Corporate Social Responsibility Preferences in South Africa

Round 1

Reviewer 1 Report

The study provides an interesting view at the issue of CSR in SA. Especially in relation to the area of enterprises operation.   The reference to the issues of Social Responsibility and conditions imposed by law requires clarification (e.g. BEE). If the BEE is determined by legal condition. Or, in addition, when they get benefit from it. To what extent is this still a social responsibility?. The problem is not specific for SA, it should be considered as a global problem. In this sense, the authors rightly referred to the problem as initiating social action. This issue should be expanded/ detailed.

The publication is very valuable and can be useful for comparing of CSA implementations in African countries and for the global determinants of CSA preferences implementation.

Author Response

Point 1: The reference to the issues of Social Responsibility and conditions imposed by law requires clarification (e.g. BEE). If the BEE is determined by legal condition. Or, in addition, when they get benefit from it. To what extent is this still a social responsibility?. The problem is not specific for SA, it should be considered as a global problem. In this sense, the authors rightly referred to the problem as initiating social action. This issue should be expanded/ detailed.

Response 1: Thank you for this point. We now clarify that BEE is legislated but applies to state organs. We also go on to elaborate on how the private sector is impacted by this legislation. Then we give a brief overview of aspects of this legislation that can be viewed as CSR. In lines 136-157 you will find the following" 

"Notably, BEE policy has been designed to be implemented via state procurement and licensing. The SA state has legislated BEE in the government sector allowing state departments and state-owned enterprises to procure goods and services from the market based on two criteria: price and BEE. The state will also view the BEE status of licence applicants in certain industries, e.g., a licence for mining rights and a licence to provide telecommunication services. Notably, when business is conducted between two private-sector firms, BEE compliance remains voluntary. In practice, firms that wish to do business with the state must also demonstrate that they procure goods and services from suppliers that comply with BEE regulations. In this way, BEE policy affects the entire supply chain of firms that do business with the state [[34,35].

Except for Black ownership and management control, the general upliftment of Black people through human resource and skills development and socio-economic development, as a version of social responsibility, has been uncontested [32]. However, ownership and management control may be considered as “special measures” accommodated in international human rights law [36]. In addition, Black ownership has a recursive relationship with efforts to promote procurement and enterprise development type equity (compared to employment equity). These efforts rely on the state and established private firms locating Black-owned enterprises across all sectors of the SA economy. And currently, they remain scarcely represented in the SA economy."

Point 2: The publication is very valuable and can be useful for comparing of CSA implementations in African countries and for the global determinants of CSA preferences implementation.

Response 2: This is encouraging for us.

Reviewer 2 Report

Thank you for the possibility to read and evaluate your paper.
My overall evaluation of the paper is minor revisions.

1. In section 2 CSR in South Africa, I recommend including graphs that show how South Africa ranks relative to the rest of the world in terms of CSR. These graphs should be accompanied by proper justification.
2. Section 5 Method should specify what was the criterion by which 231 private sector firms were chosen out of the 374 listed at Johannesburg Stock 244 Exchange (JSE) for the 2019 financial year.
3. It is not specified the software resource that was the basis for obtaining the data presented in table 3, respectively table 4.
4. What is the source of Table 2: Sample composition by industry?
5. I do not recommend in the Conclusions part the use of bibliographic references (there are two references 14, 38).
6. I also think that there should be more references to be published in the last 3 years (only 7 out of 68 I have identified myself)

 

Author Response

Point 1: In section 2 CSR in South Africa, I recommend including graphs that show how South Africa ranks relative to the rest of the world in terms of CSR. These graphs should be accompanied by a proper justification.

Response 1: Thank you for this suggestion. It improves our article a lot. We did a search and found some data indicating that SA has a CSR score of 55 out of 100 relative to a high scorer such as Latvia (a score of 64. We also locate scores on sustainability and this time we were able to provide a graph showing SA's location against other regions. Please refer to the revised version around lines 179-189. 

Point 2: Section 5 Method should specify what was the criterion by which 231 private sector firms were chosen out of the 374 listed at Johannesburg Stock 244 Exchange (JSE) for the 2019 financial year.

Response 2: We now elaborate how we arrive at 231 firms in our sample. Please see around 297-303. Within the total of 374 firms, we considered only those CSR activities related to social upliftment in the country. Environment-related CSR activities were left out since all firms are mandated to report on their environmental engagement. From a total of 374 firms listed on the Johannesburg Stock Exchange (JSE) for the 2019 financial year [63], we located data for social type CSR activity in a total of 231 firms. This represents 62 percent of listed firms.

Point 3: It is not specified the software resource that was the basis for obtaining the data presented in table 3, respectively table 4.

Response 3: In section 5.3 on Data Analysis we now indicate that we used Stata.

Point 4: What is the source of Table 2: Sample composition by industry?

Response 4: Around line 336, we now indicate that sectors were derived from South African National Accounts Classification and the number of firms derived from Johannesburg Stock Exchange (JSE) for the 2019 financial year.  

Point 5: I do not recommend in the Conclusions part the use of bibliographic references (there are two references 14, 38).

Response 5: We removed these.

Point 6: I also think that there should be more references to be published in the last 3 years (only 7 out of 68 I have identified myself)

Response 6: Thank you for this point. For this revised version, we made a deliberate attempt to locate references in the last 3 years without impacting the document significantly. For example, you will now see that we added:

-Sachs, J.; Kroll, C.; Lafortune, G.; Fuller, G.; Woelm, F. Sustainable Development Report 2021; 2021;

-Geerts, M.; Dooms, M.; Stas, L. Determinants of Sustainability Reporting in the Present Institutional Context: The Case of Port Managing Bodies. Sustainability (Switzerland) 2021, 13, doi:10.3390/su13063148.

-IMF South Africa : 2019 Article IV Consultation-Press Release; and Staff Report; and Statement by the Executive Director for South Africa Available online: https://www.imf.org/en/Publications/CR/Issues/2020/01/29/South-Africa-2019-Article-IV-Consultation-Press-Release-and-Staff-Report-and-Statement-by-49003 (accessed on 4 March 2022). 

Reviewer 3 Report

Dear authors,

your's is an interesting contribution to the field of CSR that I welcome warmly.

Still, I would like to suggest some editing

• The term "developing countries" is - at least in my cultural context - no longer politically correct. We prefer talking of the "GLobal South" vs. the "Global North". You might want to check whether this is appropriate in your context, even more so as South Africa is not really a developing country.
• I would welcome a clarification of "what CSR is", especially delving into the question of to which extent CSR is voluntary and discretionary. Maybe you can expand on your mentioning of US- and European economies.
• The situation in South Africa is no doubt interesting, but maybe you can expand on the value added for readers from the rest of the world - what can we learn from your example?

Altogether, except for some amendments in the language (as to grammar especially, like incongruent singulars and plurals) this is a fine paper that after minor revisions I would suggest for publication.

Author Response

Point 1: The term "developing countries" is - at least in my cultural context - no longer politically correct. We prefer talking of the "Global South" vs. the "Global North". You might want to check whether this is appropriate in your context, even more so as South Africa is not really a developing country.

Response 1:  We recognise your argument and thank you for this suggestion. Around lines 45-70 we now refer to SA as representative of the Global South.  

Point 2: I would welcome clarification of "what CSR is", especially delving into the question of to which extent CSR is voluntary and discretionary. Maybe you can expand on your mentioning of US- and European economies.

Response 2: We have revised a few paragraphs in Section 2 to clarify CSR in terms of its current hybrid orientation. Notably, we saw the need to return to bring in Elkington's triple bottom line to give an explicit answer to "what CSR is." Around lines 81-94 you will read:  ''As various difficulties experienced by society have arisen, public expectations of corporate responsibility have also evolved. From the original focus on social issues, CSR scholars now argue that social issues include the “stewardship of the natural environment” where environmental issues are viewed “as trespasses against society” [19 p.107]. This has led to viewing corporate performance in terms of a triple-bottom-line: economic, social and environmental [20]. A useful guide to key performance indicators of each dimension CSR can be found in the Directive 2014/95/EU[21] .

As a result of the rigorous discussion in the European Union about how to implement corporate responsibility, CSR has been revised from its voluntary posture originating in the U.S to a hybrid of voluntary and regulated elements [7,20]. For example, in Europe, it has been proposed that “public authorities should play a supporting role through a smart mix of voluntary policy measures and, where necessary, complementary regulation” [23 p.7]. The spirit of regulatory measures, it has been argued, is not to reduce the discretion afforded to firms; instead, they should guide firms [24]."

Point 3: The situation in South Africa is no doubt interesting, but maybe you can expand on the value added for readers from the rest of the world - what can we learn from your example?

Response 3: Thank you for this point. We decided to respond by providing some useful background to the SA context to show the importance and value of a regulated version for other similar contexts. The paragraph also shows the value provided by private firms beyond their profit orientation. In lines 95-108 we state: "

The South African environment presents private firms with abundant opportunities to help address social ills. South Africa has the highest level of inequality in the world, with a Gini index of 63 [25]; and about a third of its population live in poverty [26]. A major reason for this inequality is the stubborn unemployment rate, now at 35% [27]. Many of the unemployed are less educated and unskilled; and the demand for them arising from, for example, primary industries such as agriculture and mining, has continued to decline. Structural changes in the economy have resulted instead, in the demand for more skilled labour. South Africa has been described as a land of “two nations” [28]: a rich, formal economy and a poor, informal economy. With low national skill and education levels, high crime rates and poor access to clean drinking water and housing, the provision of social services, traditionally supported by charity and government, is under severe strain [29]. In this case, the private sector’s social responsibility efforts, making use of private resources that can be used efficiently and effectively, become valuable to compensate for the inadequate social services delivered by the government."

Point 4: Altogether, except for some amendments in the language (as to grammar especially, like incongruent singulars and plurals) this is a fine paper that after minor revisions I would suggest for publication.

Response 4: Thank you for recognising our work. We have also looked into the grammar and hope the grammar in our revised version is a significant improvement from the previous version.

Reviewer 4 Report

Overall I like your paper with an interesting research question to explore CSR activities in African region across industry which is less investigated.

I would recommend to include deeper theoretical reasoning in chapter 2 which CSR approach (and why) you have choosen as this approach serves as a basis for your CSR measures. In chaper 5.2.1 and table 3 I missed the reasoning why these CSR preferences are elected, i.e. "found in literature" is too superficial, see line 270.

 

Author Response

Point 1: I would recommend including deeper theoretical reasoning in chapter 2 which CSR approach (and why) you have chosen as this approach serves as a basis for your CSR measures.

Response 1: Thank you for this suggestion. At line 169, we now provide a brief rationale for the approach to CSR in South Africa. To quote: "Our approach to CSR emanates from the debate about the suitability of the Global North approach to social responsibility indices (SRI) for the Johannesburg Stock Exchange (JSE) (see, for example, Heese [41]). Eventually, the JSE developed its version of a SRI by borrowing from, among others, the FTSE4Good Index, the GRI, King Codes of Good Governance, and the Sullivan Principles [41–43]. Though the Index includes metrics connected to the natural environment, South African organizations have prioritized the socio-economic aspects of international standards. These include training and development, employee and community relations, equal opportunities, health and safety, stakeholder engagement, BEE, and HIV/Aids [41,43]."

Point 2: In chapter 5.2.1 and table 3 I missed the reasoning why these CSR preferences are elected, i.e. "found in literature" is too superficial, see line 270.

Response 2: We now provide a brief background for our categorisation--e.g. education and youth development--of the many CSR activities we identified in the company reports. After our revisions, the issue you referred to is now located at line 324. There we state: "For example, Visser [57] found commonality in charitable donations, health and safety, and SME empowerment, which we renamed enterprise development. Education, training, and skills development have been important strategic CSR activities [64]. Notably, youth development and education are the main CSR activities in Africa [65]."