Addressing Corporate Sustainability in The Corporate Sector through Payin30

The #Payin30 initiative in South Africa has been largely driven and supported by the private/corporate sector. Corporate Social Responsibility (CSR) is a management concept or a business model, that consolidates topics of social and environmental concerns into their business policies, operations and their conduct. It is a way in which the company becomes socially accountable, not only to itself and the stakeholders but also to the public. Corporate social responsibility is the approach a company undertakes to enact a balance of the Triple Bottom Approach (TPL) – “People. Planet. Profit” while holding itself accountable to stakeholders.

CSR is a conscious effort to address the capitalistic nature of the business but being cognisant of the environment in which it exists – understanding that people, profit and the planet cannot operate in isolation.

The Corporate Social Responsibility (CSR) diagram: Photo courtesy of Getty Images

THE ROLE OF GOVERNMENT IN CSR AND PAYIN30

Although the business sector lies at the centre of CSR, the government as an authoritative power can play a catalyst role – yielding their power and voice to raise awareness of what CSR truly embodies. The government can a vital role in mediating between social agents (business sector and the public).

The United Kingdom (UK) government and the South African (SA) government have been exemplary in calling for action against 90-, 60-, and 45-day payment terms. On the 19th of January, the United Kingdom government announced that it has re-examined the Prompt Payment Code (PPC) to renounce delayed invoices owed to SMEs. Under the new reconstructed terms, companies are obliged to now pay SMEs within 30 days – which is half the time defined by the current Code. The UK government is looking to strengthen the rules, by increasing Small Business Commissioner powers as a post-covid19 economic strategy.

During the South African Investment Conference in Soweto, President Cyril Ramaphosa called for the government to ensure that SMEs suppliers are paid within 30 days. The Public Service Commission (PSC) is an independent and overseeing institution, ensuring the effectiveness and efficiency of public service performance. The PSC aptly states that “The non-payment of suppliers is in contravention of the Treasury Regulations and constitutional principles such as efficient, effective and economic use of resources, accountability and transparency”. The PSC will continue monitoring compliance with 30-day payment terms, announcing that they [PSC] will view non-compliance as financial misconduct.

These two exemplary moves by the respective are indicative of how not only government institutions can set precedence on ethical practices but also yield their power for the good of the greater society. The ability of government institutions to recognise the importance of SMEs as job creators, but also as an integral part of the economic ecosystem. The government is held accountable and is responsible for its stakeholders – the people and acknowledging that SMEs are the microcosm of society and the economy. The government’s role is a prime example of the influence of corporate social responsibility.

THE ROLE OF CORPORATE AND THE PRIVATE SECTOR IN PAYIN30

As the economic and social unit of society, corporate must operate in accord with sustainable strategies endorsed by the economic system in which it operates. The highlight of this is that corporate and business do not exist in isolation and their existence is dependent on the people and planet, there is a responsibility to the planet and the people. In pursuit of a sustainable business strategy, “CSR emphasises on the maximisation of the utility of resources with minimum consumption, exploration of resources without exploitation and maintaining the surplus balance of resources for future generations.”

The #Payin30 initiative in South Africa has been largely driven and supported by the private/corporate sector. Business for South Africa (B4SA), the SA SME Fund, and Business Leadership South Africa (BLSA), and supported by, amongst others, Business Unity South Africa (BUSA), the Small Business Institute (SBI) and the Black Business Council (BBC) have all put their heads together to support SMEs. This serves as evidence that corporates are largely aware of the role and influence in the country’s economic ecosystem.

Paul Hanratty, Sanlam Group Chief Executive Officer, and member of the Risk and Compliance, and Social, Ethics and Sustainability (SES) Committees speaks on the importance of the #Payin30 campaign.

Paul Hanratty, Sanlam Group Chief Executive Office

Hanratty says, that the #Payin30 is a supportive mechanism to SMES navigating the Covid-19 pandemic and will help them become sustainable in the long term. He follows this, highlights how the #Payin30 is also an economic strategy to the pandemic, urging all big businesses to adjust their payment terms in support of SMEs. Hanratty says,

 “Recovery will not happen exclusively through big national initiatives; it will happen bit by bit, in small but meaningful increments. The business sector in South Africa has the opportunity to play a profound role in the recovery of smaller entities.”

We cannot ignore the need for economic development and growth, but we must be cognisant that it needs to be done sustainably. We cannot grow the economy at the expense of the people or the planet. The progression of concepts like that of CSR is dependent on the partnership of the private sector and government.

CONCLUSION

In their article, ‘The Truth about CSR’, Kasturi et al note that there is an increasing pressure for corporate companies to “dress up CSR as a business discipline and demand that every initiative deliver business results.”. This takes away the essence of CSR is: “to align a company’s social and environmental activities with its business purpose and values.”. The authors of the article aptly advise that to maximise the positive impact of CSR, companies must depart from poor coordination of their CSR programs and the lack of logic connecting their various programs. Kasturi et al advise that maximising this means companies need to develop coherent CSR strategies by a) focusing on philanthropy, b) improving operational effectiveness, c) transforming the business model. Post the development of these three theatres, companies must develop a unified practice program through a four-step process. Step 1) Aligning Programs Within the Theatres, 2) Developing Metrics to Gauge Performance, 3) Coordinating Programs Across Theatres, and 4) Developing an Interdisciplinary CSR Strategy. Best-practices companies operate coordinated and interdependent programs across the CSR field.

We must understand the world from the triple bottom line: the social, environmental and financial – people, planet and profit. SMEs contribute immensely to the country’s sustainable growth and need the support of both government and corporations to ensure their survival and preservation. The global problems cannot be solved alone. The collaboration with entities like SMEs, NGOs and association can help them unleash the full potential of corporate social responsibilities. Payin30 is an important CSR initiative that serves as evidence of how government and corporate can work together to ensure the sustainability of SMEs.