Taking Corporate Social Responsibility To The Next Level

20 / 11 / 2019

By Michael Chavez is the Chief Executive Officer of Duke Corporate Education and faculty in the Building Strategic Agility online course. - Forbes - -

What do you think of when you see images of the Egyptian pyramids? Perhaps words like wonder and history?

Themba Mkhwanazi, CEO of Kumba Iron Ore (the fifth largest iron-ore producer in the world and the largest in Africa), shared an interesting perspective – they reflect legacy and business leaders should aspire to be pyramid builders.

“The pyramids were built by people some 5,000 years ago and they’re still around today,” Mkhwanazi said. “We marvel at all the various attributes around the pyramids. I look at my life and career and say whatever I do must also have sustainability. Long after I’m gone, I want to make sure that whatever I started continues and evolves, but that the foundation is still there.”

Such a transformational legacy requires more than just the status quo corporate social responsibility (CSR) that might entail some nice website language and some feel-good one-off philanthropy initiative. To have a legacy requires a type of CSR that is deeply engrained in all organizational activities.

This column has focused on how purpose can engage employees and serve as a decision-making guide. Mkhwanazi added to this set of insights by underscoring the role of purpose in guiding CSR as an integrated part of the business. The organizational purpose at Kumba Iron Ore is “re-imagining mining to improve people’s lives.”

“This speaks to a much broader commitment to the world and to society at large beyond just our specific commodity,” Mkhwanazi said. “We’re not going to be remembered for the dividends we paid or the productivity improvements. We’ll only be remembered for the difference we make.”

At Kumba Iron Ore, this translates to building shared value across all stakeholders ranging from regulators to shareholders to communities, according to Mkhwanazi. “We want to create a thriving community as a consequence of our operations. This means thinking beyond just being in a host community.”

Kumba Iron Ore takes this seriously. For example, the company has a discretionary procurement of about 12 to 14 billion South African rand (approximately $800 – $950 million). Many companies in the mining space might just work with national or international companies that are well established, but don’t take into account the triple bottom line of social, environmental and financial. Guided by its purpose, this year Kumba earmarked 2 billion rand for procurement directed at host community business. This represents a growth from 100 to over 300 local businesses, directly impacting the lives of over 16,000 people. This is now in place in the Northern Cape (South Africa’s largest province) and has contributed in various ways to job creation and skills development.

More than a few skeptics have predicted that this decision would negatively impact both quality and costs. “In fact, we’ve seen the opposite because they have skin in the game with us,” explained Mkhwanazi.

Indeed, the companies working with Kumba in the Northern Cape are now very ingrained in the business. There have been no disturbances in terms of protests and blockages, an issue that frequently plagues mining companies. Consider this – when there might be an issue with the regulators, leaders from the host community businesses are actually speaking on Kumba’s behalf because they are experiencing the benefits.

“Having a purpose helps us make decisions that are holistic, long-term and sustainable,” Mkhwanazi said. “We could quite easily just focus on costs or running operations to the detriment of the ecosystem. Purpose keeps us locked in, making sure that we’re always doing the right thing. It always reminds us of the difference we can make in society. We believe that when we succeed, our communities also succeed.”

Points to consider

You might be thinking of the personal application of this for your business. How do you use purpose so CSR is fully ingrained in the business? Here are some points to consider:

· Think ecosystem. Purpose should be an exploration of the relationship that your company has with its entire ecosystem – all internal and external groups that your organization impacts in some form.

· Remember to include “relational capital” in your assessment of value. Yes, it’s critical to manage scale in, say, supply chains. Kumba reminds us that local suppliers’ feelings towards their company is a major factor in their ability to scale. The positive feelings from suppliers result in hard-to-measure levels of discretionary effort and support that translates into even more tangible value creation. Purpose enhances your ability to consider the importance of relational capital.

· Redefine CSR. Vinita Bali, former Managing Director of Britannia in India, once told me: “CSR should stand for corporate strategic responsibility.” I strongly agree. CSR should be integrated into the core of who you are as a company in order to ensure that it’s both impactful and sustainable.

· Lengthen your time horizon. By looking beyond a budgeting or even a career time horizon, leaders can focus more clearly on their legacy. This notion of stewardship is a core leadership implication of a clear purpose. If you are reading this on your main monitor and have access to a second screen, type in Egyptian pyramids in Google Images. With these pictures in the background, consider this idea of legacy – both for you individually and your organization.