×

We've got news for you.

Register on SowetanLIVE at no cost to receive newsletters, read exclusive articles & more.
Register now

CARMEL KISTASAMY | Social impact is the true measure of business success

It is a solution that builds toward long-term sustainability

Corporate South Africa provided increased support for food security initiatives in the latest financial year. File image.
Corporate South Africa provided increased support for food security initiatives in the latest financial year. File image.
Image: Esa Alexander

“Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the centre. We believe that it can give rise to the next major transformation of business thinking."

This quote from American author and academic Michael Porter has been a guiding principle for much of the work we as a bank have done as we have embraced the world of environmental, social and governance (ESG) principles throughout our business.

If we look back, the term “ESG” emerged in 2005 as part of a study entitled “Who Cares Wins” conducted with private and public sector experts in conjunction with asset managers, bankers and analysts where bottom-line profits at all costs were reviewed against long-term sustainability metrics and business goals. The terms “stability” and “predictability” are particularly pertinent and underlines the importance of measuring the business value and impact of the “social” aspect of the ESG equation.

As ESG has taken hold, there has been a big focus on the environmental side of the matrix, most notably in areas like green and renewable energy.  The social side is more nuanced, and, in many cases, it has been relegated to citizenship and feel-good initiatives rather than a broader understanding of social impact. It is important that we don’t confuse this with charity and donations – but rather long-term corporate sustainability.

The 2020 Deloitte Review article measuring the business value of corporate social impact, Beyond Social Value to Enterprise Performance, suggests measuring the business value of corporate social impact against six drivers and matching it to existing business metrics to measure the business value of social impact in ways that are comparable and consistent with other corporate considerations.

The six drivers identified include: brand differentiation, talent attraction and retention, innovation, operational efficiency, risk mitigation and capital access and market valuation. By using this approach, Deloitte found that corporations can identify concrete measures around both the social and business value of each of the six drivers.

ESG forms a core part of the Absa value proposition, and the bank has invested significant financial and human capital in this space.

We have focused on overcoming the notion that the “S” is more of an individual project at an employee level or citizenship events there is an imperative to bring our participation as a bank in the aspects related to social, to the forefront of how we do business. This encompasses financial inclusion, supply chain and SME support, gender equality financing, and youth empowerment.

To that end, we are encouraged by the adoption both internally and externally of true ESG principles that are focused on developing solutions which will benefit the African continent immeasurably in the next 10 to 15 years. We have built some exciting initiatives and over the last five years have invested over R1.5bn via our Group Society Investment, which has benefited over 860,000 beneficiaries – particularly youth who are looking to develop professional skills and start their own small businesses.

We worked on several landmark projects in the fields of green bonds, social impact bonds, healthcare and education. The pharmaceutical and healthcare sectors have been particularly proactive in developing solutions with many of our multinational clients driving initiatives in digital healthcare, testing, women-empowerment, and access to education.

We believe that the right partnerships are key to unlocking Africa’s ESG investment potential but more than that to use the right drivers and measures to manage impact investment to ensure we facilitate connecting company success with social progress.

Kistasamy is head of global development organisations, Pan-Africa at Absa


Would you like to comment on this article?
Register (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.