CSI is good for business

Online since 1.03.2017 • Filed under Corporate Social Investment • From Issue 5 - March 2017 - August 2017 page(s) 13
CSI is good for business

A new study, conducted by the Bureau for Economic Research and commissioned by the Nation Builder Trust, reveals that businesses can profit from engaging in Corporate Social Investment (CSI).

The report, entitled The Case For Corporate Social Investment in South Africa, states that at worst the effect of 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, if spent even more effectively, CSI might have a highly significant economic impact on the country.

‘So often, social investment is seen as a non-strategic activity 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,’ insists Keri-Leigh Paschal, executive director of Nation Builder.

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. The business case for CSI is 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 value CSI engagement 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 reputations and brand value.

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

It is estimated that R8.1 billion was spent on CSI in 2015. If 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 shows that the potential impacts of already existing expenditure is highly significant in the current South African context. For more information, visit www.proudnationbuilder.co.za.

Issue 5 - March 2017 - August 2017

Issue 5 - March 2017 - August 2017

This article was featured on page 13 of SABI Magazine Issue 5 - March 2017 - August 2017 .

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