Assessing the factors that drive CSR performance of Food and Drug retail companies listed on the JSE

Abstract

Corporate Social Responsibility (CSR) has recently become a buzz term in modern society and the topic is gaining significant increase in interest around the world. Nonetheless, CSR cannot be considered from a similar perspective as developed countries, since each has a different economic, political, social and cultural environment. Calls have been made for a definition of CSR within a developing country context in particular, as well as a framework of factors that drive and hinder CSR performance and the reporting thereof. If CSR is to succeed in developing countries, the gaps that have been identified need to be filled by providing crucial information that corporations in developing countries can consider when they develop or improve their CSR strategies. And in knowing what barriers to CSR performance and reporting thereof exists, corporations can start implementing strategies to overcome them. This study served the purpose of identifying factors that drive CSR, as well as factors that hinder CSR performance and the reporting thereof within a developing country by exploring the phenomena through the investigation of JSE listed Food and Drug Retail companies in South Africa. The retail industry in South Africa contributes at least nine percent towards the South African GDP and is a major contributor towards the JSE. This industry is also anticipated to be involved in CSR initiatives that can be categorized within all three contexts of CSR, being economic, social and environmental contexts. This study adopted a qualitative approach and positioned within the interpretivism paradigm. All seven (entire population) JSE listed Food and Drug Retail companies were purposefully selected and included in this study. The data obtained to address the research objectives were gathered through a literature review; a content analysis of the annual reports, integrated reports and official websites of the companies selected for this study; as well as semi-structured interviews with two CSR representatives from two of the companies selected for this study. All six companies selected for purpose of this study was approached to take part in the interviews, however, two agreed to the interview, three declined to take part and one did not respond. Based on the findings of this study a new definition for CSR within a developing country context was arrived at that suggest that corporations should not only create value for all stakeholders, but should also promote social-, civil- and

political rights of citizens, and meet the needs of citizens in a manner equal to or exceeding the role of government. This research however also cautions that the builtin expectation within the new definition might be too onerous on corporations. The findings of this study also indicate that the CSR performance of JSE listed Food and Drug retail companies have improved over time supporting the notion that other corporations could adopt the strengths of their CSR strategies identified in this study. It was however identified that majority CSR initiatives consists of philanthropy and that some companies regard CSR as voluntary. An area where the JSE Food and Drug Retail companies could improve on is the reporting of CSR. The findings of this study further reveals that CSR is driven by the company purpose, values and strategy, legal and political factors, company financial performance and the social conditions in which companies trade, amongst others. Barriers to CSR performance include amongst others, government support and aligned objectives, unstable municipal utility supplies, availability of funds and the availability of suitable CSI practitioners or managers. It was found that the main challenges experienced in terms of CSR reporting include the availability of data, technical and human errors and staff turnaround. Some of the main recommendations of this study include that in order to improve CSR within South Africa, JSE listed companies should have a formal CSR policy (strategy document) and should include reaching the FTSE/JSE Responsible Investment index as one of their CSR targets. In addition, even though the level of interest and influence of the natural environment on a corporation cannot be measured, this does not mean that the natural environment is disqualified as being labelled as a key stakeholder and should therefore be included as one. Corporations should also report on their social cost to the environment, as the environment is one of the three contexts of CSR. There should also be no substances from government working against corporations in their quest to play their part in terms of execution of CSR. It is further recommended that higher degree institutions offer a formal qualification that specifically prepares individuals to enter the workplace as CSR practitioners. Companies should also turn to social media to obtain data on their CSR initiatives and performance from the communities that they service.