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Send  Share  RSS  Twitter  14 Sep 2014

CSR: SA Businesses Agree That CSR Makes Financial Sense and it is the “Right Thing To Do”


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South African companies are implementing more socially and environmentally responsible business practices because it is the ‘right thing to do’, according to recent research by Grant Thornton.  They are also doing so because it makes good financial sense.

The latest Grant Thornton International Business Report, which researched drivers, perceptions and overall business insights into corporate social responsibility (CSR) reveals that 68% of South African businesses stated that altruism was driving more ethical business practices and 65% cited cost management as a major drivers for CSR in businesses.

While the South African government is urging businesses to help address the challenges of poverty, inequality and unemployment, only 35% of business cited government pressure as the reason businesses in their industry were focusing more on corporate social responsibility (CSR).   

Globally the situation is a little different; most businesses (65%) claim cost management to be the major driver for CSR, followed by customer demand (64%), with altruism a close third at 62%.  

The 2014 Grant Thornton International Business Report (IBR) researches the views and expectations of over 10,000 business leaders from large privately-held businesses and mid-sized listed organisations.  This particular IBR report looks at business attitudes to understanding CSR activity, specifically what they are doing and why they are doing it.  This topic is researched every three years and historical data is available for 2011 and 2008.  The data for this release are drawn from 2500 C-Suite or other senior decision makers from 34 economies.

The research also provides compelling evidence that CSR and broader business objectives are becoming more aligned. The global findings suggest that benefits of CSR are becoming ever more tangible, for example through tax relief on charitable activity or lower energy bills due to efficiency measures introduced.

The report also reveals that an increasing number of companies report on sustainability while a majority now view integrated reporting as best practice.

“An increasing awareness of the benefits of reporting sustainability measures and not just financials is evident,” says Johan Blignaut, Managing Partner of Grant Thornton Pretoria.  “At Grant Thornton, we believe that integrated reporting can play an important role in communicating businesses’ environmental and social impact to investors and other stakeholders.

Slightly more than half (51%) of privately owned businesses in South Africa now report on their CSR initiatives.  This is significantly higher than the global average of 31% or countries in the BRIC region’s average of 42%.

Nearly a quarter (22%) of companies in South Africa do so as a separate report while closer to a third (29%) integrate it with their financial and other reports.   In addition, a further 35% of SA business executives plan to be reporting externally on sustainability matters within the next five years.  

Approximately two thirds (64%) of SA companies agree that reporting on non-financial matters, such as sustainability, should be combined with financial reporting, higher than the 57% recorded globally, but lower than the 72% in BRIC countries.

“South Africa endeavours to be at the forefront of governance internationally and the research shows the extent to which we are moving in that direction,” says Blignaut.  “It clearly demonstrates that South African companies perceive reporting on sustainability and CSR initiatives to be more important than do their global counterparts.  Companies are putting King III into practice by reporting on how they have impacted on the economic life of the communities in which they operate.”

The vast majority of businesses worldwide are involved with local charities, either through donating time, money or products/services.  South African businesses are way ahead of the curve in this area.  95% of local companies surveyed donated money to community causes or charities and 94% participated in community or charity activities.  This is significantly higher than the 68% and 65% respectively reported by global businesses.  In the BRIC countries the percentages were even less (52% and 47% respectively).

In addition, 74% of SA companies donated products and/or services to a charitable organisation, compared to just over half (53%) of global companies.

Nearly half (48%) of all local businesses surveyed intentionally sourced local, ethical trade or organic products and services, compared to 26% globally.

Businesses worldwide are also working to reduce their environmental impact, with increasing numbers calculating the carbon footprint of their operations.  North American and African businesses are taking a lead when it comes to mitigating the environmental impact of their operations. Across both regions, more than three in four have taken steps to improve energy efficiency or waste management (79%) over the past year, well above the global average (65%).

88% of South African companies improved energy efficiency or waste management, up from 86% in 2011.  Only 13% of South African companies calculated their carbon footprint, however, compared to 31% globally.

“At Grant Thornton we are committed to sustainability and broadening the role of accountancy. To that end, our advice considers the environmental, operational and social impacts as well as the financial to better inform the decision making of our clients.

"It is imperative that corporate social responsibility is not just about building a public image. Instead, it is about making a real difference in the lives of people that continues long after the expense has been approved. It has to come from the heart. The leadership of dynamic businesses who are socially responsible and which have transparent practices are likely to emerge with a competitive edge to unlock their business’s potential for growth in an ever more crowded marketplace,” concludes Blignaut.



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