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Corporate Social Responsibility and Environmental Management

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Chapter 1


This section covers the background to the problem, problem statement, research questions, research objectives and the justification.

1.1 Background to the Problem

Corporate Social Responsibility (CSR) refers to the   concept whereby companies take some responsibility in developing the community around them and the environment of their operations (Bendell, 2005). This obligation can extend  to comply with legislation and makes organizations voluntarily take further steps to improve the standard of life for the people in the community and society at large (Stiglitz, 2006).

The issue about CSR begun in the 20th century, although it did not gain a lot of momentum at the time. However, there were growing concerns from the large corporations. Some believed that giving back to the community would dilute the company's targets causing a reduction in company sales. Some other companies felt that social responsibility was the governments job,  and they should not be involves. However, these people failed to realize that giving back to the community that had given so much to them would boost their position in the market as it would  gain competitive advantage over other firms. This move would also  attract employees and other investors. CSR helps to upgrade the living conditions of the people living in the society. The company ensures that it maintains a healthy and happy, work force and a conducive environment to operate by elevating poverty, hunger and illiteracy..

The United Nations Millennium Development Goals (MDGs) has also played a key role in increasing the awareness of CSR. The CSRs have helped to alleviate hunger and poverty, making the community aware of the impact the business has on the society.(Utting 2005). Garvey and Newell (2005) argue that CSR embraces the fact that all activities undertaken by a firm have an effect either inside or outside the company. Corporate Social Responsibility encompasses four distinct areas: The Workplace, The Marketplace, The Environment, and The Community. Many corporate continue to argue that their responsibility is to shareholders only. Stiglitz argues that companies are communities or people working together to achieve a mutual goal. The companies should care about each other and the community they operate in their production process.

Chatterer (1994) defines community development as the process where people in a society organise themselves for planning and action; define their individual needs and problems; execute their plans while fully relying on the community resources and supplements from the government and non- government organizations. Chitere further notes that, in this connection, companies practicing CSRs work towards an end that appeals to the community by development agencies or their clientele. It is now an accepted fact that poverty reduction and the sustainable development within the community may not be achieved through government action alone. Since the advent of the role of the market in development and characterised by the rolling back of the state, other players like the non- governmental organizations, the civil society and the private sector, play an increasing role in community development. Of late, policy makers paid additional attention to the potential input of the private sector to these  policy objectives. Further, Utting (2005) notes that the private sector ought to play a key role towards achievement of MDGs especially in the developing countries.

The foundations support communities in the areas of environmental conservation and provision of essential services such as education, health, water and economic development. CSR is associated with philanthropy, although the concept of CSR is gaining some prominence within policy debates in the UK. There are many private-related initiatives and business activities that might be described as expressions of CSR, and there are also emerging specialist CSR organisations Many CSR initiatives in South Africa operate through projects covering areas such as education, water, health and human capacity development through training. According to Kosura (2000) a project is a set of complex activities where community resources used yield expected returns.  In addition, a project ensures that the involved parties commit themselves through the planning, implementation, financing and completion of the project. Kosura notes that a project must have a definite starting point and ending point. The objective of establishing the progress of a project is to ensure the company achieves all the objectives set.  A project will thus have the stages of identification, planning and designing, implementation, monitoring and evaluation. Monitoring and evaluation helps determine the progress towards achieving the intended goals and objectives.

1.2 Problem Statement

Corporate Social Responsibility has widely been used as a marketing strategy by the corporate world with the aim of increasing a firm’s profits (Utting, 2005; Bendell et al, 2005; Cappellin and Giulian, 2004). Though some studies conducted in the past suggest that socially responsible firms have better performance in the stock market, as opposed to their competitors, many firms consider social responsibility an ethical moral issue, as opposed to an economic one. (Stiglitz, 2006). Moreover, available literature shows that when split off from commodities and when done with the involvement of the local community, CSR can highly contribute to community development (U N, 1993; Bryame, 2003; Manokha, 2004; Utting, 2005). Newel (2001) further argues that CSR has got the potential to contribute to poverty alleviation and sustainable development, though with some limitations. Alyson (2001) notes the business world plays a strategic role in the development process by engaging in CSRs. More often than not, it is the corporate view of the initiatives made and thus the perception in the society. There are studies done at the macro-level focusing on what companies do to their shareholders, workers and activities touching on the community, but assessment of whether such initiatives require the involvement of the local community, more so their view of the extent of mutuality in such CSR initiatives, is scanty. Hence, the study sets out to establish the community’s view of mutuality in CSR initiatives through a case study of The Shell Foundation’s Flower valley project in South Africa.

1.3 Research Questions

As noted in the study background and problem statement, the gap identified in literature on CSR in community development is the lack of documented community views on such CSR initiatives. The study thus aims to answer the question, what is the community’s view of mutuality in Shell Foundations’ CSR Flower Valley. The following questions will help answer the main question:

1). what was the contribution of the community at the conceptualisation of the Shell foundation project?

2). what was the contribution of Shell Foundation at the conceptualisation of the Flower Valley  project?

3). what was the contribution of the community in resource mobilisation for the Flower Project?

4). what was the contribution of Shell Foundation in resource mobilisation for the CSR Flower Valley Project?

1.4 Research Objectives

The main objective of the study is establishing the community’s view of mutuality in Shell's Foundation Flower Valley Project. The 1objectives helping feed on to the main objective includes:

1). to find out the contribution of the community at the conceptualisation of Shell’s foundation flower valley project.

2). to find out the contribution of Shell Foundation at the conceptualisation of the CSR Flower valley Project.

3). to find out the contribution of the community in resource mobilisation for the CSR Flower Valley Project.

4). to find out the contribution of Shell Foundation in resource mobilisation for Shell Foundation.

1.5 Justification

In the past, scholars have expressed fears that the society only understood  the corporate world’s view, as the players in CSR. The study will help in addressing such fears amongst scholars in their scholarly works and contributions to policy-making. It will highly contribute to the understanding of local-level development, especially the role of local community in such development. Recommendations of the study will be useful to policy-makers for better planning of companies’ engagement in CSR initiatives.  Knowing the community’s view of their engagement by the companies will help companies adopt appropriate ways of engagements that help both the communities and companies, as well. The study will be useful to Non-Governmental Organisations (NGOS) and Community Based Organisations (CBOs) in designing community engagements in their various activities on the local-level development.



2.1 Introduction

This chapter gives an in-depth review of literature on corporate social responsibility; its origin and development, its prospects for community development, its theoretical underpinnings. It also gives an overview of the concepts community development, mutuality, and the theoretical framework revolving three theories of Alternative Development, Community Participation and Basic Needs Approach.

2.2 Corporate Social Responsibility

The debate about CSR begun in the early 20th century, although it was not as common as the time. This was amid growing concerns that the large corporations would gain excess power and hold in the community. The concept of corporate charity and stewardship  played a key role  in shaping the early thinking and perceptions  about CSR in the United States (Bendell, 2005). According to Ida Tarbell in his 1904 publications, the History of the Standard Oil Company inspired the Supreme Court’s decision where the US attained the mandate to split the company on the grounds of antitrust. Similarly, Sinclair’s ideas in the book, The Jungle, published in 1906 helped to influence the congress decision to pass the Pure Food and Drugs Act, and the meat Inspection Act in the United States. These case studies can be used to demonstrate the early attempts made to mandate corporate social responsibility (Utting, 2005; Newell, 2001).

According to Bendell (2005), the initials, CSR itself came in to be applied in the business world in the early 1970s. The term stakeholder, on the other hand,   meant those individuals directly affected by an organization's activities. This means it refers to corporate owners who are beyond the shareholders level. The new paradigm of alternative development, which stresses on, developing the capacity of local communities to meet their needs has seen the increased emphasis of CSR in development.  The international CSR agenda mainly represented the investors, NGOs, consumers, business associations and businesses.  In developing countries, CSR has in the past  been criticized for being insensitive to  the plight  of the local people  and the basic needs of people. Newell (2001) and Alyson (2001) are categorical that any CSR initiative directed to a group of people ought to be designed and implemented with the involvement of that group of people. Today, many large companies now print copies of the corporate social responsibility reports alongside their annual reports. This helps the organizations to plan for future projects as well as follow up on previous projects. In addition, the report usually concentrates on what companies call the non-financial activities which are positive in nature. Such CSR initiatives usually target the development of the local communities.

2.3 Theoretical Underpinnings of CSR

There are considerable challenges in the corporate world that limit the growth of the organizations by limiting the potential returns of the firm. Government regulations and restriction also play a key role in influencing trade in a region. The government regulates the business using tariffs and other forms of restricting barriers. Globalization, Environmental regulations, political interference and exploitation are problems organizations face costing them millions of dollars. Ethical implications are in some instances, used as a costly hindrance that drives businesses and investors to shift their view point. CSR can also be used as a marketing strategy for organizations. When an organization takes up community projects in the environs, it attracts workers from the community who would want to be affiliated with an ethical company. In addition, this gives an organization competitive advantage over its competitors in the region. Although initially it might be a costly affair, the end justifies the means. This means that a company might advertise itself subconsciously through the CSRs.

(Utting 2005). Globalization, therefore, makes competitions steeper as other firms will emerge /acquiring other businesses with competitive and alternative core competencies (Stiglitz, 2006). Stakeholder and governance theory suggests that modern business should no longer be preoccupied exclusively with the interests of shareholders and relations with the state and trade unions, but must respond to the concerns of  multiple stakeholders, including NGOs, consumers, environmentalists, and local communities. Business can be pro-active and work with civil society organisations, government and multilateral institutions (Alyson, 2001; Utting, 2005: Stigliz, 2006).

2.4 Concept of Community Development

Chitere (1994) defines community development as a movement designed toimprove the living standards of the entire community.  He also sees it as a form of social action where  the people of a community organise themselves for planning and action; define their individual needs and problems; execute their plans  using  the community resources. The government and the NGOs also play a role in supplementing the resources required for projects. The two definitions above appreciate the role of the community coming together, mobilising resources available from within and without, and working together for the fulfilment of a common objective. Chitere (1994) observes that community development perceives projects as a process, a method, a programme, and a movement, with its conception also portraying it as a means and an end. As a method, community development is  a means for accomplishing some end. Itere further states that corporations participating in CSRs gain the appreciation and admiration of development agencies and their clientele.

2.5 CSR and Community Development

Bryame (2003) argues that there are three schools of thought in the practice of Corporate Social Responsibility in the development. These are neo-liberal, which is self-regulation, by industry according to risks and rewards of CSR; state-led, national and international regulation and co-operation; and the "third way" which is the role of profit and non-profit organisations in community development. However, the author argues that the three theories may be criticized using theories applicable to a broader field of development, hence the importance of contextualizing the concepts under discussion. According to Newell (2001) the relationship between companies and local communities helps to build trust. This in the long run boosts the company image in the community.

2.6 The Concept of Participation

According to Chambers (1997) and Paul (1987), participation is an active process by which local people take part in the planning, acting, monitoring and evaluating activities touching on their day-to-day lives. However, Bamberger (1986) argues that a complete definition of community participation must take into consideration the agents or organisational groups used; the medium or methods used to participate; the stages of the project; the program’s level or scope; the participants and the intensity of participation. Paul (1987) proposes five objectives to which community participation might contribute, namely:

  • Sharing project costs- Participants contribute money or labour during the project process.
  • Increasing project efficiency- Involves the beneficiary consultation and involvement in project planning, management, implementation and operation.
  • Increasing project effectiveness- The greater beneficiary involvement to help ensure project achieves its objectives and that benefits go to intended groups.
  • Building beneficiary capacity- This will be by ensuring participants  participate in project planning and implementation, and through formal and informal training and consciousness raising activities.
  • Increasing empowerment- By increasing the control of the available resources in the underprivileged sectors of society and ensuring that the decisions made benefit the society in which they live.


3.0 Introduction

This chapter gives an analysis of the research methodology to be adopted by the study, and it includes the site selection, the sampling, data and its sources, data collection criteria and techniques of data analysis and presentation of the study findings.

3.1 Site Selection

Flower Valley district is a district located in South Africa, in Africa. Though regarded as well-off region in resource endowment, access to quality education still remains a crucial problem amongst the local community. This paper will focus on the Flower Valley, a Shell foundation Project.

3.2 Sampling

The study will assume the approach of a case study and mainly with a deductive thinking with the units of analysis being the local households who are beneficiaries of the water project. The chairman of Shell Foundation and Flower Valley project director will be the key informants in the study. All households within the Flower Valley Location benefit from the education project.  The sample will involve 60 households. The method used to select households will be the Simple random sampling..

3.3 The data and its sources

The study will use secondary sources of data. Secondary sources will involve review of the Shell Foundation annual reports and the company’s publications on CSR.

3.4 Data Collection

The researcher prefers using both structured and semi-structured questionnaires as well as interviews   to collect data on the community’s contributions during project conceptualization, resource mobilization and in the on-going operations. A structured questionnaire mailed to the director of Shell foundation will effectively collect information on the company contributions during Shell Foundation’s conceptualisation, resource mobilisation and in the on-going operations. Shell Foundation seldom allows face-to-face interviews with their employees, hence the decision to mail the questionnaires.. This will, however, be a challenge to study as there will be no chance to enquire further on the responses given.  An interview with the chairman of Shell Foundation to get an in-depth analysis of the on-going operations of the water project- the roles of the community, Shell Foundation and any other party involved.

3.5 Data Analysis and presentation

Data analysis wills both quantitative and qualitative techniques will be used for data analysis. Questionnaire information will be coded and entered in SPSS for analysis to generate percentage figures on the extent of mutuality at the three stages of the project and overall, as operational zed by the study- Not There, Less, Much and Very Much. Figures on Percentage contributions of the Shell Foundation, the Community and others, will also be generated. Data from interview schedules and secondary sources will be analysed qualitatively through description. Review of the project annual report will help review the success of the project, thus helping tell with some certainty the likelihood of the project being sustainable. The findings of the study will be presented using figures and tables showing the extent of mutuality in project conceptualization, resource mobilization and on-going operations.  This summarized data uses frequency tables in the SPSS and results explained using inferences as people’s opinion. On the other hand, descriptive continuous prose is the best present secondary sources information.

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