Moving from passion projects to sustainable investments – The evolution of corporate philanthropy

Corporate social responsibility (CSR) has become one of the standard practices of business. It has seen many incarnations over the years, and continues to keep evolving even today.

But for every corporate leader that believes it is an important part of any company’s business strategy, there is an equal number of dissenting voices that say it is nothing more than a corporate obligation forced on them by, either, legislation or public pressure.

Certainly, if your view of CSR includes providing once-off contributions to personal passion projects, support for localised community projects, or even benevolent donations to worthy causes it can be hard to see how it can progress your business’s agenda in a way that goes beyond nurturing the public’s feeling of goodwill towards the company’s brand.

But corporate social responsibility is evolving to become so much more than an obligation or a brand-building exercise. It has moved from mere philanthropy, where companies see themselves as benevolent cash dispensers, to something that is closer in definition to venture capitalists, where companies support projects or initiatives with the deliberate intention of realising mutual, long-term benefit.

It’s the notion of being purpose driven, beyond the rhetoric, and for Absa they articulate this as Shared Growth. According to Morgan Mandeville, General Manager for Monitoring, Evaluation and Reporting, it can be described as “a new way for the bank to think of itself in relation to the how best to address the needs of customers, clients and communities we serve, while creating value for the bank and its shareholders”.

The virtues of self-interest

Make no mistake, being a purpose driven organisation is about competitive advantage. And, while some may think that it goes against the spirit of philanthropy, Mandeville believes it is a much more sustainable and impactful approach than traditional charity. “The role of business in society is to deliver on its purpose among a multitude of stakeholders,” she explains. “By channeling investments and resources towards clearly aligned projects, a business can deliver its objectives to fulfill the needs of society, thereby meeting the demands of its stakeholders.”

Finding the sweet-spot where business opportunity and social need intersect forms the ethos of Absa’s shared growth philosophy. Mandeville believes that by seeking to address social needs that aren’t aligned to one’s core business objectives, companies inadvertently create relationships that aren’t sustainable and face the challenge of creating or unlocking real value as they will be focused on areas that are not aligned to their capabilities.

“Our business success is dependent on communities that need and want the products and services we offer. Therefore we work with multiple-stakeholders to address and resolve societal problems within the larger eco-system. It is not the role of business to lead on tackling some of society’s pressing challenges in isolation of other actors, but it is their role to enableand participate in partnerships, using their core assets and expertise, to support collective socio-economic development aims.”

At Absa, we have identified three focus areas where we believe we can have a real societal impact, while also aligning with our core business goals and objectives – education and skills development, enterprise development, and financial inclusion. “Our business benefits when people can access the education needed to pursue their ambitions, when small businesses develop and grow through better access to development finance and markets, and when people are provided with convenient and affordable access to financial services and products that met their needs,” says Mandeville. “It makes sense, therefore, that we support initiatives that enable this.”

She is quick to point out, however, that there will always be a place in Absa’s corporate citizenship strategy for philanthropic initiatives and other passion projects, but it’s the clearly aligned projects that form the core of their shared value agenda and their pursuit of purpose.

Evolution on the inside and out

At Absa, this evolution has necessitated changes in the role of core business in delivering on a Shared Growth approach. Shared Growth is business-led, cross cutting all aspects of the bank’s operations. Shared Growth informs business strategy and each division actively participates and contributes to the implementation and delivery thereof.

One example of such an initiative is Absa’s relationship with the Technical Vocational Education and Training colleges (TVET).  As many TVETs are Absa clients, our ability to support their needs beyond traditional banking solutions is part of our purpose-driven approach to working with clients. For example enabling work-based exposure opportunities for students to fulfill their curriculum requirements is an obvious shared value intervention. Not only does it address a societal need in the education and skills development space, it also enhances our client retention strategy and strengthens client relationships.

Key to the success of shared growth is the leveraging of partnerships. “A lot of private companies and public sector agencies are working in similar areas that we as a bank have chosen to focus on,” Mandeville explains. “By collaborating with them and working towards a common goal, you reduce redundancy and increase efficiency and scalability.”

Turning CSR into competitive advantage

Faith in corporate organisations is at an all-time low.  The 2008 financial crisis, among other examples of corporate malfeasance, have created a belief that big business is consumed by self-interest. Furthermore, CSR initiatives are often viewed by cynics as half-hearted attempts by these businesses to show their customers that they care. But self-interest doesn’t have to be detrimental, and CSR doesn’t have to be mere lip-service. Mandeville believes that when a purpose-driven philosophy guides your business strategy, philanthropy/CSI/CSR can evolve from a “feel-good” obligation to a real competitive advantage for the business that addresses social challenges in a way that makes a meaningful and long-term difference.

Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.