Impact investing — a re-orientation of CSR
By Emmanuel Osei Akuamoah
Gone are the days when corporate institutions and businesses that engaged in or sponsored beauty pageants and soccer competitions were hailed as being socially responsible.
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The meanings and purposes such endeavours were intended to serve are parallel opposites and far apart.
The World Bank views corporate social responsibility (CSR) as the commitment of businesses to contribute to sustainable socioeconomic development through working with employees, their families, local communities and the general society to improve quality of life to be beneficial to businesses and societies.
CSR is, therefore, not a preserve of corporate or non-governmental organisations. Individuals as members of civil society have a myriad of avenues under democratic systems to engage firms and other organisations whose activities improve community well-being to some extent.
Socially responsible activities by businesses also include those that supplement the efforts of governments to develop human capacity, infrastructure and resources to stimulate national development.
In its advanced form, CSR may take different forms such as firms establishing endowed chairs or lead researcher positions at institutions of higher education. Such chairs and lead researcher positions are meant to create research that produce innovative approaches to production and business practices with the potential to minimise the ills of business activities on society.
It must be stated that the benefits derived from socially responsible efforts of corporate organisations are dependent on a thriving partnership between corporate, national and community groups who are committed to working together.
In Ghana, CSR has mostly taken the form of sponsorship deals in support of our national (soccer) teams and beauty pageants with few of these endeavours directed towards community improvement and wellbeing.
First, there is limited support for and reliance on applied research such as needs assessments, community profiling and baseline studies which could be used to identify community needs and resources. Even where such community studies are available, they have not informed or influenced the approach and practice of CSR by corporate bodies in Ghana.
A community practitioner, John McKnight, contends that: “Every single person has capacities, abilities and gifts. Living a good life depends on whether those capacities can be used, abilities expressed and gifts given.”
CSR to impact investing
The argument that businesses have tax and royalties commitments and so their paltry socially responsible contributions should be highly commended has been refuted by the new emphasis or re-orientation of CSR through impact investing.
This call for a re-orientation of CSR through impact investing is necessitated by the fact that economic activities can generate significant social, economic and environmental impacts. Because endeavours impact their external environments, there is a need for a very serious commitment beyond the payment of taxes and royalties to help mitigate any adverse effects.
There is the need for a diversification of CSR by the corporate and business community in Ghana in order to spur socioeconomic development in our communities. This would significantly supplement the official development agenda of local and national governments to mimic the experiences from more developed economies such as Australia and Canada.
Refocusing CSR
Impact investing is more promising for firms because they can increase firm value as well as be recognised as socially responsible. Socially responsible or impact investing has also been used as a tool for gaining the social licence, the unwritten social contract to operates especially with investments in the extractive industry sector.
The writer is the Administrative Manager, Venture Capital Trust Fund