CSR & Corporate Governance - Business Studies Syllabus.
This section includes:
- Social Responsibility
- CSR in South Africa
- Triple Bottom Line Reporting
- King Code
- Corporate Governance
C S R - C or p o r a t e S oc i a l R e s p o n s i b i l i t y c a n b e d e fi n e d a s m a n a g e m e n t’ s o b l i g a ti o n t o
p r o t e c t a n d p r o m o t e t h e w e l f a r e o f a l l s t a k e h o l d e r s , th e c o m m i t m e n t t o ac t i n a n
ethical manner.
C S I - C o r p o r a t e S o c i a l I n v e s t m e n t i s t h e a c tu a l r e s o u r c e s t h a t a r e i n v e s t e d i n t h e s e
s t a k e h o l d e r s , i . e . m o n e y , m a n p o w e r , p r o d u c ts e t c .
B u s i n e s s n e e d t o i n v e s t i n t h e i r fi n a n c i a l p e r f o r m a n c e a s w e l l as s o c i a l p e r f o r m an c e
and looking after the environment. (King Code)
S t a k e h o l de r s = O w n e r s , E m p l o y e e s , C u s t o m e r s , S u p p l i e r s , G o v e r n m e n t, L o c a l
c o m m u n i ti e s , C o m p e ti t o r s
SU ST A IN AB IL ITY
The a b i l i t y t o b e ma i nt a i n e d a t a c e r t a i n r a t e o r l e v e l.
• T o m a k e a di f f e r e n c e i n th e l o n g t e r m
• Environmentally friendly alternatives – “there is no planet B”
• I m p o r t r aw m a t e r i a l s th a t a r e s e a s o n a l
• T o e n a b l e th e c o m m u n i t y t o b e c o m e s e l f s u f f i c i e n t
• T e a c h i n g t h e m s k i l l s t o e n ab l e t h e m t o ge t j ob s t o s u s t a i n t h e m i n t h e l o n g
term, marketable skills
• S u s t ai n a b l e p r o j e c t s c a n c o n t i n u e i n t o th e fu tu r e – a f t e r C S I i n t e r v e n ti o n
IM PL ICAT ION S O F C S R FO R BU S IN ES S A ND C OMM UN IT IE S
P O S I T I V E S F O R T HE B U S I N E S S:
• P r o m o t i n g t h e i m a g e o f t h e b u s i n e s s / M ar k e ti n g s t r a t e gy
• C o m p e ti ti v e a d v a n t a g e b e c au s e o f g o o d p u b l i c i ty / r e p u t a ti o n e . g . , K F C A d d H O P E
• May attract/retain good staff who believe in CSI
• M a y a t t r a c t i n v e s t o r s w h o a r e c o n s c i ou s o f C S I
• A s s i s ts g ov e r n m e n t i n p r ov i d i n g C S R r e l i e f w i th o u t th e m h av i n g t o e n f o r c e i t
t h r o u gh l e gi s l a t i o n
• May enjoy tax rebates from SARS
• A higher rating on the JSE SRI
• A s s i s ts i n t h e i m p r ov e m e n t o f s o c i o- e c on o m i c p r ob l e m s s u c h a s p o v e r ty , th e f t ,
c r i m e – w h i c h c o u l d h a v e a n e g a ti v e e f f e c t o n t h e b u s i n e s s
N E G A T I V E S F O R T HE B U S I NE S S :
1
, • T h e c o m m u n i t y s u p p o r te d m ay n o t b e a b l e t o s u p p or t th e b u s i n e s s – e . g . c a n ’ t
a f f o r d t h e i r p r o d u c ts
• S m a l l e r b u s i n e s s e s fi n d i t di f fi c u l t t o i m p l e m e n t C S R p r o g r a m s
• C S R c a n d i s t r ac t b u s i n e s s e s /e m p l oy e e s f r o m t h e i r c o r e
f u n c ti o n s / r e s p o n s i b i l i t i e s
• C S I i s p a i d f r o m p r o f i ts w h i c h c o u l d h a v e u s e d t o l ow e r s e l l i n g p r i c e s t o b e n e f i t
t h e c u s t o m e r s o r i n c r e a s e p r o fi t s h a r e o f o w n e r s
• D e t a i l e d r e p o r ts n e e d t o b e d r a w n u p = t i m e c o n s u m i n g
• S o c i a l s p e n d i n g r e d u c e s th e c o m p a n y ’ s e c o n o m i c e f f i c i e n c y = m a k e s b u s i n e s s
l e s s c o m p e ti ti v e
• C o m p a n y d i r e c t o r s a r e a c c o u n t a b l e t o th e s h a r e h o l d e r s , n o t t o th e c o m m u n i ti e s
• I t i s di f fi c u l t t o a c c u r a t e l y m e a s u r e th e e f f e c t i v e n e s s o f s oc i a l i n v e s t m e n t
• M a n a g e r s / s t a f f m ay n o t b e t r ai n e d / e x p e r i e n c e d t o r u n C S I p r o gr a m s
• O w n e r s c o n t r i b u t e c a p i t a l t ow a r d s t h e b u s i n e s s a n d e x p e c t a r e t u r n o n th e i r
investment
• S o m e s e e p r o v i di n g g o o d s a n d s e r v i c e s al r e a d y m e e t th e ne e ds o f c o n s u m e r s =
CSR
P O S I T I V E S F O R T HE C O M M U N I T Y :
• S u p p o r t s t h e b u s i n e s s b y p u r c h a s i n g i t s p r o d u c t s a n d d o i n g s o c o n tr i b u t e s t o i ts
p r o f i t a b i l i ty
• T h e c o m m u n i t y p r ov i d e s e m p l o y e e s , c u s to m e r s a n d s u p p l i e r s t o th e b u s i n e s s
• P r o v i s i o n o f b u r s a r i e s m a y i n c r e a s e th e s t a n d a r d o f l i v i n g o f th e c o m m u n i ty
• I m p r o v e s t h e w e l f a r e a n d q u a l i ty o f l i f e o f s o c i e ty /c o m m u n i ty
• I n v o l v e s e m p l oy e e s i n c o m m u n i ty p r o j e c ts
• B e t t e r e d u c a ti o n a l f a c i l i ti e s a r e e s t ab l i s h e d i n p o o r c o m m u n i ti e s
• C o m m u n i ty w i l l b e n e fi t f r o m p r o g r a m s s u c h a s : t r ai n i n g a n d de v e l o p m e n t
p r o g r a m s s u c h as A B E T ( A du l t E du c a ti on ) , A I D S p r e v e n t i o n , A n ti - d r u g ab u s e
c a m p a i g ns , s p o ns o r s h i p s , c r e a t i n g o f i n fr a s t r u c tu r e e tc .
• S u s t ai n a b l e C S R = j o b c r e a ti o n a n d i m p r o v e d s t a n d a r d o f l i v i n g i n c o m m u n i ti e s
N E G A T I V E S F O R T HE C O M M U N I T Y :
• D i s t r i b u ti o n o f s c a r c e C S R r e s ou r c e s t o s e l e c t e d b e n e fi c i a r i e s m ay c a u s e
problems such as discrimination
• P r o g r a m s m ay n o t s a t i s f y a l l t h e n e e d s o f t h e c o m m u n i t y
• C o m m u n i ti e s b e c o m e d e p e n d e n t o n t h e C S I p r o g r a m / c r e a t e e x p e c t a ti o n s
• S u s t ai n e d p r o j e c ts a r e di f f i c u l t t o c o n ti n u e w i t h ou t th e r i g h t e x p e r t i s e
• S p e n d i n g m o n e y o n C S R m e a n s th a t t h e b u s i n e s s n e e d t o r e c o v e r th e s p e n d
s o m e h o w – l e a d s t o h i g h e r p r i c e s b e i n g c h a r g e d a n d i n f l a t i o n w i th a n e g a t i v e
i m p a c t o n th e e c o n o m y
T HE NEED FOR CS R IN SOUT H A FRIC A
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