Doing Good Business

Doing well by doing good conjures the scene of Disney’s character “do-gooder” Pollyanna, an orphan girl who spreads her sunshine all over town, transforming such local curmudgeons as hypochondriac Mrs. Snow, hellfire-and-brimstone Reverend Ford, and reclusive Mr. Pendergast into positive, life-affirming sorts and even transforms the stubborn Aunt Polly. Ebulliently optimistic Pollyanna reaches out to the community by applying common sense and refusing to indulge anyone's self-pity.

No longer is it a part of fantasy. The value principle of “Doing well by doing good” has become increasingly part of business lexicon. The principle that organizations can be successful by acting in the broader interests of society as a whole even while they satisfy the interests of their shareholders or partners is evident in companies such as Pick n Pay, Timberland and BP to name but a few.

Definition of Corporate Social Responsibility

Upon closer inspection, there appears to be no one meaning for corporate social responsibility. 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".

Another definition, “Corporate Social Responsibility is about capacity building for sustainable livelihoods. It respects cultural differences and finds the business opportunities in building the skill of employees, the community and the government" to "Corporate social responsibility is about business giving back to society".

However you wish to define this label, corporate social responsibility is a convoluted term which decoded refers simply to: organizations meaning to do something good.

The ladder of goals

In 19761, a study disclosed that executives ranked business credibility and government regulation as the top two issues facing business. A study in 19872 of top executives in 200 organizations, showed that all these executives agreed that economic goals were in the top four goals and only one executive ranked corporate social responsibility first. However this study did conclude that social responsibility was increasing as a major corporate goal.

Policy: Mandatory or voluntarily

Traditionally, the purview of social responsibility adopted by the business was philanthropic in nature. Essentially, businesses would “give away” or donate money to charitable causes. “Giving” in organizations has since evolved to adopting a corporate social responsibility policy framework which is accepted from top executive management to employees.

In the legal environment, the Legal Services Sector Charter was adopted by attorneys and advocates with one of its objectives being to provide a free legal service for the less fortunate members of our society, i.e.:

“Devising and implementing measures to address the provision and availability of pro bono services and community-based paralegal services, thus ensuring access to affordable legal services for all people in South Africa, particularly marginalised, poor and rural communities”.3

By means of the Charter, a mandatory social responsibility initiative was adopted in the legal profession.

It is interesting to note that scorecards were developed under the Charter which serve as a performance management measuring tool. The Socio-economic development scorecard which targets pro bono services provides that each professional, partner, director, employer excluding candidate attorneys shall render 24 hours per annum of professional legal services to the less fortunate members of our society. Each of the seven scorecards sets out a weighting, with the total weighting of all the scorecards equalling 100 points i.e. total compliance. The Socio-economic scorecard has a weighting of 15 which is on par with Enterprise development and ranked below Ownership and Skill development. A commitment by legal professionals to social responsibility can no longer be ignored in the environment in which we conduct our business.

According to Empowerdex the budget allocation for social responsibility initiatives should be 1% of net profit after tax. In aiding the business’ BEE rating, 5 points from a total of 100 points are allocated to socio-economic development. Corporate social responsibility has a firm footing in our boardrooms whether we like it or not.

Notwithstanding the important role of BEE ratings and the pro bono services by legal professions, it is encouraging to witness that many domestic and international organisations do already voluntarily subscribe to corporate social responsibility initiatives. This is indicative of the growing recognition and importance of corporate social responsibility in business.

Shanaaz Mahomed

Partner at Spoor & Fisher

Date published: 2009/06/11
Author: Shanaaz Mahomed

Tags: business corporate social resposibility