Understanding Corporate Social Responsibility

The term ‘Corporate Social Responsibility’(CSR) or corporate citizenship is one of the buzzwords which have made their way into our corporate jargon. Big companies like BAT, BRALIRWA, MTN, BCR, KCB often publicize their Corporate Social Responsibility activities.

The term ‘Corporate Social Responsibility’(CSR) or corporate citizenship is one of the buzzwords which have made their way into our corporate jargon.

Big companies like BAT, BRALIRWA, MTN, BCR, KCB often publicize their Corporate Social Responsibility activities. Yet the concept of CSR is not yet well appreciated by Rwandan businesses or the general public.

Corporate Social Responsibility basically meansa commitment by a business to behave ethically and contribute to economic development while improving the quality of life of its workforce and their families as well as the local community at large.

For long, companies viewed their obligations as purely to make profit for their shareholders at the expense of everything else. This attitude often led them to pursue policies which were unethical, e.g. employing young children cheaply to work long hours in textile factories so as to reap maximum profits from the clothes sold.

However, the global trend has been to favour inclusion of public interest into corporate decision-making, and the honoring of a triple bottom line: people, planet, profit.
This trend has been borne out of the realization that your business does not exist in isolation nor is it simply a means of making money. Customers, suppliers and the local community are affected by what your business does.

Your products and the way you make them affect the environment. Moreover, your reputation lies in the hands of the people it serves. CSR entails doing things beyond the minimum legal requirement. 

Many people in Rwanda and elsewhere tend to relate CSR with philanthropy i.e. monetary donations and aid given to local organizations and communities by big businesses. Philanthropy is but one of the CSR approaches. By engaging in philanthropy companies show their “human” side, identifying the specific needs of the communities in which they operate and addressing them.

Such acts are good for the companies’ image and offer free publicity. Moreover, a good relationship with the local authorities makes business sense if you consider that local authorities may be more inclined to award contracts to businesses which have a record of working with the authorities to improve the community. 

There are other approaches to CSR.  These include, incorporating the CSR strategy directly into the business strategy of an organization. For instance, a company may encourage its employees/management to adopt ethical behaviour and avoid taking or offering bribes in the course of their employment.

Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals. These can also draw unwanted attention from regulators, courts, governments and media. Building a genuine culture of ‘doing the right thing’ within a corporation can offset these risks.

Also, a company may offer fair pay for work they do and take out medical insurance on their behalf, as a number of Rwandan companies do. In the long run, this is not only beneficial to the employee, but to the business as well, as the it will be able to attract the best employees on the market and keep them, and they are likely to be highly motivated hence being more productive for the business.

 Whatever the type of business you are involved in CSR is a vital component to your business. Identify and implement whatever CSR strategy is best suited to your business and you may be surprised by the results.

kalricardo@yahoo.com

Richard Balenzi is a lawyer

 

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