Corporate social responsibility now a priority

By Macharia Kamau and Luke Anami

For many organisations, corporate social responsibility (CSR) was once a purely philanthropic activity to arouse public goodwill with no consequence on profitability.

However, the perception has changed with CSR programmes ranking high on the corporate plans of most organisations.

Mr Joe Otin, director of Media Research and Monitoring Division at Synovate Kenya told Financial Journal that organisations are differentiating between CSR, marketing and advertising, with many setting up departments to exclusively handle CSR programmes.

"Most organisations have a policy on CSR and these programmes have public interest at heart rather than gaining mileage or visibility in the market," he said.

"CSR activities were initially embedded in marketing departments."

Otin’s division tracks coverage of different issues by local media. He says the media now receptive to CSR activities.

"When most organisations rolling out substantial CSR projects, journalists thought the activities were publicity stunts but the perception has changed," he said.

He noted well planned and executed CSR projects have the power to position a company differently from its competitors.

"CSR projects can differentiate a company from its competitors targeting the same market segment," said Otin.

He said there is need to review the country’s tax regime to encourage more organisations roll-out CSR programmes.

"There are now incentives but in some countries, like the US, organisations are exempted from paying some taxes to encourage investment in CSR projects," he said.

Many CSR programmes target provision of basic services like health, education and access to clean water because of widespread poverty, but environmental conservation is also gaining currency.

The strategic importance of CSR led to the transformation of once a low-key department at Safaricom Ltd into a fully-fledge section — Safaricom Foundation – at East and Central most profitable company.

"In recent year’s, intangible assets such as company values, human and intellectual capital, reputation and brand equity have become important to organisations," Les Baille, Safaricom Foundation Chairman said.

In the current financial year, Kenya Commercial Bank (KCB) set aside Sh100 million for CSR activities in environment, education and enterprise development. The bank also has health and humanitarian development programmes.

KCB Divisonal Director for Public Affairs and Communication Kepher Bosire said the bank would increase the CSR budget to Sh120 million next year.

"Sustaining CSR projects is an obligation that every organisation has because it makes money from the community, so it plough some of the earnings back."

He noted that other than granting a company the "social licence" to operate in a particular market, CSR also impacts a firm’s brand equity and profitability.

KCB has CSR projects for the community but also an internal programme aimed at cutting down wasteful use of resources. It has a policy against printing e-mails or large documents.

"We don’t roll out CSR projects with certain expectations and sometimes we just want to touch people’s lives," Bosire said.

"When you touch people’s lives, you touch their hearts and hope you have recruited new customers and investors. The community will also back the organisation when things are not rosy."

Kenya Power and Lighting (KPLC) Chief Executive Joseph Njoroge said CSR activities of the power retailer are focused on environmental conservation.

Environment

"We are actively involved in environmental conservation programmes. We are aware that our activities impact on the environment and for this reason we embedded CSR in our operations, with the environment being at the centre of our focus," he said.

"In the last financial year ending June, among other CSR activities that we supported, we contributed Sh7 million towards forest conservation, especially Government forests. In the current financial year, we have allocated another Sh7 million for tree planting."

Investors and financiers are attracted to socially responsible firms, as it is a pointer of good management and positive reputation.

"Investor interest is high if a company has a laudable CSR programme. Certainly, it is CSR programmes that have made safaricom a market leader," said Baille.

Safaricom Foundation has spent millions in various projects ranging from matters of education, medical, environment and capacity building.

The Foundation launched a unique CSR programme, World of Difference (Wod), whose objective is to involve employees in CSR projects.

In the Wod programme, Safaricom employees apply their professional and technical skills in philanthropic projects for three months.

"The World of Difference programme was established in 2002 by Vodafone Group Foundation and aims at providing unique opportunities for individuals to impact their world," said Baille.

Now in its second year, Wod has selected 19 employees in the second phase, up from 12 picked in the first phase.

"At Safaricom, we are keen to implement corporate social responsibility initiatives that help strengthen partnerships with our project partners and with local communities," Safaricom Chief Executive Officer Bob Collymore said when he launched the second phase of

the Wod at Safaricom offices at Mlolongo, Mombasa Road last week.

"Thus, with the World of Difference initiative, we are moving away from engaging staff in day-long events, to giving them an opportunity to contribute their knowledge, skills and expertise in developing our communities for a longer period."

Safaricom

Three months ago, Safaricom Foundation allocated Sh4 million to support educational projects through the Junior Achievement Kenya. So far, the Foundation has spent over Sh7.5 million on similar projects in the last three years.

As Baille observed, initiatives such as support for community building initiatives and environmental awareness can add significant value to an organisation, and if the programme is well designed the benefits far outweigh the costs.

"Companies that exhibit good corporate citizenship are likely to gain a competitive edge as attested by our CSR programme," Baille explained.

"For instance, during the recent price wars some customers told us they will remain loyal after what the Safaricom had done for them."

Attracting and retaining competent people is also a key objective of CSR programmes.

Consequently, CSR influences a company’s competitive advantage today through two key value drivers, reputation of the corporate brand and high quality human resources.

"Reputation and brand perception are greatly influenced by public perception," said Baille.