Five Questions about SRI – Weekly Expert Interview with Professor Freek Cronjé, Director, Bench Marks Center for Corporate Social Responsibility (CSR), North West University, South Africa – May 11, 2012

Each week Emerging Markets ESG publishes an interview entitled, “Five Questions about SRI.”  The interview features a practitioner’s insights about SRI in emerging markets and through Emerging Markets ESG shares this expertise with a wide global audience.  The goals of Five Questions about SRI are fourfold:

  • To collect a catalogue of examples of SRI in practice in emerging markets;
  • To raise awareness about SRI in emerging markets;
  • To reflect on what SRI in emerging markets means to practitioners; and
  • To enable SRI practitioners in emerging markets to network with peers around the world.

This week’s interview is with Professor Freek Cronjé, Director, Bench Marks Center for Corporate Social Responsibility (CSR), North West University, Potchefstroom Campus, South Africa.

The Bench Marks Center for Corporate Social Responsibility, North West University, South Africa, was established in January 2012.  A research grant from SIDA, the Swedish International Development Cooperation Agency, will support the Centre during the first two years.  The Centre aims to stimulate and conduct high-quality innovative research and training on corporate social responsibility; provide the space for dialogue amongst various stakeholders, in particular government, civil society and the private sector; create synergy between basic and applied research (‘theory / policy and practice’); create a specific research focus in CSR at the Potchefstroom Campus of the North-West University in South Africa; and learn from the studied experiences of communities that are living through and experiencing actually existing CSR-CSI programmes and initiatives, with a view of changing it to benefiting people and the planet, contrary to only enhance profits.  Professor Freek Cronjé is Associate Professor in Sociology at the Potchefstroom Campus of the North West University in South Africa, and was Chair of the department until 2010. Since then, he is the Director of the Bench Marks Centre for CSR at the same university, also at the Potchefstroom Campus. Most of his research is conducted under the ‘umbrella’ of sustainable development. His specific research interests are migration studies and CSR in the mining sector. Professor Cronjé is currently involved – with the Bench Marks Foundation (an international NGO based in Johannesburg) – as one of the lead researchers in an extensive research project on CSR and sustainability issues in the SADC mining environment. Apart from CSR research in the mining sector of South Africa, the Centre recently finished CSR research projects in Zambia (copper – 2008), Botswana (diamonds – 2009) and the Democratic Republic of the Congo (gold – 2010 & copper – 2011). Flowing from the research work, Professor Cronjé delivered numerous peer reviewed articles and contributions in edited books as well as conference presentations (nationally and internationally). He also acts as supervisor / promoter for a substantial number of Masters and PhD students in the field of CSR.  Prof. Cronjé is currently also the President of the South African Sociological Association (SASA).

Emerging Markets ESG:  How would you define socially responsible investment (SRI)?

Professor Freek Cronjé:  Socially responsible investment (SRI) carries very strongly with it the issue of ethical behaviour.  The challenge therefore, in simple terms, is to invest in such a way that the main three dimensions of development, i.e. the economic dimension, the environment as well as the social dimension are being ‘looked after’ in a responsible way.   To combat and prevent a potential conflict of interests, it is of course also important that the shareholders (as well as other stakeholders) must be on board and ‘on the same page’ regarding these ‘responsible’ investment initiatives.

Emerging Markets ESG:  What distinguishes SRI from mainstream investment? 

Professor Freek Cronjé: The main distinction is that SRI is not only focused on profits, but also has a strong focus – within the whole investment ‘exercise’ – on sustainability regarding especially the environment and people (e.g. communities adjacent to huge Multi-National Companies (MNC’s), women and children, migrants and refugees, etc.).

Emerging Markets ESG:  Which extra-financial theme – environmental, social or governance – is the most challenging for companies in South Africa to manage?

Professor Freek Cronjé: Mining companies operating in the Southern African Development Community (SADC) – the primary focus of our research – really battle regarding environmental sustainability, depite strict regulation.  The implementation and monitoring of relevant legislation also seems problematic due to amongs others, poor capacity, corruption (on the side of the government and certain companies) and companies that are ‘cutting corners’.  One also finds often that international companies view environmental responsibility in Africa in a less serious light (than for example in Australia or Canada) and that Africa can become potentially a ‘pollution haven’.  Social issues are also a huge challenge for companies; here we think of the general well-being of communities adjacent to corporates, local economic development (LED), human resource development, issues regarding indigenous peoples, stakeholder engagement and participation, etc.

Emerging Markets ESG:  Which extra-financial theme – environmental, social or governance – is the most challenging for investors in South African companies to analyze?

Professor Freek Cronjé:  Although integrated reporting (IR) starts to become more and more important for companies, I will say – again – the the environmental and the social dimensions are exceptionally challenging to analyze.  The question of governance is also an increasingly important issue; poor governance in South Africa, at all three levels (local, provincial and national) is the order of the day, and potential investors must ‘calculate’ that into the investment equation.

Emerging Markets ESG:  You have conducted extensive research on the mining sector in South Africa and other African countries.  How can mining be conducted more responsibly and sustainably?  Which mining impacts are most important to socially responsible investors?

Professor Freek Cronjé: I would say that the key to this is to (try to!) bridge the gap between policy (legislation as well as policies of the company) and practice.  It is of course easier said than done; amongst other aspects, we are advocating towards a more ‘standardised’ legislation in SADC, that will also make implementation and monitoring easier.  Some of the CSR and sustainability programmes of companies are mis-directed; therefore, the question of stakeholder engagement, stakeholder dialogue, and stakeholder participation are also of the utmost importance.