Personal Finance

Firms must make CSR a core part of business

While methods may vary, giving back to the
While methods may vary, giving back to the society is invaluable. FI:LE PHOTO | NMG 

A lot of organisations are embracing corporate social responsibility (CSR) and some have a structured framework for this.

A lot of organisations are embracing corporate social responsibility (CSR) and some have a structured framework to achieve this. They are going beyond capitalism and profitability as goals and are considering how their existence positively impacts the society.

The CSR is a wide concept without a set definition but as the name suggests it is all the steps a company takes to conduct its business in an ethical way, upholding social impact as a goal.

Organisations have a level of CSR, for example, job creation and paying taxes, which in turn have a positive impact on the society.

A detailed CSR approach benefits the stakeholders in many ways. It improves an organisation’s reputation and brand in the marketplace and boosts customer loyalty. It may also attract potential investors. For example, some investors would want to invest in green innovations. The CSR enables an organisation to forge strong partnerships in the marketplace if the activities are carried out jointly with others. This, in turn, creates new growth opportunities for an entity.

It has a lot of benefits to the society, for example, it improves the livelihoods and social welfare of the community, such as those institutions that offer job opportunities to the locals, builds health centres and schools.

There are some communities in Kenya that have grown due to CSR activities. In Kenya, before an organisation can be granted a licence to exploit any natural resource, for example, minerals or oil, it has to show how the project will benefit the local community. The Local Content Bill has provisions on this and contains clauses on revenue sharing between the local community and the organisation that exploits the natural resource.

Social innovations are some of the emerging CSR areas. These are innovations whose major aim is to boost social welfare.

There is also a steady increase in social entrepreneurship, whereby an entrepreneur’s main focus is to use a venture to boost social welfare. There are lenders who fund social entrepreneurs who also attract some form of support such as grants from NGOs.

There are many financing models for social development such as social impact bonds, which are social impact bonds issued by a public entity.

The proposed green bond by Kenya can be considered as a social impact bond.

To get started on CSR, it is important to have a strategic plan highlighting the goals of the venture, resources needed, marketing initiatives and partnerships amongst others.

Some firms do not have a structured way of doing CSR but do it as part of their routine business. There are those that form a team or committee to handle CSR initiatives while others form related departments.

Larger organisations separate their core activities from CSR by forming foundations that handle the mandate.

The foundation is essentially a trust the business owns. A trust deed sets out the activities of the foundation.

It is important to engage in CSR no matter the method one chooses due to the many benefits for stakeholders.