Research shows that Corporate Social Investment (CSI) is good for your business.

Online since 9.11.2016 • Filed under Industry news
Research shows that Corporate Social Investment (CSI) is good for your business.

A new study says that businesses can profit from engaging in Corporate Social Investment (CSI). The research, conducted by the Bureau for Economic Research and commissioned by the Nation Builder Trust, analyses various sectors and the effect that their social investment has on both the business and on society.

The report states that at worst, the effect of CSI on the company is simply neutral but probably positive. This is an important point to note as many senior executives often see CSI as a compliance exercise that carries costs. Furthermore, the estimated CSI spend in South Africa is such that, if spent even more effectively, might have a highly significant economic impact on the country.  According to Keri-Leigh Paschal, executive director of Nation Builder, “So often social investment is seen as a non-strategic thing, that is either a compliance issue or a heart issue. But if you want it to be effective, you need to implement it in a similar manner to investing in capital.” 

The report looks at the importance of CSI in terms of its impact on economy-wide output, GDP, number of jobs created and labour income. These results should encourage businesses to see the potential of their social impact on the bigger/ national picture, to celebrate what has already been achieved by CSI as well as to impress on businesses the potential collective impact of their giving – along with others in the private sector, government and civil society.

Below is a summary of the report, entitled “The case for Corporate Social Investment in South Africa”.

Summary

Corporate social investment (CSI) is more important than a simple compliance exercise. Businesses can “do well by doing good” through an effective CSI programme that impacts people and the economy while also offering strategic benefit to the business.

The business case for CSI is often grouped into four main categories:

Cost and risk reduction: There is growing evidence that companies with strong sustainability reputations find it easier to recruit, motivate and retain high-quality employees. CSI activities directed at managing community relations may also result in cost and risk reductions (through a better understanding of stakeholder concerns). Positive community relationships may decrease the amount of regulation imposed on a company.

Gaining competitive advantage: Consumers are taking CSI engagement into account and tend to be more loyal to companies with a good record.
CSI activities may also lead to improved innovation as feedback from diverse stakeholders can be a source of ideas for new products, processes and markets, resulting in competitive advantages.


Developing reputation and legitimacy: Reputation, or brand equity, involves trust, credibility, reliability, quality and consistency. Good CSI performance allows companies to build their reputation and brand value, which are amongst the most valuable assets.

Seeking win-win outcomes through synergies: CSI can provide a business with valuable input into strategic planning, due to insights and understanding as it engages with different markets, and is exposed to the needs and consumption of products by these markets.

Business South Africa is becoming increasingly involved in the solution to the social problems of the country – leading to a closer cooperation between government and the private sector.

Companies have a large stake in preventing the collapse of the economic environment, and by effective spending on CSI programmes; they help to create a more stable environment within which to operate. A better society creates a better environment for business.

The potential economic impact of effective CSI

It is estimated that R8.1 billion* was spent on CSI in 2015. If all of these funds were invested effectively, this could result in R25 billion being added to South Africa’s economic output. In effect businesses will experience a societal return of R3.2 for every R1 spent annually on CSI. This same value of CSI spend would sustain almost 63 000 jobs and generate R7.7 billion in labour remuneration – ultimately reducing unemployment and impacting our economy positively. GDP increases by R12.5billion if the investment is done efficiently.

CSI plays an important role in creating an environment that allows for more inclusive economic growth and the report has shown that the potential impacts of already existing expenditure is highly significant in the current South African context. The BER calls this “a rare win-win situation”.

Findings such as this highlight the importance of initiatives such as Nation Builder and the Good Giving Benchmarking Tool that assist businesses to achieve the best possible impact through their CSI initiatives.

Contact

Keri-Leigh Paschal

Telephone

021 816 1111

Cell

074 116 9974

Email

keri-leigh@muthobi.co.za

Website

www.proudnationbuilder.co.za

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