareholder rights, strong stakeholder relations and
sound risk management practices.

For example, the International Finance Corporation (IFC), which is the private sector arm
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of the World Bank Group, has stringent lending criteria in place. Prior to lending money
to companies for large projects, the IFC insists that an adequate impact assessment be
undertaken. Projects must be environmentally and socially sound, satisfying IFC environ-
mental and social standards as well as those of the host country.

5.8.4 Procurement
A group of external stakeholders that has a very close relationship with the business is
504

that of suppliers. Unfortunately the attitude of organisations when dealing with suppliers
is all too often: “We tell them what we need, we pay them, and that’s about it.”

505 How can a company maximise its positive impact through its suppliers?

Consider, for instance: How does the organisation first of all choose its suppliers? Do the
506

selection criteria provide for more than just the best price. What is the right or ethical
thing to do, and how can the organisation maximise its impact through its suppliers?

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507 Here we are talking about something as simple as complying with legislation:

 The Preferential Procurement Act 5 of 2000 stipulates that a preferential point system
must be followed to promote sustainable black economic empowerment.
 Black economic empowerment through the supply chain has seen many individuals
and communities become financially independent for the first time in their lives. BEE
charters, such as those for the finance sector, mining sector and the tourism sector,
impose specific requirements on the respective industries.
508

But it is also about more than just adhering to the letter of the law. Does the business
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know how its suppliers are running their businesses: Where and how do they obtain
the products that they provide to the enterprise, and are the values of the organisation
aligned with those of its suppliers?

After all, by buying from them, the organisation is keeping its suppliers in business and
510

adding its vote of confidence to its suppliers’ business practices!

511 Some relevant legislation:

 Preferential Procurement Policy Framework Act 5 of 2000

 National Black Economic Empowerment Act 53 of 2003
 Companies Act 61 of 1973 and Closed Corporations Act 69 of 1984
 Constitution of the Republic of South Africa, 1996
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Table 5.2: JSE impact classification table

High impact Medium impact Low impact
Aerospace and defence General retailers Banks
Automobiles and parts Health Insurance
Chemicals Household goods and textiles Investment companies
Construction and building Information technology and Investment entities
materials hardware
Electricity Leisure, entertainment and Life assurance
hotels
Food and drug retailers Media and photography Speciality and other finance
Forestry and paper Real estate
Mining Software and computer
services
Oil and gas Telecommunications services
Tobacco
Water

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5.8.5 Human resources
The real value of a company lies in its people – without sound HR practices, any
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organisation, however big or small, will sooner or later find itself in big trouble. CSR can
help to increase employee satisfaction and loyalty, improve recruitment and retention,
and build the long-term pipeline of employees.

Employees form the internal stakeholder group of an organisation. How does the business
515

treat this stakeholder group? Does it have proper policies and procedures in place that
meet the real needs of its employees? This goes beyond service contracts and normal
benefits such as leave, maximum working hours and overtime: it includes factors such
as training opportunities, disciplinary practices and non-discrimination. Does manage-
ment promote sound health and safety measures in the workplace? Does the employer
encourage its staff to take part in organised employee actions, such as unions? And how
does it deal with the unions: is there regular, honest consultation, and do these unions
have an input in decision making?

On the other hand: How do employees treat their employers? Do they adhere to a code
516

of conduct? Is there a corporate culture of anti-corruption and anti-bribery, and are

employees participating in initiatives beyond their call of duty, for instance volunteer
programmes within the community in which they operate?

Staff involvement in corporate social responsibility should not be a separate or optional

517

aspect of an entity, but the assessment of the social and environmental impact of em-
ployees’ activities should form an integral part of their key performance areas (KPAs) and
performance evaluation.

518 Some relevant legislation:

 Labour Relations Act 66 of 1995

 Employment Equity Act 55 of 1998
 Basic Conditions of Employment Act 75 of 1997
 Occupational Health and Safety Act 85 of 1993
 National Black Economic Empowerment Act 53 of 2003
519

5.8.6 Risk management

520 The management of organisational risk has become more difficult for several reasons:

 Globalisation of risks. Companies are competing in a global environment, with

risks coming at them from multiple sources and multiple geographies. It is more
difficult to keep abreast of potential risks and to know how to respond if they occur.
 Heightened surveillance. Companies are being watched by more groups, with more
diverse agendas, than ever before. These groups are linked across the globe by the
internet, allowing instant transmission of fact (and falsehood) to millions of consumers.
 Increased demands for transparency. Consumers, labour and communities have
moved from a “trust me” to a “show me” stance, demanding to know more about
what a company is doing and how it affects them.

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Social and environmental factors pose an increasing risk to the environment in which
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organisations operate. Here we are talking about factors such as unemployment, crime,
the use of non-renewable resources, poverty and ill health. Of course, HIV/Aids is currently
the most significant health challenge facing South Africa.

HIV/Aids is but one social risk factor that can have an enormous impact on the financial
522

bottom line of companies: Shouldn’t companies seriously rethink their risk management
focus?

5.8.7 Marketing and public relations

Marketing deals mainly with the effective development and delivery of a satisfactory
523

product offering to the market in such a way that it meets the needs of the organisation,
the consumer and the community. How should organisations then use their marketing
function in a responsible and ethical manner to ensure maximum benefit to everyone
involved: the business, customers/clients, employees and the wider community?

We all know that marketing is about much more than advertising; but advertising is a
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good example of a visible marketing initiative that is directed at consumers. How respon-
sible are the advertising practices of companies? An example that most of you might be
familiar with is the TV ad of a certain cell phone manufacturer, where the boyfriend uses
cell phone technology to deceive his girlfriend’s father. It might make you smile, but
what message does it send out about the values associated with that product? Is that
responsible advertising?

An example of an advertisement where a product is associated with a good cause is

525

the Isuzu ad where the KB280D small truck is used to rescue a beached whale. However,
we do not know what business practices actually underlie this claim to corporate social
responsibility – and that is where the real impact will be found.

526 Responsible marketing is also about how the organisation positions its brand. For instance:

 Is the product properly labelled?

 Does the brand – through its marketing – actively promote social and environmental
well-being?
527

An interesting new development, which is gaining huge popularity worldwide, is that of

528

brand citizenship and cause-related marketing. Broadly speaking, this is where business
and charities form a partnership to market an image, product or brand for mutual benefit
using the power of the brand to make a difference in society.

529 Consider the following examples:

 Woolworths – think of the My School card: Woolworths benefits and many schools
in less fortunate environments benefit.
 Avon beauty products donate a part of their profits to the fight against breast cancer,
especially through the proceeds on their pens that are sold specifically for this purpose.
 Coca Cola sponsors the Coke Football Stars Tournament.

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 Tiger Brands and the Unite Against Hunger campaign is a classic example of business,
government and charities working together for mutual benefit.
530

Of course, corporate social responsibility is much more than public relations (PR). If
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a company chooses to put a marketing spin on flaunting the company’s good corporate
social responsibility practices, it should always be underpinned by demonstrated triple-
bottom-line benefits. CSR can very easily be misused and turned into a pure PR initiative
without any substance.

532 Some relevant legislation:

 Promotion of Access to Information Act 2 of 2000

 Competition Act 96 of 1979
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SUMMARY
You now have a basic understanding of the concepts underlying corporate social
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responsibility. We have examined the imperatives for implementing corporate social

responsibility in organisations and discussed why and how stakeholder engagement
is key to the process. Finally, the concepts of “corporate governance” and “sustainable
development” were defined and we have highlighted the link between corporate social
responsibility and the various business functions. When you revisit the learning units in
this study guide, always be aware of how corporate social responsibility relates to the
other key business management concepts. The next learning unit gives you an introduc-
tion to general management.

BUSINESS IN CONTEXT
Refer to the recommended book entitled Business Cases, in particular case study number
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4 “Corporate social responsibility: South African Breweries”. This is not compulsory

for you to do, but merely a business-in-context addition to your learning of business
management.

SELF-ASSESSMENT QUESTIONS

Consider the following case study. A PR exercise or true CSR benefit? But does it need to
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be “either/or”?

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 MNB1501/1/2018–2020

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Many companies (notably listed companies for whom sustainability reporting is becoming
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an increasingly important requirement) are publishing not only an annual report, but also
a sustainability report which focuses specifically on the social and environmental aspects
of their business. Although the information in such a report should always be honest
and truthful, reflecting the real impact of the company’s business dealings on the triple
bottom line, the very fact of issuing such a report is good PR in itself in that it positions
the company as a “good corporate citizen” in the eyes of its stakeholders.

You can find some very good examples of sustainability reports on www.nedbankgroup.
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co.za, www.sab.co.za, www.angloplatinum.com and www.mtn.co.za.

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