Corporate Social Responsibility

Corporate Social Responsibility (CSR) has broad resonance to everyone. This is due to the various applications of the concept, resulting in its applicability being so diverse that it is now difficult to specifically define. Broadly, CSR encompasses the expanding of business obligations to include more than financial considerations. LEMCO believes that the definition that best explains the concept is the International Organization for Standardization’s Guidance Standard on Social Responsibility, ISO 26000:

“Social responsibility is the responsibility of an organisation for the impacts of its decision and activities on society and the environment, through transparent and ethical behaviour that:

• Contributes to sustainable development, including the health and the welfare of society.
• Takes into account the expectations of stakeholders.
• Is in compliance with applicable law and consistent with international norms of behaviour, and
• Is integrated throughout the organization and practised in its relationships.”

Corporate Social Responsibility is based on the belief that a properly functioning economic market occurs by aligning individual and collective interests. Essentially, this concept assumes that when individual and collective interests are affiliated there is no need for suppliers or buyers to contemplate the effects of their actions on market outcomes. This means that participants can focus on achieving their goals and interests, without the confusion of whether this will negatively impact others.

The role of the government in CSR has been questioned based on the precedent that ethical business conduct is not just the government’s concern, it is everybody’s responsibility. Essentially, this concept encourages measures from within businesses rather than externally imposed controls to encourage authenticity.

Strategically, businesses must acknowledge that CSR originates from within and it is in their  best interest to meet the needs of their stakeholders through ethical business conduct. It is a concept that stems from the culture of a company and can resonate in their environmental, social and governance programs.

The challenge of valuing Corporate Social Responsibility has been met with debate historically. Due to the challenges of specifically defining CSR, it is also difficult to value it. Although generally it is relatively simple to gage whether a firm is ‘good’ or ‘bad’ with regards to ethical actions, the main problem occurs when attempting to quantify societal expectations and then measure these against firm performance.

In some cases, pollution levels, litigation against a business, or philanthropic donations are measured, whilst other considerations include share price viability or short term profitability. In most cases CSR improves the performance of firms in all of the aforementioned areas.

A recent survey of CFOs, investment professionals, institutional investors and CSR professionals from across the globe, examined the best measures of valuing social responsibility. This determined that environmental, social and government factors are considered in value creation processes.

Survey respondents were more likely to agree that the generation of financial benefits does not distract from the benefits of ethical social programs. Essentially, it was conceded that a positive reputation and brand equity will subsequently result in financial value. It was also generally agreed upon that over the long-term, environmental and social activities will create value for companies, particularly when environmental savings are factored into operational costings. Furthermore, the value added to a company through the recruitment and retainment of talented employees is often significant and can be linked to the reputation of a company’s environmental, social and governance programs. Those surveyed broadly agreed that financial reports outlining the quantity of financial impact, measuring commercial opportunities and risks would be the most beneficial way of valuing CSR as this metric allows for the easy distinction of company sizes relative to their CSR impact.

Others add that goals can be utilised as a measurement mechanism. If goals are clearly defined and shared with stakeholders initially then mutual benefits can occur. The demonstration of CSR is now an accepted part of business activities. By acknowledging consumers and their expectations regarding a firms CSR agenda, a company’s return on investment can be improved.

Ultimately, measuring the value of Corporate Social Responsibility is difficult. However, businesses can best combat this by outlining measurable goals to start with, and following this up with financial reporting mechanisms.

We value ethical business practices with a sustainable focus. LEMCO knows that Corporate Social Responsibility begins with our company culture. Sustainability starts from the top, with our Executive Directors knowing and sharing the value of development for the long-term. This is something that is then filtered through the company, encouraging everybody to act in the present but consider the long-term effects.

Corporate Social Responsibility is our business. Socially, we are making valuable contributions and improvements to the well-being and livelihoods of the indigenous communities we enter. We are providing healthcare and education to improve the welfare of these societies.

Economically, LEMCO provides indigenous communities with the ability to sustain themselves financially and for the long-term. We ensure that they have the knowledge, skill-sets, resources and monetary stability to conduct the sustainable development agriculture activities we implement in remote regions.

Environmentally, the LEMCO focus is on eco-system preservation and conservation. We ensure that this occurs by balancing conservation with cultivation.