ZAMBIA CATHOLIC UNIVERSITYFACULTY OF BUSINESS,MANAGEMENT AND FINANCE

DEPARTMENT OF BUSINESS ADMINISTRATION

STUDY TITLE: AN INVESTIGATION OF CORPORATE SOCIAL RESPONSIBILITY (CSR) IMPLEMENTATION BY KONKOLA COPPER MINE

(KCM)

DIANA .L.HATIMBULAI.D. NO: 110046

2015

1.0. INTRODUCTION AND BACKGROUND• Corporate Social Responsibility (CSR) is a responsibility a company

has to the community or the society of which it operates. Farrell et al (2004) defines CSR as “an organization’s obligation to maximize its’ impact on stakeholders and minimize its negative impact”.

• Though CSR has become a issue growing concern, companies still do not voluntarily comply to the idea but are forced to adapt it due to the expectations of the society (Han, 2010).

• Henceforth the following components were considered to help understand CSR implementation at KCM and these were:

i. Description and definition of CSR ii. Integration and implementation of CSR, iii. Monitoring of CSR.

1.1. History and background of KCM• KCM is one of Africa largest copper producing mine in Zambia• Was initially owned by Anglo American Corporation and Roan

Selection Trust but by early 1970 it was nationalized for a period of 20 years.

• After privatization, Anglo American got hold of 51% of the company comprising of Konkola , Chingola mines and Nkana smelting and refinery operation.

• After the withdraw of Anglo American it was owned by government entities ZCCM-IH AND ZCI.

• Vedanta Resources plc. which is major shareholder now by 2004 owned 51% holding of the company.

• By 2008, it increased its holding to 79.4% and has invested US$2.9 Billion for upgrading the mines which has increased the life of the mines to over 25 years(assessed from KCM website).

1.2. PROBLLEM STATEMENT Due to the number of growing scandals in the society which

include environment disasters, ethical issues, fraud, bribery, child labour, and dishonesty in business operations a number of companies have seen the need to engage in CSR. These problems mentioned require that the company is responsible for its actions in all by taking to account social responsibility(Carroll, 1979; Welford, 2004).

• For that reason the researcher found a problem that led to keen interest to investigate CSR implementation by KCM a mining company.

• If KCM does not implement CSR the society loses out as it giving out more for less. As a result the society loses out in terms of KCM polluting the air, water, land making it hazardous for the community. Hence the need to give back to the society through CSR programs.

1.3. RESEARCH OBJECTIVESMain objective• The general objective of the research is to give a better

understanding of CSR and how the concept of CSR is integrated to the business model.

Specific objectives

i. To find out how KCM describes or defines CSR and its

concept.

ii. To find out how KCM has integrated CSR and the extent to

which it is implemented in the company.

iii. To find out how KCM has monitored or reported its CSR

efforts.

1.4. RESEARCH QUESTIONS

i. How does KCM describe or define CSR and its concepts?

ii. How does KCM integrate CSR and what extent has CSR

implemented it in the company?

iii. How does KCM monitor or report its CSR efforts or

activities?

SIGINFICANCE OF THE RESEARCH the study provided evidence on how aspects of the company that

can improve CSR implementation through integrating it in the company operations that is giving a better understanding of CSR in the organization.

• The study also gives out the importance of integrating CSR in the company and which contributes to new literature for scholars.

SCOPE OF THE RESEARCH• Information was collected from Konkola Copper Mines (KCM) in

Chingola and included investments expenditures on CSR from 2007 to 2011.

2.0. LITERATURE REVIEW 2.1. DEFINITIONS Corporate Social Responsibility (CSR) can be defined as ‘‘the

voluntary integration, by companies, of social and environmental concerns in their commercial operations and in their relationships with interested parties” ( Ciliberti et. al, 2008)

Davis and Frederick (1984) stated that CSR is an organization’s obligation to engage in activities that protect and contribute to the welfare of society, including general communities, customers, shareholders, the environment and employees.

CSR is a way that business can be responsible and profitable and yet CSR activities initiatives do not seem to work or convince the society of businesses engagement with social responsibility (Muthami, 2014)

All these definitions combined are useful for better understanding of CSR.

Literature Review cont….2.2. RELATED STUDIES Muthami (2004) carried out a study on the investigation of how

practicing corporate social responsibility affects organizational performance at Unilever ESA (Kenya)

• The findings showed that CSR affects the corporate financial performance of the organization to great extent. The study revealed that CSR enhanced organization performance through creation of demand for organization product, bring the company close to the people, increasing sale volumes and making the company socially responsible.

Another study was a debate on whether Corporate Social Responsibility (CSR) is a choice or a necessity for global companies.

And the findings were found that CSR implementation process is a complex process that needs to be integrated in every part of the organization and in the daily activities in order to be successful ( Hermansson & Olofsson, 2008).

2.3. Factors for implementing CSR

2.3.1. DESCRIPTION OR DEFINITION OF CSR

•Corporate Social Responsibility (CSR) can be defined as ‘‘the voluntary

integration, by companies, of social and environmental concerns in their

commercial operations and in their relationships with interested parties”

( Ciliberti et. al, 2008)

•Andriof and McIntosh (2001) highlights four areas of CSR which are:

the market, environment, community and work place.

Activities of CSR: Education, sustainable development, health care,

sports, infrastructure development and these can be either internal or

external responsibilities.

2.3.2.CSR integration or implementation by a company is done by looking at these factors:Top management involvementCompany mission and cultureCSR organizationCodes of conduct

2.3.3. MONITORING CSR• These are some of the standards used for evaluation of CSR are

follows as ISO 14001 ( an international document on environmental management systems)

• SA 8000( social accountability document for auditing CSR)• GRI ( document that provides for guidelines on reporting systems)• EMAS,(document that provides for systems of auditing and

managing the environment).

CONTINUATION on MONITORING CSR And Zadek (2001) outlines the reasons for monitoring or

measuring CSR performance is monitored are as follows:

Know what they want to achieve and to measure performance against aims.

Know what ways, if any, the company can explain their actions to their stakeholders

Find out the options available to improve their social performance in order to sustain.

• Understand the implications of what they are doing

2.4.Theoretical Framework2.4.1.Motives and benefits of CSR implementation

Streets & Weihe (2006, p.8) states that motives and benefits of CSR implementation are:• It attracts qualified staff (Successful CSR implementation attracts

more qualified staff to seek for employment in the company)• It motivates already existing employees: As good CSR

performance will motivate the employee as it helps manage dissatisfaction.

• Its also increases company reputation: as the company contribution of CSR attracts a good company image and minimizes the negative impacts.

• Philanthropy simply means charity or a humanitarian act as the company contributes and commit their resources to CSR programs.

2.5. Conceptual framework conceptual framework diagram

INPUTS PROCESS OUTCOME

Source: compiled by author

Company definition of

CSR

Integration/

Implementation extent of CSR

Monitoring and evaluation

of CSR

CSR Implementation

Model

CSR is integrated in the company

2.6. CRITIQUE ON LITERATURE• Many authors have written studies on CSR, but a few of them

have concentrated on CSR in the mining industry as well as how CSR integrated in the organizational operations.

• And studies have been carried out on CSR in other industries (Estrada, 2008; Chaisurivat, 2009; Muthami, 2014) but non of them have mentioned CSR in the mining industry hence the knowledge gap.

3.0. METHODOLOLOGYResearch design • Case study design: the case study was meant to collect in-depth

information as well as get insight of the research. • Interviews were used for collecting primary data which involved

the CSR people.Research method• Was a qualitative approach by aid of interviews which were semi –

structures to allow room to ask more question or new ideas on the subject.

Data collection and analysis• Primary data was by aid of interviews and secondary books,

journal, theses and publications by KCM on CSR.• The data collected was analyzed using qualitative methods such as

thematic analysis as well as Microsoft excel.

4.0. PRESENTATION of FINDINGSFig 4.1: pie chart for years of service for employees

CONTINUATION ON FINDINGSINVESTMENTS EXPENDITURES OF CSR PROGRAMS

Fig 4.2: Graph for CSR expenditure on Infrastructure

Fig 4.3: Graph for CSR expenditure on Health

Cont….Fig 4.4: Graph for CSR expenditure on Education

Fig 4.5: Graph for CSR expenditure on sustainableDevelopment

Cont….Fig 4.4:Graph for CSR expenditure on Education

Fig 4.5: Graph for CSR expenditure on sustainableDevelopment

OBJECTIVES OF THE RESEARCH

DISCUSSION OF THE FINDINGS

1. To find out how KCM describes or defines CSR and its concept.

The researcher found that KCM describes CSR a hand that goes beyond mining.

Defines it as a responsibility of a corporate citizenship by participating to give back to the society needs.

2. To find out how KCM has integrated CSR and the extent to which it is implemented in the company

It is evident that KCM implement and integrates CSR in the company as from management , codes of conduct., culture.

And management work hand in hand with the CSR department in organizing CSR programs and issue that they are carried out.

3. To find out how KCM has

monitored or reported its

CSR efforts.

• KCM monitors CSR to track the benefits of CSR to the society.

• The CSR activities are monitored by the following standards GRI,EMAS, ISO 2600 for guidelines on CSR, SA 8000 and external codes such as Equator principles are used to benchmark CSR works.

Recommendations and areas of further study• It is recommended that the company should put considerations in

investing infrastructure and educational programs as they be investing in a better future help eradicate poverty and ignorance.

• Since KCM management is involved in CSR activities but it should strive to motivate their employees to know CSR as it an integral model for the business and they should conduct training programs for all employees in the organization on CSR.

And for further studies these suggestions can be helpful:i. The effect of leadership on CSR implementation, this study will help

to understand the importance mangement in implementing CSR.ii. A quantitative study can be done on the effect of the implementation

of CSR on organizational financial performance of the company. The research could look at CSR has impact on financial performance of the organization.