impact matters - serious social investing 2013
DESCRIPTION
Social investment is no longer just about what funders spend. The FirstRand Group's Sizwe Nxasana speaks at the Tshikululu Social Investments Serious Social Investing 2013 workshop.TRANSCRIPT
FirstRand Limited
SSI 2013
Sizwe Nxasana
Agenda
1. Structural Challenges
2. Corporate Governance
3. Business and Community Development
4. Partnership and Collaboration
5. Conclusion
South Africa's structural challenges
SA is still one of the world’s most unequal middle income countries
one of the world’s highest gini coefficients
POVERTY
EDUCATION
UNEMPLOYMENT
Source: Development Indicators, SA Govt.
South Africa's structural challenges
POVERTY
EDUCATION
UNEMPLOYMENT
• Unemployment rate in Q4 2012 was 24.9% (35.9% expanded)
• Approx 61% of job seekers do not have matric
• SA's labour force participation rate is 54.6%
• World average ~ 64.1%.
• Youth unemployment rate ~ 48%
• Brazil ~ 18%%
• Sub-Saharan Africa ~ 12%
• World average ~ 13%
• By 2015 more than half of the working age adults will still be
out of work
Source: StatsSA ; ILO
South Africa's structural challenges
EDUCATION
UNEMPLOYMENT
POVERTY
The rate of unemployment is
worse in Free State, Mpumalanga and
Eastern Cape
Lower unemployment
rates associated with higher
levels of education
Source: Stats SA, Q1 2012 Survey
South Africa's structural challenges
EDUCATION
UNEMPLOYMENT
Source : StatsSA
POVERTY
% CSI SpendGP 23.3%WC 11.4%EC 7.6%KZN 6.4%MP 4.2%NW 4.2%LP 4.1%FS 2.3%NC 2.0%National 34.6%
Source: JET
30 37 15
South Africa's structural challenges
EDUCATION
UNEMPLOYMENT
• Adult literacy rate ~ 89%
• While 76% of whites over 20 years old and 62% of Indians have a high school or higher qualification, this figure is only 35% among blacks and 33% among the coloured population
• Student participation rate is almost 20% (proportion of 18- to 24-year olds in higher education• Whites 59%• Indians 46%• Coloureds 15%• Blacks 14%
Source : StatsSA
POVERTY
Agenda
1. Structural Challenges
2. Corporate Governance
3. Business and Community Development
4. Partnership and Collaboration
5. Conclusion
• Impact of the global financial meltdown
• Increased social isolation
• Civic alienation
• Flaw of “Everyman for himself” mindset exposed
• Image of business fraternity damaged
• Investors
• Customers
• Government
• General public
Future of Capitalism
• Desperate need for business community to
• Repair image
• Re-examine value system
• Give a “human face” to capitalism
Significant shift in relationship between private enterprise and society
Financial Performance
Environmental Performance
Social Performance
Ethical imperative
towards investors only
• New Companies Act 71 of 2008
• Came into force May 2011
• Approach sourced from King III Report on Corporate Governance
• Shift from ‘shareowner compact’ to ‘stakeholder compact’
• States that reputation is a company’s most significant asset
• Management and effective stakeholder engagement crucial
Proper governance and management focus on social and ethical matters
Financial Performance
Environmental Performance
Social Performance
Responsible business
conduct and good
corporate citizenship
• Company acting in a responsible and ethical manner leads to
• Good financial performance in long run
• Maintaining productive relationships with government and regulators
• Requirement to establish
• Social and Ethics Committee
• Social and Advisory Panel to assist committee
• Ensures proper governance and management focus on social and ethical matters
Agenda
1. Structural Challenges
2. Corporate Governance
3. Business and Community Development
4. Partnership and Collaboration
5. Conclusion
Why get involved in community development
Customer Employees
ShareholdersSociety
Profit / People / Planet (Triple bottom line view)
What is good for one is good for the others
Profit
People
Planet
Why get involved in community development
• Meet customer needs
• Establish strong customer relationship
• Maintain strong consumer value
• SustainabilityCustomer Employees
ShareholdersSociety
Profit / People / Planet (Triple bottom line view)
What is good for one is good for the others
Why get involved in community development
• Working conditions• Employee
engagement• Reciprocity
• Volunteerism
Customer Employees
ShareholdersSociety
Profit / People / Planet (Triple bottom line view)
What is good for one is good for the others
Why get involved in community development
• Sustainability• Corporate
Citizenship• Brand image
Customer Employees
ShareholdersSociety
Profit / People / Planet (Triple bottom line view)
What is good for one is good for the others
Why get involved in community development
• Accountability• CSI / Partnerships
• Private• NGOs• Government• Society
Customer Employees
ShareholdersSociety
Profit / People / Planet (Triple bottom line view)
What is good for one is good for the others
Agenda
1. Structural Challenges
2. Corporate Governance
3. Business and Community Development
4. Partnership and Collaboration
5. Conclusion
• Responding to national need to address structural challenges
• Taking advantage of the national plans and commitments by key stakeholders i.e. NDP Vision 2030• Fresh vision for SA future
• Useful beacons for guidance
• Active Citizenry
• Importance of stakeholder consensus and willingness to work together
Rationale for collaborationProfit
People
Planet
• Working on increasing value for money• Increasing focus of interventions on priority areas
• Eliminate duplication of activities
• Increasing collaboration between non-governmental and government interventions
• Jobs fund
• Education spend
• Improving sustainability of the interventions
• Promoting integration between reform, transformation and improvement initiatives
• Capitalising on the gains of the past 18 years
• Addressing systemic challenges in the country
Rationale for collaborationProfit
People
Planet
• Corporate-to-Corporate level
• Not much has happened
• CSI viewed as competitive
• Failure to distinguish between
• sponsorship to benefit business
• “right thing to do”
• Corporate-to-Government level
• Trust, a major factor
• Foundation to build trust
• Value importance of relationship
• Develop shared and common vision together
• Invest in relationship and nurture it
• Honesty is vital
• Differences must be understood
• Focus on commonalities
Partnership and Collaboration
Profit
People
Planet
• Consultative manner
• Greater involvement from company
• More sustainable solutions for beneficiaries
• Need to talk and listen to communities
• Understand intricacies of initiatives
• Design solutions for the communities
• Avoid imposing company/NGO-created solutions
• Takes more time to set up, implement and follow through
• Benefits of approach
• Ensures beneficiaries receive most suitable and sustainable benefits
• Easier to gain deeper understanding of involvement areas
• Focus through fewer areas of specialisation
Partnership with Communities
Profit
People
Planet
Agenda
1. Structural Challenges
2. Corporate Governance
3. Business and Community Development
4. Partnership and Collaboration
5. Conclusion
• Perception of CSI
• Hard-earned reputation for flakiness
• Today’s leadership has evolved past this perception
• Difficulty linking to concrete tangible outcome
• Measurement is key
• Measure to understand
• Understand to control / monitor
• Control / monitor to improve
• Impact of CSI
• Social value is inseparable from its business value
• Business value of initiatives need to be rigorously quantified
• Partnership and collaboration on initiatives
• Collaboration framework
Conclusion
FirstRand Limited
SSI 2013
Sizwe Nxasana