NICK ROCKEY: Corporate social investment comes of age with CSI 3.0

Corporate social investment (CSI) has evolved significantly over the past 25 years, from the pre-democratic era through political transition and economic transformation, to the “lost decade” under former president Jacob Zuma, which presented developmental challenges as economic growth achieved between 1994 and 2008 was reversed.

The Covid-19 pandemic had a major socioeconomic effect, and CSI funds were deployed to bolster health and food security outcomes. Trialogue’s primary research indicates that disaster relief was the third most supported cause in 2022 (after education and social and community development), with 71% of companies directing funds to this. As was the case in 2021, more than half of companies supported food security and agriculture interventions.

Despite the challenges — or because of them — CSI continues to strive for transformational change in the country. Since the publication of the second King Report on Corporate Governance in 2002, companies have thought about corporate citizenship more holistically, funding projects that align with their values and strategy. They are working increasingly closely with implementing partners and communities to solve societal challenges.

Today, companies are increasingly considering how to bring about systemic change, looking at entire ecosystems rather than just pockets of need. This more collaborative, strategic approach to CSI can help to accelerate or consolidate impact — an important driver of change in the development landscape. Companies can become powerful agents of change, particularly when the challenges of bureaucracy, achieving consensus with stakeholders and unlocking finance that can support unconventional initiatives are addressed.

From the early days of CSI, in which companies took the first steps to contribute to socioeconomic upliftment in SA, business has played an integral role in development. The increasing professionalisation of CSI has seen a transition from reactive grantmaking, where businesses made charitable donations to non-profit organisations, to the complexity of bringing about systemic change.

Companies have spent R223bn on CSI over the past 25 years. Expenditure has increased dramatically, from R1.5bn in 1998 to R10.9bn in 2022 — a tenfold increase.

During the first phase, “CSI 1.0”, SA companies played a complex yet important role in the country's transition to democracy. The establishment of the Urban Foundation in 1976 laid the groundwork for focused corporate giving during its 18 years, with more than 350 companies helping to raise funds for education and housing.

Companies that were deeply entrenched within the apartheid system had to rethink their stance, especially considering the global rise of corporate social responsibility (CSR), and the values of social, economic and political justice embedded in the Sullivan Principles, which guided the conduct of US companies operating worldwide. These principles provided a framework for corporate giving and allowed SA companies to bring some formality to their corporate giving in the form of nascent CSI programmes.

The early years of CSI in SA saw the private sector increasing philanthropic giving, but it lacked the strategic intent that would become a feature of CSI 2.0. Giving was largely reactive and only incidentally part of a largely transformative effort.

The publication of the second King Report on Corporate Governance for SA (King II) in 2002 brought into focus the fact that social responsibility and corporate citizenship could inform how companies thought about their business. This heralded a shift to CSI 2.0, with companies choosing to fund projects that aligned with their values and strategies.

In 2004, the BBBEE Act was signed into law, with wide-ranging implications for companies, as CSI was included in the codes and charters. This meant set targets and expenditure requirements, turning CSI into a performance-driven pursuit for businesses wishing to improve their BBBEE scores.

CSI 2.0 was characterised by greater investment in communities as stakeholders, rather than just beneficiaries. This was the era of three- to five-year flagship projects, with companies investing in one or two sectors rather than disbursing funds wherever need was identified.

This sustained support, together with greater consultation with implementing partners and communities, proved fruitful — it facilitated long-term relationships and strong branding opportunities. Social investment became a focal area, and the “professionalisation” of CSI began with the appointment of specialists and the introduction of dedicated, formula-based CSI budgets.

With the establishment of a CSI industry, greater emphasis was placed on meeting regulatory requirements and achieving developmental impact in partnership with other stakeholders, most notably government and civil society. Grantmaking became more strategic, moving away from ‘doing good’ to bringing about long-lasting change.

Now, in the CSI 3.0 phase, research conducted by Trialogue in 2021 shows that companies use three primary sources to inform their CSI strategies and practices: company strategy (90% of survey respondents), government policy documents and development plans (77%), and global codes and standards like the UN Global Compact, the UN sustainable development goals, the Global Reporting Initiative and others (72%).

With a multitude of metrics against which to benchmark their CSI initiatives, companies are acknowledging the complexity of the development landscape, along with the need to partner to bring about meaningful change. Increased collaboration and cross-sector engagement are taking place, driven by innovative and outcomes-based finance. In addition, businesses are more willing to support legitimate and lawful advocacy work, particularly in a post-pandemic world of accelerating inequality and injustice.

A solid example of CSI 3.0 is the Teacher Internship Collaboration SA initiative, the convening group of which consists of Just Energy Transition Education Services, the Bertha Centre at the University of Cape Town, Bridge Innovation in Learning, and Trialogue.

The initiative is supported by companies and programmes that fund or offer student teacher internships, for pupils from distance education institutions, with the intention of improving teaching quality, pass rates and retention of teachers in the profession. The Teacher internship collaboration seeks to add value to the sector through collaborative processes, knowledge-sharing and common measurement practices.

• Rockey is MD at Trialogue.