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Paper written for: Corporate Social Responsibility Handbook 2000

Written by: Sarojini Persaud

CSR/CSI: A Means to Integrate the Profit Motive and Human Rights

Six years after the "new" political dispensation affirming a culture of Human Rights, particularly socioeconomic rights, South African corporations are challenged to re-think, reconfigure, and re-align their "bottom line" measures of performance. Traditional reporting on corporate performance, which focused on the financial bottom line, is no longer a sufficient performance measure in a democratic context with constitutionally entrenched human rights. Increasingly, corporations, as juristic persons, enjoy many "human rights" and, therefore, are expected to not violate these rights and to act as good corporate citizens.

CSR/CSI increasingly provide opportunities for corporations to demonstrate, at a minimum, their observance of human rights, but as "first prize", their commitment and active promotion of such rights; that they are good corporate citizens. Sustainable socioeconomic development can, therefore, be said to intertwine with the profit motive. But the balancing of these two objectives has not been easy. This is reflected in the myriad of CSR/CSI programmes across corporations. The challenge is for CSR/CSI to embed rigorous and integrated methods that can generate credible performance measures of corporate observance/promotion of human rights and in so doing, demonstrate good corporate citizenship. One method that holds a lot of potential for effective measurement is Social and Ethical Accounting, Auditing and Reporting (SEAAR).

Social and Ethical Accounting, Auditing, Reporting: A Method for Measuring the Impact of Corporate "Social Investments"?

SEAAR is a cyclical process that organisations employ to measure performance in two ways: social impact and ethical behaviour. Measurement of performance is anchored in the organisation’s mission and guiding values but carried out through comprehensive stakeholder engagement. SEAAR closely follows the financial accounting, auditing and reporting cycle in that it requires an organisation to develop an accounting system to monitor its performance through data capture, analysis and report writing. This is followed by the auditing / verification of reports to ensure the integrity of the accounting and report writing processes. Finally, the audited report is published and made accessible to stakeholders. This "cycle" culminates in an organisation holding itself accountable to its stakeholders and doing so in a transparent way.

If organisations are to adequately report on their performance, they must include their social impact (contribution to socioeconomic development) and ethical behaviour (observance, protection, and promotion of values such as human dignity, freedom, and equality). Where relevant, corporations must also report on their impact on the environment because the right to a sustainable environment is a human right. A corporation’s CSR/CSI portfolio can, therefore, be an excellent "accounting" platform because, in spite of the motive for creating them, CSR/CSI programmes target human rights and should account to the organisation’s stakeholders in terms of human rights observance/fulfillment/promotion. This is where SEAAR is relevant.

The potential benefit of SEAAR for corporations is that it can be used to measure the performance of their CSI/CSR programmes. It can help them to ask and answer the question: "is our social investment / social responsibility programme making a difference in light of the socioeconomic (development) needs of communities and the nation as a whole?" SEAAR contends that the best persons/entities to answer this question are the very communities/groups/organisations, the stakeholders, that CSI/CSR programmes target. Without credible data to measure performance, corporations cannot assess their CSI/CSR programmes and, therefore, they cannot proudly account for their performance. SEAAR provides the CSR/CSI programme with a rigorous method of engaging stakeholders to develop meaningful performance measurements, and to carry our performance assessments, in order improve their impact and relevance.

The Institutional Basis for SEAAR: Institute for Social and Ethical Accountability – Southern Africa (ISEA-SA)

SEAAR is a "new" discipline that is promoted through the institute for social and ethical accountability – South Africa (ISEA-SA). ISEA-SA is a not-for-profit and membership based professional institute. It is intended to be a SADC regional body that has formal professional links with a partner organisation called ISEA "international" based in the UK. Legally incorporated in November 1999, ISEA-SA’s establishment is the culmination of a consultative process initiated in 1995 which, throughout the period between 1995 to 1999, involved organisations from the private, public, and voluntary sectors. ISEA-SA adds value to institutions and organisations, across all sectors, through the introduction, promotion, and development of a values based approach to performance measurement. It is not a service delivery organisation in that it does not do SEAAR training or consulting. The raison d’etre for ISEA-SA’s is as follows:

ISEA-SA is a regional not-for-profit membership organisation that exists to:

Promote and advocate the discipline of Social and Ethical Accounting, Auditing, and Reporting

Develop the discipline through research

Accredit and evaluate practitioners, including the review of standards on an ongoing basis

Monitor the delivery of training to ensure compliance with standards

ISEA-SA is motivated by values such as transparency, integrity, accountability and human rights and by a concern to ensure triple bottom line accountability from all sectors in order to achieve sustained socio-economic transformation."

ISEA-SA’s strength and value is its non-partisan interest in the professionalisation, promotion and development of social and ethical accounting, auditing and reporting (SEAAR). Through a rigorous accreditation system for practitioners, organisations and institutions will derive optimum benefit from SEAAR processes such as the identification of relevant and effective performance measures through effective stakeholder engagement processes. As the institute, or professional body, for the SEAAR discipline, ISEA-SA realises that it must be sensitive to the socio-economic, environmental, political, etc., issues of the region so that perception and reality, regarding how SEAAR is introduced and implemented, are congruent and positive. ISEA-SA, therefore, partners with other organisations in order to have optimum reach and impact when promoting and advocating for the use of SEAAR but, maintains its professional, legal, and ethical independence.

The SEAAR "Fear"

In responding to new things or changes, there are four options from which we generally choose. The same applies when we are first introduced to SEAAR. We could respond through denial – "SEAAR does not exist!" Or, we could respond by resisting – "they can’t make me do it!" This may be followed by exploration – "well….it does not seem so bad…maybe we should try it out?" Finally, there could be acceptance – "I am a convert and want to spread the word!" When first exposed to SEAAR, a reaction may be to vacillate between resistance and exploration. Resistance because it seems like SEAAR just dumps another reporting obligation on an organisation’s already strained resources. Exploration because SEAAR has an intuitive logic that resonates for many organisations wanting to improve their performance. So, at first glance, it may seem that an organisation is caught between a rock and a hard place – "we want to do it but we just cannot manage".

The elegance of SEAAR, in fact, is that it provides a framework for an organisation to integrate its existing performance measurements and reporting formats so that duplication and overall inefficiencies are minimised. The strategy in doing SEAAR is to build on what the organisation is already doing. For example, what legal compliance reports is the organisation already preparing? What is it doing regarding employee satisfaction and climate studies? Is the organisation engaged in environmental impact measurement and reporting? How is the organisation engaging its stakeholders? All of these are individual "accounts" that an organisation is already keeping. It simply uses different words to describe them. SEAAR offers a cohering framework for performance measures and reporting that is, in actuality, not all that "new"! The value of SEAAR is that it augments organisational performance by anchoring it in an organisation’s mission, guiding values, and stakeholder expectations.


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