Corporate social responsibility perceptions: A South African institutional investor perspective
Date
2025-03
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Stellenbosch University
Abstract
Companies are placing increased emphasis on corporate social responsibility (CSR) activities to address social and economic issues and to create value for stakeholders. Given the importance of corporate investment in CSR activities, it is essential to understand how CSR practices and performance are perceived by investors. Institutional investors can have a substantial impact on responsible corporate practices, given the size of their investments and related voting and negotiation powers. By reflecting on institutional investors' perceptions of sustainability practices, researchers can obtain a better understanding of the complexities related to responsible investment. However, there is limited scholarly evidence about how institutional investors process CSR information and which sustainability factors influence their decisions. Companies and investors in developing countries are challenged with multiple sustainability concerns that differ from the drivers of CSR in developed countries. Therefore, this study explored South African institutional investors' perceptions of CSR practices. Four research objectives were addressed. Firstly, CSR terminology was explored from an investment perspective. A systematic literature review was performed by conducting content and thematic analyses on 94 articles. The findings confirm that CSR has remained relevant in the investment context. Eight key dimensions were identified to describe CSR in this context, namely social concerns, stakeholders, economic factors, environment, action, voluntarism, ethics, and sustainability. These eight core dimensions were combined in a comprehensive, context-specific CSR definition. Secondly, the main CSR themes that institutional investors value were identified. This was done by analysing the sustainability themes on which selected local asset managers focused in their stewardship reports as well as the Sustainable Development Goals (SDGs) that they addressed through their investment mandates. The findings of the content analysis indicate that prioritised sustainability themes include climate action, infrastructure development and social considerations. Promising investment opportunities in companies that address social issues related to the health and well-being of society (SDG 3) and broadening access to quality education (SDG 4) were highlighted. Thirdly, South African institutional investors' perceptions of CSR concerns were explored through conducting semi structured interviews with asset managers. The findings revealed that CSR should form part of the primary purpose of an investee company. Asset managers focus on material and industry specific CSR concerns when making investment decisions. Factors that hindered the inclusion of CSR practices in decision-making included the relatively small local investable market, a limited client demand for sustainable investments, and insufficient disclosure of material sustainability information. The interviewees were positive about social and economic infrastructure investment opportunities. Refined regulation and client education could improve CSR practices in the local investment context. Lastly, the challenges that asset managers face to include social factors in their sustainable investment decisions were explored. The interview findings suggest that the considered asset managers focused on respecting human rights and maintaining healthy stakeholder relationships. Prominent challenges to incorporate social considerations in investment decisions included difficulty to measure social impact, the lack of standardised sustainability reporting guidelines pre-2023 and social washing. The need was therefore identified to develop a social impact measurement specifically for institutional investors in emerging markets.
Description
Thesis (PhD)--Stellenbosch University, 2025.