a. Corporate social responsibility (CSR) is when a business takes responsibility for its impact on society by doing things that are good for people, the environment, and the community, while still aiming to make a profit.

The following are the risks to which Zanzibar industries might be exposed for failing to be socially responsible:

i. Reputation risk: This is the risk arising from a company’s failure to respond to growing public concern about social and environmental issues. This might cause a damage to the company’s reputation.

Zanzibar Industries is exposed to a damage to its reputation by being generally perceived to be responsible for the damage to the road leading to its factory. This is compounded by its failure to rehabilitate the affected road.

ii. Operational risk: This is the risk of loss resulting from a company‟s inadequate or failed internal processes, people, systems, or from external events. Zanzibar could suffer this risk as a result of its failure to fix the road leading to the factory which could increase cost of maintenance of its trucks.

iii. Environment risk: These are risks associated with the impact of the operations of an organisation on its physical environment. The heavy truck traffic damaging the road contributes to environmental degradation. Also, damaged roads can result in dust, noise, and other forms of environmental pollution. Over time, these could lead to soil erosion, increased air pollution, and overall damage to local ecosystems, all of which are detrimental to the community and the environment.

iv. Regulatory risks: These are risks associated with contravening extant government policies and regulations as a result of carrying out company operations. Environmental degradation, especially due to industrial activities, can lead to scrutiny from environmental regulatory bodies. If Zanzibar Industry is seen as contributing to environmental harm by damaging public infrastructures or causing road damage, it could face inspections, fines, or other penalties from governmental or environmental organisations. Governments and local authorities are increasingly focused on enforcing environmental protection laws, and failure to adhere to these regulations can be costly.

v. Community relations risk: These are risks that could emanate from an organization’s operations which fracture the relationship between the entity and the host community. Failure to address the road condition or engage with the local community, could lead to strained relationships between the company and the local stakeholders, including employees, residents, and local government officials. Negative community sentiment can lead to protests, social unrest, or even a decline in employee morale and productivity.

b. The following are the steps Zanzibar should take in formulating/implementing a CSR policy:

i. Decide its code of ethical values, and possibly publish these as a Code of Ethics;

ii. Establish the company’s current position regarding its CSR values, and decide

the position it would like to reach in the future. The gap between the current position and the target position provides a basis for developing CSR strategies;

iii. Develop realistic targets and strategies for its CSR policies. These strategies should be implemented;

iv. Key stakeholders in the company should be identified, whose views the company wishes to influence (employees, pressure groups, customers, etc.

v. The company’s CSR achievements should be communicated to the key stakeholders. This is the main purpose of CSR reporting; and

vi. The company’s CSR achievements should be monitored.