Business Studies – Grade 12
Topic 1: Social Responsibility and
Corporate Citizenship / Corporate
Social Responsibility and
Corporate Social Investment
 Introduction:
• The way in which business operations are
conducted has changed over the last two
decades.
• Businesses have not always been as committed
to corporate social responsibility as they are
today.
• Corporate Social Responsibility (CSR) became a
popular topic in the 1990’s when the political
environment in South Africa began to change.
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Introduction:
• The word “social” refers to society and to the public at large.
• The word “responsibility” refers to accountability and duty.
• Social responsibility refers to the public’s duty to further the
interests of society.
• Businesses are corporate citizens- this means that
businesses have a responsibility towards society.
• Corporate Social Responsibility (CSR) refers to a business’s
responsibility to further the interests of the community in
which it operates.
• CSR is about making profit in a responsible way- i.e
conducting business by taking into account the impact of a
business’s operations on the environment, employees and
the community in which it operates.
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Introduction:
• Triple bottom line( people, planet, profit) serves as a guideline for responsible
business practice:
Environmental
sustainability
(planet)
• Business operations have an impact on environmental
resources.
• Businesses must attempt to strike a balance between
impacting the environment and maximising profit.
Economic sustainability
(profit)
• Business should aim to achieve ling-term growth and
sustainability, instead of maximum short-term profit.
Social sustainability
(people)
• Businesses have a responsibility towards employees
and towards the community in which they operate.
• This is achieved by , for example:
 Ensuring that business operations are not harmful to
the community.
 Ensuring that employees are working in a safe and
healthy working environment.

Introduction:
• CSR includes advancing the well-being of employees and other stakeholders:
Employees
Initiative to advance the well-being of others in a business context:
Employee motivation initiatives:
Offer incentives when performance targets are met.
Create opportunities for promotion.
Provide employees with job security.
Employee development initiatives:
Skills training.
Learnership programmes.
Mentorship programmes.
Rehabilitation and wellness initiatives:
Assist employees who suffer from addiction problems with rehabilitation.
Offer counselling to employees who experience personal trauma.
Stress management initiatives:
Provide employees with access to recreational facilities such as gyms.
Create awareness of the correlation between stress and disease.
Arrange wellness-days for employees to have their cholesterol and blood
pressure measured by medical professionals.
 Organise team building events
 Treat employees fairly and with respect.
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Introduction:
Clients
• Ensure that prices are market-related and fair.
• Advertising should not be false, misleading or deceptive.
• Ensure production and delivery of quality goods and services.
Society
• A business should consider the impact of its operations on society.
• A business can contribute to the well-being of society through CSI projects,
such as:
 IADS awareness projects.
 Projects to raise funds for less fortunate people.
 Projects to raise awareness of violence against women and children.
 Projects to provide shelter for homeless people.
 Anti drug abuse campaigns.
Environment
Initiatives to advance the well-being of others in a business context:
• A business should consider the impact of its operations on the environment,
by:
 Complying with all environmental laws.
 Contributing money towards environmental research.
 Refraining from testing products on animals.
 Minimising pollution.
 Finding alternative energy sources.
 Definition
of Social Responsibility:
• It is an ethical objective aimed that all individuals
and organizations have a responsibility to benefit the
community as a whole.
• It also includes the awareness of the consequences
of actions for the community and environment.
• This responsibility ma be in the following forms:
 Passive: avoidance of any actions that may damage the
community and environment.
 Active: take steps that can benefit the community by
initiating projects that have a positive impact on
individuals, community and society.
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CORPORATE SOCIAL RESPONSIBILITY (CSR):
Definition:
• The way in which businesses manage their time to influence
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their stakeholders (individuals, organizations who somehow
made a commitment to the business) in a positive way.
To ensure the business’ own survival in the future the
business should take care of the well-being of its
stakeholders.
A continuous objective of the business to behave ethically in
order to make a positive contribution to economic
development.
CSR implies that businesses recognize the need to give
back to the community in a sustainable manner.
The focus will vary from business to business because the
focus of the business’ CSR initiatives differs, e.g. some
businesses focus on community involvement, while others
focus on the manufacture or distribution of socially
responsible products.
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CORPORATE SOCIAL RESPONSIBILITY (CSR):
The basic principles of CSR are:
• Businesses accept their responsibility for their impact
on society and the environment.
• Businesses react responsibly to the behaviour of their
stakeholders, e.g. ensure that they support ethical
suppliers.
• The relationship between the business and the broader
community must be managed effectively to increase
profits, but also to add value to the community.
• Primary social responsibility: meet the needs of the
stakeholders who are directly connected with the
business, e.g. owners, employees, customers, suppliers
and competitors.
• Broad social responsibility: refers to the broader
community, not just clients, which also include various
levels of government.
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Corporate Social Responsibility (CSR)
Nature of CSR:
• Businesses implement CSR programs for various
reasons:
 Some see it as a sign to promote their image of the fulfilment
of social responsibility, others are driven by the philanthropic
culture (do something positive in the lifting of the
community).
 Most businesses, however, are motivated by a combination of
factors to implement their specific CSR programs, e.g.:
 The community expects it from the business and businesses would
like to see that they fulfil these expectations.
 Economic benefits for the business (avoiding penalties and legal
expenses and acceptance of credit because they do something
good, e.g. reducing the carbon footprint).
 Ethical considerations such as responsible business agreements
and relationships in the workplace.
Social Responsibility and Corporate Citizenship /
Corporate Social Responsibility and Corporate Social
Investment
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CORPORATE SOCIAL RESPONSIBILITY (CSR):
The nature of CSR:
• We can say:
• CSR aims to protect the natural environment in which a business
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operates.
CSR means not pursuing profit at any cost.
CSR aims to be sustainable.
CSR aims to create a safe working environment for employees.
CSR is transparent.
CSR builds a business’s reputation.
CSR is relevant.
CSR is ethical.
Claims from government because of limited resources available to
the government:
 The CSR programs that the business undertakes should positively
contribute to the lifting of the community in which they work.
 It must be strategic in nature and not just random attempts without a
positive impact on the community.
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Corporate Social Responsibility (CSR)
Process of CSR:
• Assess a business in terms of financial, economic and
social sustainability.
• Identify areas for improvement in terms of the extent to
which a business considers the impact of its operations
on the environment and community.
• Devise a strategy to address the weaknesses identified in
the previous step.
• Businesses must then decide what Corporate Social
Investment to make:
 Identify a need in the community which can be addressed
through CSI.
 Register CSI-projects and programmes with relevant
institutions.
 Draw up a budget for the chosen projects.
 Ensure beneficiaries are legitimate.
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Corporate Social Responsibility (CSR)
Benefits of CSR for businesses:
• CSR helps build a business’s reputation.
• Businesses with good reputations attract good
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candidates.
CSR contributions are awarded BEE points.
Employees feel more positive about employers who
look after employees and conduct business in a
responsible way.
CSR-programmes help build customer loyalty.
CSR-programmes help create a positive image of
businesses among consumers.
Many investors prefer investing in businesses that
conduct business ins a responsible way.
CSR creates employee opportunities, e.g. if a school is
built, teachers must be appointed.
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Corporate Social Responsibility (CSR):
Benefits for the Community:
• CSR improves a community’s standards of living, e.g. By
providing healthcare services.
• CSR can create employment opportunities by appointing
members of local communities.
• CSR benefits communities by providing education and training
through skills development.
• CSR teaches Communities to become self-sustainability, for
example growing vegetable gardens.
• CSR focuses on sustainability- ensuring that resources will be
available for future generations.
• CSR focuses on protecting the environment.
• Infrastructure is often improved as businesses expand.
• Product safety for customers because laws are strictly
enforced.
• Safe disposal of pollutants by the community benefit the
community.
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CORPORATE SOCIAL RESPONSIBILITY (CSR):
Problems and challenges relating to Corporate Social Responsibility for businesses:
• CSR costs money that could have been invested more profitably
• Businesses carry a heavy load- businesses a tax intended for
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building infrastructure and addressing socio-economic
problems. On top of this, businesses are expected to make CSR
contributions
Businesses are required to prepare detailed CSR reports- this is
time consuming.
Employees are often expected to participate in CSRprogrammes in their free time.
Production time is lost when time is spent on CSR-programmes
during business hours.
Many CSR-programmes are not successful, because businesses
tend to focus more on implementation than on maintenance –
e.g. a business budgets to equip a school with computers, but
does not provide for the maintenance of these computers.
Small businesses do not always have enough employees to
implement CSI-initiatives.
 CORPORATE
SOCIAL RESPONSIBILITY (CSR):
 Problems
and challenges relating to CSR for
community:
• Communities do not always enjoy the intended
benefits of CSR-programmes , because business
tend to focus on implementation only not on
maintenance as well.
• Businesses are not always equipped to address
social problems.
• Communities can avoid taking responsibility for
themselves, because they expect a business’s CSRinitiatives to provide for them.
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CORPORATE SOCIAL RESPONSIBILITY (CSR):
Components of CSR:
Components of Corporate Social Responsibility:
Environment
• Business must take into account the impact of their
operations on the environment.
• Business operations must be conducted in a manner that
ensures that natural resources are available for future
generations.
• Ways in which business can be environmentally
responsible:
 Contribute money towards research aimed at finding
alternative sources of energy.
 Recycle, e.g. paper, empty cartridges and dated
equipment.
 Use energy –saving globes
 Reduce paperwork by keeping correspondence digital.
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CORPORATE SOCIAL RESPONSIBILITY (CSR):
Components of CSR:
Components of Corporate Social Responsibility:
Ethical
corporate
social
investment
• Corporate Social Investment (CSI) is an extension of a
business’s, Corporate Social Responsibility.
• CSI mainly focusses on addressing socio-economic issues
such as poverty and a lack of education within the
community in which a business operates.
• Ethics and CSI are complementary concepts.
• The point od CSI is defeated when it is not implemented in
an ethical manner.
• Ways in which businesses can contribute towards ethical
social investment:
 Ensure corporate social investment projects have
legitimate track records.
 Ensure that the purpose of CSI is to benefit the community,
and not to raise profit.
Health and
safety
• Businesses have a responsibility to ensure the safety of
employees at work and of people who visit their premises.
• Businesses operations must not pose a risk to the health
and safety of communities..
• Ways in which businesses can contribute towards the
health and safety of role players and people who visit the
business( employees, consumers, suppliers , government
officials):
 Adhere to health and safety requirements as per the
Occupational Health and Safety Act( No. 85 of 1993).
 Provide protective gear to workers who work with
dangerous materials.
 Employers who employ more than twenty employees must
appoint at least one health and safety representative for
every 100 employees( shops and offices) ;and at least one
health and safety representative for every fifty employees
in the case of all other workplaces.
 Do regular maintenance of machinery and office
equipment.
 Devise an emergency plan in case of an emergency , e.g.
fire.
Socioeconomic
development
(SED)
• Although socio-economic development (SED) is not a
component of CSI, SED is closely related to CSI.
• Like CSI, SED aims to further the interests of communities ,
but the difference is that SED is specifically aimed at
promoting access to the economy for black people.
• SED comprises four elements:
 Infrastructural development
 Educational development
 Community development
 Healthcare development
• Businesses receive BEE-points for qualifying for SED
contributions.
• Businesses make SED contributions according to the
industry in which they operate.
• Ways in which businesses can contribute towards socioeconomic development:
 Infrastructural development, e.g. programmes that provide
communities with solar power.
 Educational development, e.g. providing a disadvantaged
school with computers.
 Community development, e.g. programmes that develop
arts, culture and sport.
 Healthcare development, e.g. HIV/ Aids programmes.
CORPORATE SOCIAL RESPONSIBILITY (CSR):
 Issues that challenge CSR:
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HIV/AIDS
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Businesses aim to further the interests of the communities in which
they operate through CSR.
However, some problems just seem too big to be solved.
Examples of such problems include:
• South Africa has one of the highest HIV-prevalence rates in the world an
the infrastructure to deal with this problem is lacking.
• Although businesses are making a contribution, the effects of HIV/Aids
are overwhelming:
 Children become orphans when their parents die.
 These children, often very young, drop out of school because they
simply cannot cope with running a household and going to school.
 Parents cannot take care of their children in the final stages of the
disease.
 Employees who live with HIV/Aids are absent more often.
CORPORATE SOCIAL RESPONSIBILITY (CSR):
 Issues that challenge CSR:
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Examples of such problems include:
Poverty Unemploymen
t
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• Although government has devised several strategies to address
unemployment, it is still a very big problem.
• Businesses contribute towards solving this problem by offering
learnerships to unemployed people.
• However, in many businesses there are simply not enough positions
available for businesses to make a significant contribution.
• Many businesses try to alleviate poverty by donating clothes or other
valuable items to underprivileged communities.
• Although these contributions are extremely helpful, it is not really
addressing the root of the problem.
 Corporate
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Definition:
Social Investment (CSI):
• CSI forms part of Corporate Social Responsibility.
• It refers to the time, money and other resources
businesses spend on improving the standard of
living of the community in which they operate.
• The main aim of CSI is not to increase a business’
profits, but to use a business’ resources to benefit a
community.
• Not seen as a marketing activity.
• CSI is a business’ contribution to communities over
and above their normal business activities.
 Corporate
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Social Investment (CSI):
Definition:
• Projects aimed at development and lifting of the community
and operated out of the company’s resources.
• Addressing specific socio-economic issues such as poverty,
HIV/Aids, illiteracy, etc., by making the business’ resources
available to non-profitable organizations which are involved
in lifting programmes in the community or by getting selfinvolved in lifting programs.
• The original goal of CSI was philanthropic, but later it
became clear that the reputation of the business can be
promoted through CSI.
• Originally SCR and CSI was seen as the same thing but it is
now defined differently. Where CSR refers to the business’
overall responsibility to the business environment in which it
operates, CSI is a sub-component of CSR and the goal is the
lifting of the community through ways that will improve the
quality of life through direct investment.
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Corporate Social Investment:
Nature of Corporate Social Investment:
• The nature of Corporate Social Investment refers
to the characteristics of CSI:
 CSI contributes towards sustainable development.
 CSI is enforceable by law and government requires
businesses to make CSI contributions.
 CSI plays a positive role in the development of
communities.
 CSI reveals a business’s attitude towards the
community in which it operates..
 CSI is a long-term investment.
 CSI is relevant to the South African context where
socio-economic upliftment is such a priority.
 The main focus of CSI is not to increase profit, but to
support communities
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CORPORATE SOCIAL INVESTMENT:
Nature of Corporate Social Investment:
• Although South Africa is behind the rest of the
world regarding CSI, the King Code largely
contributed to CSI practices in South Africa.
• It does not matter what the nature is that the
business chooses, but it should aim to lift the
society and the environment in which it
operates.
• The nature of CSI depends on the CSI policy of
the business and the specific needs that exist
within the community .
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CORPORATE SOCIAL INVESTMENT PROJECTS:
Businesses are free to decide their level of involvement is CSI.
Examples of CSI projects include:
• Projects that focus on nature conservation, e.g. cleaning up a polluted area or
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creating awareness of the dangers of pollution.
Providing education and training to disadvantaged people, e.g. bursaries,
providing resources to schools, fund appointment of extra teachers ore
renovating dilapidated school buildings.
Expanding infrastructure , e.g. by being involved in building a community
centre or renovating rundown houses.
Investing in the well-being and advancement of employees, their families and
communities, e.g. by providing employees with housing subsidies, creating
jobs or teaching a community to become sustainable by cultivating small
vegetable gardens.
Projects that focus on human rights, e.g. initiative that support early childhood
development ( right to education), initiatives that help communities with
housing ( right to shelter) or initiatives that help to restore the dignity of
communities.
Initiatives that help to combat crime, e.g. starting a neighbourhood watch or
counselling for substance abusers.
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Corporate Social Investment:
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Responsible business practice:
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Businesses should be good corporate citizens.
Corporate citizenship suggests that businesses do not pursue profit at any
cost, but consider the impact of their operations on the community.
The cornerstones of responsible business practice are:
• Transparency
• Fairness
• Accountability
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The JSE launched a Social Responsibility Index (SRI) to identify listed
companies that implement the principles of responsible business
practice.
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Corporate Social Investment:
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Responsible business practice:
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The SRI measures the performance of listed companies against the
criteria of the triple bottom line:
• Social sustainability
• Economic sustainability
• Environmental sustainability
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Examples of responsible business practice include:
• Creating a safe and healthy working environment
• Fair and equal treatment of all employees.
• Limiting or eliminating the impact of a business’ operations on the environment.
• Launching Corporate Social Investment initiatives to “give back to society”
• Paying fair wages
• Manufacturing products that are safe to use.
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Challenges to the business regarding the long-term needs of society:
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Businesses face the following challenges regarding CSI:
Sustainability
• Sustainability refers to a business’ long term commitment
to a community and to CSI.
• However, it may be possible that a business cannot
continue with a CSI-initiative (e.g. when a business goes
bankrupt).
Maintenance
• Many great CSI contributions have already been made
and many of these contributions focused mainly on
implementation, for example a business donating
computers to a school.
• The success of initiatives like these, is compromised if
the business does not also provide for computer training,
maintenance and security of the new computers.
• It is therefore possible for a business to spend millions of
Rands on CSI, yet a community never enjoys the benefit
of the initiative.
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Challenges to the business regarding the long-term needs of society:
High cost of CSI
Making a true
difference
• CSI requires a commitment form businesses to be
actively involved in a community.
• This commitment requires both employees’ time, who
work hard as it is, as well as money.
• CSI can distract a business’ attention form its core
activities.
• Businesses need to remain focused on their core
activities in order to be profitable and at the same time
make corporate social investments.
• South Africa faces a variety of socio-economic problems.
• Many businesses spend fortunes on initiatives to uplift a
communities.
• However, it appears that much of this effort is not yet
visible, as many South Africans remain illiterate, poor,
uneducated and homeless.
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Challenges to the business regarding the long-term needs of society:
Keeping up with
society’s longterm needs
• Businesses need long-term CSI strategies for
communities where people are poor and unemployment
is high.
• Handing out food parcels, for example does not uplift a
community in the long run.
• Instead, businesses must strive to address the core issues
(education and skills training).
• Building a clinic is easy, but making sure that the clinic
functions optimally is a much harder task.
• Hence, businesses must do comprehensive long-term
planning in order to make sure that the needs of societies
are addressed over the long-term.
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Legislative requirements:
• Some legislation has an impact on businesses’ CSR and CSI.
• In May 2004, the JSE launched South Africa’s first CSI 0ndex
• Public companies must apply to be listed on this index.
• There are 94 different criteria that businesses must comply,
including commitment to BEE, dealing with HIV/AIDS in the
workplace, fair labour practices, environmental sustainability,
contribution to reduce global warming, etc.
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Legislative requirements:
• Public companies must report on the following:
 Environmental Issues: Business policy, how it is managed,
reporting, etc.
 Employee issues: training, employee-employer relationships,
equal opportunities, health and safety, HIV/AIDS. etc.
 Other social issues: Black Economic Empowerment,
community involvement, stakeholders’ involvement, reporting
to stakeholders, etc.
 Management issues: Practices of the Board of Directors, code
of ethics, risk management, etc.
• The JSE requires all public companies listed on the JSE,
regardless of whether they are listed on the CSI index, to
submit an annual integrated report on environmental, social,
economic and financial achievement.
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Legislative requirements:
Employment
Equity Act
• Aims to promote equal opportunities in the workplace
and to eliminate unfair discrimination.
• CSI must be inclusive.
Skills
Development Act
• Aims to redress past imbalances through education
and training.
• Many CSI initiatives are aimed at skills development,
education and training.
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Legislative requirements:
BEE and BBBEE
• Aims to empower black South Africans by encouraging
black ownership of businesses.
• According to the BBBEE Act and the new BEE codes
(effective April 2015), businesses are assessed against
the five pillars of BBBEE: ownership, management and
control, skills development, enterprise and supplier
development and socio-economic development.
• Businesses are rated according to the amount spent on
CSI and SED.
National Skills
Development
Strategy
• The National Skills Development Strategy is a strategy
that focuses on redressing past imbalances through
skills development.
• Many CSI initiatives concentrate on skills development,
education and training.
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Legislative requirements:
Human Resources
Development
Strategy
• A long-term strategy that aims to empower people
through skills development and education.
• SETA’s act as vehicles to provide skills development
and training.
• Many CSI initiatives concentrate on skills development,
education and training.
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Differences between CSI and SED:
CSI
SED
• Aim to improve the standard of
living of the greater society.
• Directed at improving the standard
of living by making any
contribution to the community
• Specifically aim to promote access
to the economy for black people.
• Directed at:
 Infrastructural development
 Educational development
 Community development
 Healthcare development
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Similarities between CSI and SED:
• CSI and SED both depend on time, money and other resources from
businesses.
• CSI and SED both aim to improve the standard of living of communities.
• CSI and SED both have a positive impact on society
• CSI and SED both address socio-economic issues