How often have you asked your accountant to give you a breakdown of the donations account at year end, to determine which ones were to the benefit of black people, so you can claim them for SED points on the B-BBEE Scorecard? If at least 75% of the beneficiaries are black, then those donations are SED initiatives and they earn you B-BBEE points, right? The correct answer is: “maybe”.
While donations fall squarely within the definition of CSI, it is dangerous to assume that all CSI initiatives, which benefit black people, are SED initiatives. CSI contributions are not necessarily SED contributions.
So, what is SED and what is CSI then? How do they differ?
Let us start with CSI and to understand what CSI is, we need to understand what Corporate Social Responsibility (CSR) is:
Corporate Social Responsibility (CSR)
This is an abstract term which refers to the responsibility of an enterprise to the environment in which it operates, taking into consideration profits, people, and the planet. It is connected to the culture of your enterprise, its ethos, and the way the cognisance of its environment, manifests in how it operates. Every enterprise is a corporate citizen and being a good one, stems in part from acknowledging Corporate Social Responsibility.
Corporate Social Investment (CSI)
Corporate Social Investment is what happens if CSR takes action. While CSR is an all-encompassing term, CSI refers to the actual initiatives being implemented. CSI does not generate profit but benefits the community and environment. Initiatives may come in an array of forms e.g., the giving of time, money, skills, expertise, etc.
Socio-Economic Development (SED)
Socio-Economic Development is an element of the B-BBEE scorecard and embedded in the B-BBEE legislation. As it is indigenous to B-BBEE, has its own nomenclature, it must be different to CSI. B-BBEE is a common term and we all know what the acronym represents: Broad-Based Black Economic Empowerment, but we tend to brush over that second “E” – Economic. It is in that “E” where the difference lies.
SED wants the contribution to have a positive economic consequence to the beneficiary and it wants that consequence to be sustainable. The purpose of the contributions must therefore be to facilitate income generating activities or sustained access to the economy for the beneficiaries.
It is a responsible citizen, corporate or otherwise, who acts in such a manner as not to inflict harm to its environment and to attempt to remedy damage already present. The importance of CSI as CSR in action, cannot be over-emphasized. The role CSI plays in supporting spiritual wellbeing, animals in need, fire prevention, nature conservation, etc., is immeasurable, but does not necessarily also qualify as SED.
When an initiative attempts to address a person’s participation in the economic environment though, that is when we see SED in action.
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