CSR: Real care for communities or a marketing ploy?

The World Business Council for Sustainable Development in its publication Making Good Business Sense by Lord Holme and Richard Watts, used the following definition.

“Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.”

Corporate Social Responsibility (CSR) has become an important part of business operation in the developed world, as well as loftily taking shape in the developing world. At the time of publishing this blog, I have not come across a thoroughly researched paper on CSR in Zambia. In my opinion, the Zambian case for CSR or lack of it is all based on western research and text books. I have a friend who is totally against text book theory copy and pasted in. But the truth remains that CSR is an emerging theme that cannot be ignored in Zambia hence I will blot my opinions on it.

CSR is a duty, beyond what is obligatory by the law and economics, for a firm to pursue long term goals that are good for society. It is how an organisation administers its business process to produce an overall positive impact on society. It is a company’s sense of responsibility towards the community and environment (both ecological and social) in which it operates.

It is generally believed that CSR can improve profits. CSR can promote respect for a company in the marketplace which can result in higher sales, enhance employee loyalty and attract better personnel to the firm. Society is constituted of current and potential customers, thus the perception they hold about a company being socially responsible and promoting their cause may tilt their loyalty towards that organization hence improve profits.

  

Compliance CSR vs. Conviction CSR

Some experts discourse that companies use CSR as a tool to conform to expectations and regulations imposed by government and society at large. This is known as compliance CSR. Conviction CSR, contrariwise, is about the vision and integrity of the organization and its desire to assume a leadership role in positively influencing the development of the society. CSR in this case becomes a relationship-building tool that inspires trust in the statements and intentions of the company.

Then there is the case of KCM. To be fair to the mining giant, in this day and age mechanization is required in order to boost production hence enjoy economies of scale which later translate into productivity. This is a seriously business decision, and over time job cuts are inevitable. However, a company that has a proper CSR programme would not just throw more than 1500 families to the streets overnight. This is a company that boasts of great CSR, they sponsored a chipolopolo trip to India for extensive training prior to the 2012 AFCON. When copper prices were high they pledged to pay for the coach’s salary and left the burden to FAZ and government when the copper prices plummeted. Since when did sports sponsorship become CSR? This is not CSR but advertising. It is actually riding on the Chipolopolo brand. Would you then say insurance giant AON’s shirt sponsorship deal with Manchester united is CSR?

My views… my thoughts

CSR requires a company to ensure that it’s financial, human and resource capital are conserved and developed in the best interests of everyone concerned. CSR is distinct from simply donating money to the Football Association or building a block of classrooms at a basic school. Of course long term activities focused on improving educational opportunities and facilities can be CSR. Such CSR may also help build the brand image of the business; in due course improve the quality of the human resource pool available for hire, ensuring the long-term success of the business.

It is also absolutely correct to expect that corporations should be “responsible” by creating quality products and marketing them in an ethical manner, in compliance with laws and regulations and with financials represented in an honest, transparent way to shareholders and stakeholders alike. It is expected that a food manufacturing company will provide a safe product to its community. Agencies like Zambia Bureau of Standards then police such a company to make sure they meet the minimum standards in order to guarantee the safety of the consumers. When a company achieves these minimum standards, this can’t be called CSR. They are obligated to guarantee consumer safety for God’s sake.

However, the concept that a company must apply its assets for social purposes, rather than for the profit of the shareholders, is reckless.  Any company must strive to make a profit first. In striving to make a profit, it must fulfill all its obligations – legal, social and taxation. This must not in any way be classified as CSR. These are obligations.

The owners of a company can certainly donate their own assets to charities that promote causes they believe in. In order to have companies that operate in ways that portray real care for society, ownership of these companies must change. We need to develop a cadre of as many Zambian’s that own business entities. A local Zambian may not under declare profit before tax so as to syphon the difference abroad. Foreign Direct Investment (FDI) must be augmented by local investment.

I do believe real CSR does help with profitability; but I do not entirely classify it as advertising. On the other hand I do not classify sponsorship to a local sports team as CSR; neither is donating prize money to a local school debate competition. What both situations do is enhance a company’s corporate image. Enhanced corporate image is linked to favourable behavior from customers towards the firm’s products and services (Eisenburg and Riley, 1998; Fombrun, 1996; Turban and Greening, 1997; Arpan, 2005)

Corporate philanthropy is a direct way of marketing. In other words, no one really cares about society unless they have a cut in it.