In today’s business world, the informed CEO makes strategic corporate social investment (CSI) decisions, aligned with core business interests. The excellent organisation integrates sustainability with business performance, and forms collaborative partnerships with government to influence policy and advocate change.

Over the past couple of years, the CSI industry was forced to take off its rose-tinted spectacles to assess the core of its developmental efforts. The world is fed-up with naïve goodwill, flamboyant cheque writing, PR spin and scattered donations. Society demands truly accountable organisations. Boards, funders, NGOs, practitioners and academics are asking hard-hitting questions about the effectiveness (and the future) of CSI.

In short: the world of CSI has changed dramatically. Businesses cannot afford to do things the way they have done it in the past, and they cannot ignore the rapidly shifting landscape of social development.

In my view, the following seven trends will dictate the business of CSI in both an African and South African context. A series of indicative phenomena have been driving these trends – the most notable perhaps, global legislation, the financial meltdown and climate change.

TREND 1: Linking cash with care

CSI can only be truly sustainable if it is also financially viable. This has resulted in more revolutionary market-based approaches to CSI. Perhaps one of the best South African examples is the Nedbank Green Affinity programme. This project successfully illustrates how the bank empowered staff and clients to make a real difference to the environment and people less fortunate than them, simply by encouraging them to use one of their products – the Nedbank Green Affinity credit card – as a vehicle to channel their contributions in a meaningful way.

A new business breed is also emerging in the world of commerce. Ashoka – one of the global leaders in the development space – coined the phrase ‘social entrepreneurs’ in the 80s. Today, South Africa is teeming with young, mindful individuals who recognise the country’s social problems and apply their entrepreneurial flair to create and manage commercial ventures to achieve social change. Claire Reid, founder of the Reel Garden project, who successfully patented pre-fertilised seed strips for vegetable gardens (now sold at several commercial outlets in South Africa), is an excellent example of such an entrepreneur. These are the individuals you want to invest in to further your development programmes and effect sustainable social change.

Increasingly, trends like bottom-of-the-pyramid strategies (how to encourage marginalised people to buy your product), the micro credit movement (with leading examples by Grameen Bank in rural India) and growing impact investing, emphasise the vital role of commercial integration with CSI.

TREND 2: Adapt, comply (or die)

As the focus on sustainability reporting and triple bottom-line compliance narrows, companies are under increased ‘pressure to measure’. This includes the more-difficult-to-measure social side of the business. The GRI 3.1 sustainability reporting framework requires companies to prove the effectiveness of their social development claims. Organisations need to show impact on communities and return for the business.

In South Africa, companies need to comply with the soon-to-be revised Black Economic Empowerment (BEE) Act and the respective industry charters, as well as several voluntary compliance platforms like the JSE-SRI Index. From 2011 onwards, as per King III, South African companies will also be obliged to report in an integrated fashion, effectively making South Africa the first country in the world to make King III compliance compulsory for business. Have you considered this a USP, as your organisation competes on the environmentally-minded international stage?

TREND 3: We’re in this for the long run (because it makes business sense)

The quest for sustainability has become feverish in the face of compelling legislation. With the increasing number of regulatory requirements companies might suffer from ‘compliance fatigue’. But the excellent organisation also realises the importance thereof. Triple bottom-line drivers have elevated CSI from once being a trivial, side-plate function to becoming one of the most important strategic business tools to ensure a licence to operate. CSI is, in effect, both a reputation and risk management strategy to mitigate negative impact and ensure business sustainability, as opposed to simply a reputation driver, as it was viewed in the past.

Organisations must engage with stakeholders, conduct social baseline studies, develop models that meet stakeholder requirements and have detailed exit strategies in place to ensure the sustainability of both business and society.

As new patterns of giving emerge, the ripple effect of CSI is also far greater than the effect it has on your immediate stakeholder base. Trends such as indigenous giving, poor philanthropists (the poor giving to the poor) and diaspora giving, where migrant workers send money to families in their home countries, mean that your development efforts touch lives across borders.

TREND 4: The beautiful south

A development trend that will greatly impact on the role South African business plays in the emerging economic landscape is South Africa’s recent inclusion into BRICSA. Although this has not yet trickled down to the commercial sector, several global partnerships have been formed at government level. These partnerships are likely to influence multi-national private organisations’ development efforts and South African businesses must take cognisance thereof.

A ‘south to south’ development trend is also prevalent. Southern African funders invest little money north of the Southern African Development Community (SADC) borders. Countries like South Africa, Namibia, Botswana, Mozambique, Swaziland and Lesotho have joined hands in major infrastructural and other developmental partnerships (the growing amount of Southern African healthcare case studies related to HIV/Aids and Malaria, is a clear case in point).

TREND 5: The end of the world as we know it

In September 2008 the financial markets came to a standstill. Many analysts predicted that the capitalist world – as we know it – would cease to exist. Naturally, the resulting recession continues to have a gripping effect on CSI, holding both bad news and good news for practitioners.

The downturn forced an increasing number of NGOs to close their doors. This emphasises that companies should consider operational costs when funding NGOs – a specialist development agency without funds to run effectively, is futile. It also means your investment is futile.

Furthermore, donors continue battling to fulfil their pledges, and international funding has almost dried up leaving a huge developmental gap that government and the private sector needs to fill. Despite this gap, CSI budgets in South Africa were cut with 23 percent in 2008, 20 percent in 2009 and 14 percent in 2010 as a result of the recession.

The flipside of the coin is the new discourse about aid and development effectiveness. Companies value the impact and return on investment of CSI more than ever before and multi-sectoral partnerships have been formed to address social concerns.

TREND 6: Business unusual

Increasingly, more unconventional approaches direct businesses’ funding decisions. Companies evaluate their social programmes for human rights compliance, violations and infringements to make sure that they adhere to issues such as gender diversity and racial equality; while climate change has become one of the most crippling issues of our time.

Without proper climate change policies in place, business’ long-term sustainability is under threat. Companies are therefore increasingly basing their funding decisions on issues such as food security, energy efficiency and water and waste management.

TREND 7: Finding new focus

In view of changing economic conditions, companies are shifting their focus to programmes that have an effect on their core business. Job creation has never been higher on the agenda. Increasingly companies fund enterprises, SMME and skills development. Environmental focus areas also attract more funding – specifically renewable energy, carbon offsetting and security of water and food supply.

Although education is still the most widely-funded focus area with 93 percent of corporates supporting education-related development – funding for early childhood development, schools, bursaries, further education and training and subject-specific programmes like science and maths, decreased. Companies are starting to realise that they can no longer fund programmes, purely based on a ‘bandwagon effect’. The impact of their focus areas must be critically evaluated in light of their business needs, which implies that companies must focus on the future skills they will require in the business as opposed to funding education in general.

Government has also cut HIV/AIDS funding as prevalence rates drop and the private sector seems to be following suit. If a large portion of your workforce is HIV positive, this is perhaps a focus area that you would like to reconsider, despite the prevailing industry trend.

There is no doubt that the evolving discipline of CSI has taken several new directions in the last few years. I am of the firm opinion that businesses cannot afford to ignore these trends on their path to sustainability excellence, as it now has a direct impact on their bottom-line.

– Reana Rossouw is a strategic sustainability consultant and director and owner of Next Generation Consultants.