Corporate Social Responsibility (CSR) models practised by some industrialised country companies in Africa and developing countries are often unsuitable.
As a result, they largely have an insignificant social impact.
Corporate social responsibility is a central pillar of corporate governance.
It is the idea that companies have a responsibility to operate in such a way that they exercise a duty of care for the wider society, people, the economy, environment, and the future.
Yet, CSR initiatives in developing countries often focus on public relations and are removed from the needs of impoverished communities.
The social impact of such initiatives is therefore often not sustainable.
As a result, stakeholders become resentful and angry and level accusations of window dressing.
Irrelevant CSR models can also undermine their social licence – approval by community, stakeholders and wider society – to operate.
Glossy corporate social responsibility reports are in many cases ‘PR speak’.
They talk glibly of the “triple bottom line” and “profit, people, planet”, whereby a business is supposedly committed to prioritising social, environmental and sustainability impact in tandem with profit-making.
But there is often little to show in the way of sustainable projects.
Companies have greater social, environmental and economic responsibilities in countries with historical inequalities, where profits by former colonial or apartheid-era or developed country origin companies were made by exploiting indigenous communities.
More holistic CSR approaches are crucial to secure the ‘social licence’ to operate from the community, stakeholders and victims of companies’ past wrong behaviour.
Countries such as South Africa, Zimbabwe and Namibia have dominant traditional corporate cultures based on colonialism and apartheid, which tend to influence their CSR models. This must change.
Dominant mainstream corporate culture was largely based on segregation of opportunities, and stripping the environment.
Many industrialised country companies almost always use the same model, and try to pay as little tax as possible.
What should drive CSR in companies operating in African and developing countries?
CSR is often run by a small unit in a company rather than integral to the business as a whole. Broadly, it should fully encompass its operations company-wide.
It must look at the company as a responsible democratic corporate citizen.
It must model sustainability in its internal, as well as its external operations, and consider the future impact of its operations.
It must strive for gender equality, non-racialism, diversity and ethical decision-making.
There should be no pay gap between women and men doing the same work, nor excessive pay gaps between high-paid executives and ordinary employees.
The business operations of a CSR model for companies operating in developing countries should be carried out sustainably and their business practices minimise harm.
They should prioritise human rights, fair labour practices and fair trade practices – including not exploiting the poor, the vulnerable and illiterate with higher fees than those who are more affluent, and paying dependent contractors on time.
At the core of CSR is the responsibility to ensure the sustainable use of natural resources, reducing green gas emissions, reducing pollution and rehabilitating the environment.
CSR has to involve companies providing industry-relevant skills and technical training to employees.
In countries like South Africa, Namibia and Zimbabwe, reparations must be prioritised if the company harmed local communities during apartheid and colonialism.
Similarly, industrialised country companies must rehabilitate local environments they damaged.
It is important to involve local communities around mines and factories in their value chain by using local small contractors and farmers for goods and services.
Corporates must support local community development projects and educational programmes, and fund sport and recreation facilities and community infrastructure projects.
Many corporates in developing countries engage in corrupt activities. Some argue they have no choice because corruption is endemic in the host country, and “everyone is doing it”.
However, it is crucial for companies to behave as model democratic citizens and eschew corruption even if it means losing contracts.
Many African countries, desperate for foreign investors, often allow them to skirt local laws.
Corporates must follow country laws and respect democratic institutions and the environment.
A CSR model in African and developing countries has to reject a corporate culture which demands extreme profits above all else.
Success must be measured in sustainable, inclusive ways.
- William Gumede is associate professor, school of governance, University of the Witwatersrand; this is an edited version of his keynote address ‘Reimagining Social Impact’ at the Annual Social Impact Symposium, Stellenbosch University.