This relates to an organisation investing in community or societal upliftment projects and initiatives that will benefit the environment in which they operate, and in turn this will assist the organisation garner support from the surrounding community. Businesses make use natural/raw materials from the environment (water, land, trees, coal, etc.), human resources (employees who may be members of the community in which the business operates), financial and other forms of resources all in the aim of making a profit. A business which is socially responsible ensures that it reduces any negative impact it may have on society and the environment, replenishes what it has taken from nature, and considers the well-being of its employees and all other important stakeholders of the business.
The introduction of the concept of Employment equity came as a need to address the effects that the Apartheid regime had on South Africa, especially in terms of its labour market.
According to HR Pulse (2016), the creation of the Employment Equity Act (Act no. 55 of 1998) sought “to regulate how people within an organisation are managed in terms of their skills, roles and remuneration in a fair and non-discriminatory manner.”
The concept of business ethics, as explained by Rensburg (2017), relates to a business following the rules that will bring the undertaking of correct business practices with regard to dealings and operations. It is important for a business’s sustainability that it takes note that how the business obtains its resources, how it produces goods, how it hires people through ethical human resources practices, and also how it treats and relates to these employees as well as customers are all actions that the business can be accountable for in the future.
Consumerism is the act of satisfying customer’s needs, and it is the consumption of goods that businesses create for these customers in a morally ethical way. Wright and Rogers (2009) explain that consumerism can also be considered as an indication of the economic growth of a country, meaning that if a government and organisations are able to satisfy the needs of citizens/consumers by producing goods and services in great quantities, then that may be an indication of a better or higher standard of life for the people in the society. Consumers’ rights are also protected to make sure they do not fall victim to false advertising, unsafe products and other exploitive business practices.
Environmental sustainability refers to a business’s awareness of the natural environment and, by taking legislation and social standards into account, the organisation puts initiatives into place to reduce their contribution of damaging effects on the environment that their operations may have.
Mondi strives to provide assistance to the communities it operates and the employees who work for the company. Taking into consideration the needs of customers outside of the business’s main activities is one way that Mondi is being socially responsible.
Another way Mondi has demonstrated its social responsibility is through its partnership with The World Wide Fund for Nature (WWF), which is an independent conservation organisation whose sole mission is “to stop the degradation of the planet’s natural environment and to build a future in which people can live in harmony with nature…” (World Wide Fund for Nature, 2018). Due to the nature of Mondi’s core business, which involves deforestation for the production of paper and other related products, the company has identified the responsibility it has to nature and the overall environment. David Hathorn, Group CEO of Mondi says, “Mondi and WWF have a successful association working together on projects … We are very pleased to be working with WWF as we continue to reduce our footprint and share responsible practices across our industry and beyond.”
In addition to the above-mentioned partnership, Mondi has created a division, called Mondi Zimele, which is a small business development partition of Mondi South Africa. The ways they directly affect communities through their core objectives of the division is:
Expanding sustainable empowerment contractors in Mondi’s forestry value chain. This will have a positive impact on creating long-term opportunities for development through job creation and entrepreneurship in the communities.
Encouraging job creation and local economic development through the support of small businesses in surrounding communities. Mondi recognises the fact that people need to be able to support themselves on a prolonged basis, hence the name of the division being “Zimele”, which means “to be independent”. Mondi has made provisions to support and sustain communities through this empowerment initiative, and by doing so, are able to benefit these stakeholders on a broader scale.
Lastly, by facilitating the increased availability of sustainable fibre for Mondi mills from private growers with the emphasis on new community forestry businesses. This will also be a long-term beneficial factor in creating and broadening opportunities for wealth creation in these communities.
Mondi also ensures good corporate citizenship, integrating vigorous stakeholder commitment and dependable social investments. The company is mindful of the fact that they are accountable for their actions and the effect they have on society and the environment. By being aware of this, the company can then put measures into place to ensure that they are in constant communication with the community and are able to maintain a good relationship with stakeholders (employees, shareholders, suppliers, etc.).
A company as large as Mondi, which operates across 30 counties and employs approximately 25 000 people, must be compliant with a number of labour legislation pertaining to each country in which they operate. In South Africa, Employment equity is governed by the Employment Equity Act (1998), which has the purpose of addressing the disadvantages that Black people (Africans, Indians, Coloured people) experienced in the labour market of the Apartheid regime, by ensuring that they have a fair and equal opportunities to be part of the working class sector of the economy.
Broad-Based Black Economic Empowerment (B-BBEE), in relation to employment equity, aims to support economic transformation to facilitate meaningful participation of Black people in the economy (Phatshoane Henny Attorneys, 2015). Companies that are B-BBEE compliant are therefore Employment equity compliant. Mondi is a signatory to the Forest Sector Transformation Charter, which promotes B-BBEE in and through the forest sector. Mondi’s B-BBEE levels are frequently monitored and reported as prescribed by the B-BBEE Codes of Good Practice regulated by the South African Department of Trade and Industry.
Mondi declares its commitment to the following principles regarding employment equity and B-BBEE:
getting rid of hindrances to ownership and participation by black people, especially black women;
developing truthful employment conditions and encouraging variety in the culture of the organisation;
promoting employment equity so that management and workforce profiles both closely reflect the racial and gender demographics of our region;
contributing more to the investment of skills development and the education of upcoming black professionals, especially women;
enlarging the acquisition of goods and services from highly-rated B-BBEE suppliers;
aiding in the development of entrepreneurial skills and increasing the number and capability of black firms; and
guaranteeing good corporate citizenship, incorporating active stakeholder engagement and responsible social investments; and with the help of an independent verification society, regularly monitoring and publishing their B-BBEE scorecard.
Mondi has been included in the FTSE4Good Index Series since 2008, which, according to FTSE Russell (2017) “is designed to measure the performance of companies demonstrating strong Environmental, Social and Governance (ESG) policies.”
For a company to be included in this index, they must exhibit their compliance according to how ethical they are when it comes to their:
Environmental policies: Maintaining biodiversity, addressing climate change, pollution and resources and water use.
Social policies: Labour standards, Human Rights and community, health and safety and customer responsibility.
Governance policies: Tax transparency, risk management, corporate governance and anti-corruption (FTSE Russell, 2017).
Mondi solidifies their commitment to sustainable development and good business ethics by adhering to labour relations laws such as B-BBEE and the Employment Equity Act (EEA), by being aware of the impact that they have on the environment and taking measures that are aimed at benefiting the communities that they operate in at all levels of their operations.
Mondi has responded to customer’s needs by developing a Green Range product collection which was due to customer’s demand in green purchasing decisions. When customer’s needs are satisfied, this can be said to be good consumerism. Mondi’s purpose is to create solutions for their customer’s success, by delivering exceptional value in a sustainable way.
Excessive consumption is also a characteristic of consumerism, which can be amplified by the growth of population and the competition for land. By having a different approach which is aimed at protecting the environment and a production approach which encourages environmentally sustainable behaviour, Mondi’s customers can therefore be more thoughtful when deciding which products to buy (Environmentally Preferable Purchasing). Mondi also ensures that it places much importance on the safety of their employees. The company strives to remove the risk of the occurrence of fatal accidents and life changing injuries in their mills. Customers can feel confident in knowing that they are purchasing products that have been made in a safe environment, and also in having access to information that will help them make better purchasing decisions.
Mondi’s inclusive listing in the FTSE4Good Index Series indicates their commitment to environmental sustainability. In addition to this, their partnership with The World Wide Fund for Nature is said to send as strong signal that addressing environmental sustainability is the appropriate thing to do for the continued existence of their business. This partnership is focused on reducing the effect Mondi’s operations have on forests, climate and water, and also promoting sustainable practices in the industry. The plan is meant to address three main areas:
Ecosystem supervision – protecting high conservation value ecosystems in regions such as Russia, and increasing the value and resilience of multifunctional production landscapes in South Africa;
Manufacturing supervision – further reducing the water and climate footprint of Mondi’s operations and encouraging resources do what they are meant to do, recycling and longevity of products, including the cascading use of wood and forest products where appropriate;
Product supervision – further improving the environmental performance of Mondi’s products.
Mondi’s integrated structure and their landholdings contribute to their self-sufficiency, and help maintain a high percentage of CoC-certified wood for processing their mills, which is the Chain of Custody certification. The Forest Stewardship Council (FSC) is as a non-profit organisation that lays down principles for forestry approaches with the sole purpose of upholding environmentally responsible and social favourable forestry (TÜV SÜG, 2014).
Every country has the duty to identify which economic system best suits the markets that are within the country. South Africa has chosen the market economy, or the free-market environment which is an economic system in which the products and services demanded by the community are provided by independent entities/organisations and businesses that intend to make a profit (Erasmus et al, 2017). Mondi is a company involved in an array of product and services supply endeavours, such as hygiene constituents, strong cement bags, retail boxes and office paper supplies. The customers Mondi supplies these goods and services to are part of industries of the automotive field, building and construction, food and beverage, home and personal care, medical and pharmaceuticals, pet care, packaging and paper converting and office/professional printing fields. Being a supplier to all these various industries means that there is freedom of choice by Mondi to decide what products they are willing and able to supply to the market system, and in turn, customers also have the freedom to decide if they would like to purchase Mondi’s products or if they would like to select another supplier. Mondi is not the only supplier of these products and services, the company competes for a share in the market through participation in the competitive state of the market economic system.
An additional feature of the market economy is that individuals are free to own assets, be it in the form of land and property such as buildings, equipment, vehicles, machinery, etc. Individuals may also make use of these assets for profitable gain. Mondi controls its own wood supply and owns 0.3 million hectares of land in South Africa. The objectives set by the company must make the best use of the resources and assets owned by the business to ensure that the return on the investment of these operations is what was intended.
South Africa is a country that is caught between having an over-supply of qualified graduates and able-bodied members of society and a lack of or limited availability of employment opportunities. With this fact taken into consideration, many people are encouraged to start their own businesses and regard entrepreneurship as a viable career option. If done correctly, people are able to become active, direct and meaningful contributors to the economic growth and development of the country.
Many people face numerous challenges and sometimes even hindrances in their attempts at starting up new businesses. Makinane (2015) argues that even with business ideas and concepts, the process of getting these businesses off the ground comes with many challenges; this ranges from funding, risk aversion, policy and regulation, having access to the markets and lastly, a drive to push through all these barriers.
When it comes to acquiring funds to start a business, many entrepreneurs face the problem of not meeting the criteria set by investors. The downfall can be credited to a lack of knowledge in developing a long-term plan for the business and an outline of how the business may be able to sustain itself for a prolonged period of time. Investors may ask questions such as, “How will the business be able to continue to survive during the recession and expansion phases of the business cycle?”, “How will the business impact the community in which it operates?”, etc. An in depth projection of the future of the business is what most entrepreneurs fail to perfect and present, which leaves investors apprehensive to support the innovation.
The subject of risk aversion implies that many members of South African communities are reluctant to try new local products. If given the choice to choose from a new local product or an established one, they would opt for the tried and tested as opposed to trying something new and local. This apprehensiveness may be due to the fear of the unknown or even scepticism. However, if the product has been endorsed by a member outside of the community, perhaps even internationally, only then could South African users be convinced to give the local business support.
For a business to be fully operational and recognised, it needs to go through certain processes of regulation by business establishment organisations. This can sometimes be a lengthy process and can sometimes negatively affect the entrepreneur’s momentum if they lose determination to carry out what may be expected of them. In light of this, it is beneficial for entrepreneurs to keep educating themselves and obtaining information that may be able to assist them in uncovering loopholes to speed up the process of getting their business regulated as soon as possible so they do not miss out on opportunities that could be based on timeliness.
The future of entrepreneurship is not bleak. In fact, there is a lot of hope for emerging entrepreneurs. There are many steps available for entrepreneurs such as approaching business incubators to support them in their early stages of development (Diogenes, 2011). All that needs to be done is research of available opportunities and education of the business markets. Getting support from internal and external environments is also crucial to the survival of new entrepreneurs, which is something most do not have. When there is a strong foundation in the development stages of the business, with the aid of having access to the markets, small businesses might stand a better chance to survive in the chosen market of the business.
The form of ownership selected by Mondi is a public company. The organisation has a dual listed company structure, with its primary listing being on the Johannesburg Stock Exchange (JSE) for Mondi Limited, and a premium listing on the London Stock Exchange for Mondi plc.
Mondi is a large company which operates over and across 30 countries. The form of ownership chosen must enable Mondi to fulfil its contractual and regulatory obligations across all these different countries. A company’s structure facilitates how the company will employ managers who have specific skills to perform the required duties. Mondi’s choice of the company structure supports the work they do within the communities they operate, through levels of management and the proximity they are able to engage with stakeholders as well as with shareholders. Their dual listing structure implies that Mondi’s ability to raise capital will be increased; this will be beneficial in their usual business endeavours and as well as beneficial to their business support other growing businesses and their social responsibility initiative.
Mondi is a business which heavily relies on the physical environment. The physical environment entails resources such as land, water, air, forests, oceans, etc. Mondi, to create the products they do, need to have a constant supply of wood, water and related supplies.
The issues that the physical environment face could affect Mondi’s ability to operate. These issues of concern include (Erasmus et al., 2017):
Countries that have the responsibility to support a great number of growing populations have the problem of not having enough land, and this can lead to the dreadful condition of the land, malnutrition due to the difficulty in cultivation and other negative results on the environment. Mondi would have limited ability to operate effectively if they conducted their main business activities in a country that is overpopulated.
Mondi is a company which is in line with reducing their carbon footprint and reducing any negative impact their business activities may have on the environment.
Many of the world’s animals and ecosystems are in danger of extinction because of uncontrolled irresponsible behaviour which harms the environment. Mondi holds itself accountable to responding to the silent plight of the environment by increasing long-term productivity and placing value on the protection of ecosystems and the resilience of rural terrain. Jim Leape, Director General of The WWF stated, “Companies like Mondi that choose to contribute to sustainable resource use and nature conservation are ensuring their own long-term viability, while contributing to the well-being of people and the planet today.”
Pollution is caused by the over consumption and waste of man-made products and activities that result in the unhealthy state of the environment. It may come in different forms such as land pollution, water pollution and air pollution. Considering that Mondi manufactures packaging solutions for various industries, the organisation contributes, one way or another to the problem of pollution, therefore, it is necessary that they put measures in place that reduce the effects that their business activities have on the environment. Mondi has been successful in this endeavour, and are adamant in ensuring they contribute to making the environment healthier, while also continuing to make profit.
In the establishment of a business such as SPAR, it may be assumed that the initial phases of its operations require making a profit the main concern of the business’ activities. However, there has been a paradigm shift in the management approaches of organisations. Businesses and organisations have broadened their focus and have adopted the concept of Corporate Social Responsibility into their daily business practices. Businesses have become aware that they are only but a part of the society they operate and not separate from it. This realisation has moved business managers to feel the need to put in back what they have benefitted, through the support of the communities and societies that the business wishes to continue.
Corporate Social Responsibility as an “Umbrella” Theory is defined below and has the following implications for businesses:
Organisations must recognise that they are accountable for the state of the natural environment in which they conduct business. According to Chakraborty (2015), the concept of Corporate Social Responsibility is closely connected to sustainable business development, and this requires businesses to strike a balance in their social, environmental and economic responsibilities towards the stakeholder of the organisations. When a business recognises the role they play in environmental issues such as pollution or excessive energy consumption, the business must take responsibility to reduce any negative effect their operations may have on the environment in order to conserve the condition of the environment and to protect the health of the people who live in the environment; the environment which they depend on for acquiring the resources they need to function and the people who are ultimately the business’ main source of income.
Organisations are responsible for the behaviours of those they do business with. As the saying goes, “Guilty by association”. A business must be purposeful with the interactions it has with other entities as these interactions may affect the current and future image of the organisation. Businesses need to ensure they associate themselves with other businesses that have the same or similar values and intentions as them.
The last element of the “Umbrella” theory is that the business must maintain a good relationship with the community in which the organisation conducts business; this can be for the purpose of garnering support from members of the community or to simply add value to the standard of living of the people that surround the area.
The company chosen for this discussion is SPAR. SPAR Group Limited has adapted a sustainable philosophy that is now incorporated into all aspects of the SPAR strategy. In relation to the above-mentioned elements of the “Umbrella” theory, the following are the Corporate Social Responsibility practices and initiatives that SPAR performs:
SPAR optimises on its supply chain, it also has developed an innovative energy management control system that will achieve cost and carbon footprint reduction. SPAR further commits itself to the reduction of their direct environmental footprint by being biodiesel and fuel efficient, saving energy, recycling and managing their water consumption levels. SPAR declares that its environmental compliance is a material aspect of their business, from an economic and management indicator perspective.
SPAR recognises that their environmental, social and economical impacts do not only reside within the organisation, but also with the retailers they engage and do business with. SPAR ensures that it makes responsible decisions with regards to which suppliers to use. The organisation has begun a supplier environmental assessment. It entails reviewing their top suppliers and screening new suppliers according to environmental criterion.
SPAR participates in a vast number of social responsibility and community investment initiatives. These range from healthcare, hunger alleviation, safety and sports. SPAR has invested R13.2 million in the year 2014 and R11.8 million in 2013 to their social responsibility projects. The company performs random visits to paid beneficiaries during the year to evaluate the progress of the organisations that they have provided the funding to (SPAR, 2014).
SPAR, in partnership with a crime prevention society named Khulisa Social Solutions created the SPAR Ubuntu Community programme in the region of Luphisi. The purpose of the programme is to give power to members of the community and help the tackle the problem of crime in their area.
The positive outcomes of the social responsibility projects that SPAR takes on are what Spar regards as successful, not the possible monetary gain that might have been achieved through these initiatives.
For any organisation, big and small, an undertaking usually has objectives which should be in line with the vision and mission of the organisation. Once the undertaking has been concluded, it must be measured according to its outcomes against its intended results. This determines how effective the endeavour was. The existences of the projects that SPAR facilitates have a direct and effective impact on the lives of the most vulnerable members of the communities that are targeted for investment. An example of this impact is demonstrated by SPAR (2014); they detail an initiative called the “Roundabout” water project which is centred where children gather together. Merry-gorounds are erected where children play and in the process of playing they pump water into the reservoirs. More than anything, SPAR is in the business of people and relationships; ensuring that they take great care to nurture and sustain these relationships will give more purpose to the effectiveness of their business activities and their Corporate Social Responsibilities.
The contribution that businesses are making to the upliftment of the society is necessary in helping to solve many of the world’s problems today. In some cases of irony, some of these problems are caused by the activities of the business, however, an organisation that seeks to tackle how to respond to matters of sustainability and corporate social responsibility in its development stages will be better prepared to evaluate how to exercise sustainable business practices and contribute to the overall betterment of society.