Rethinking CSR: The role of the public sector

on   /   in Sweet Crude 9:00 pm   /   Comments

The concept of corporate social responsibility (CSR) has become an important area of interest and concern for many businesses. Some have gone ahead to develop and implement policies which clearly suggest that they can simultaneously make profits and be good citizens.

Others are now embracing the language of CSR and taking measures to reform their management systems in order to make them more responsive to the environmental and social concerns of the different stakeholders in their areas of operation.

Interestingly, there has been a gradual but noticeable expansion in the number and range of stakeholders that businesses have to deal with.

This has resulted in the re-definition of the roles and responsibilities of business in a society. New multi-stakeholder groups have emerged and global governance frameworks have evolved.

Working together, they have inadvertently created a strong platform to encourage and/or put pressure on businesses to re-invent themselves as ‘forces for good’ in the society. For many businesses, CSR means going beyond the simple paradigm of ‘doing no harm’ to the environment or society.

It also implies that they must re-consider the previous expectations which mainly focused on the financial returns to their shareholders.

CSR is a business management model, and several drivers often compel a company to develop, adopt and implement CSR policies and programmes.

These include managing risk and reputation, protecting human capital assets, responding to consumer demands and avoiding regulation. Yet, there are there two main impediments to the full realization of the potential benefits of CSR.

The first one is ‘fear’, and this is one of the greatest reasons why businesses undertake CSR. The emphasis here is on the business desire to avoid trouble (e.g. with shareholders, stakeholders, government, etc), rather than looking for opportunities to contribute to the social, economic and environmental development of the societies in which they operate.

The second impediment relates to that fact that very often CSR is seen as a ‘bolt-on’ to business operations rather than something that should be ‘built in’ to a business strategy.

Due to these impediments, CSR can easily become either a distraction or hindrance to business purpose and objectives, rather than helping to contribute to sustainable development of the wider society. This often results in a considerable gap observed between corporate rhetoric and actual practice of CSR.

Against the above background, there is need for active public sector participation in the promotion of CSR practice to ensure the full realisation of its potential contributions to sustainable development.

In Nigeria, the CSR initiatives and programmes that many companies have developed and implemented depends to a very large extent on how they define CSR and the relative importance they attach to it.

There are therefore multiple CSR interpretations, as each organization faces different stakeholders with different expectations and priorities.

For many business organisations, the challenge is simply the political will to look at their impact through the prism of sustainability which requires social, economic and environmental considerations in the decision making process.

Generally, the major multinational corporations tend to pursue similar CSR policies. However, the unique challenges of the Nigerian political, social, cultural and economic environment can make their CSR practices in Nigeria to be significantly different in some respects, from similar practices in other countries.

The public sector in Nigeria (i.e. the government) has a significant responsibility to provide the enabling environment for the private sector to contribute to sustainable development through the framework of CSR.

An enabling environment implies a policy environment that encourages business activity that minimizes environmental and/or social costs and impacts, while at the same time maintaining or maximizing economic and social gains.  The role of the public sector in promoting CSR can be summarised as follows:

?          Making efforts to create and raise awareness on a shared understanding of corporate responsibility among companies and the broader public, including what business can do to implement CSR policies,

?          Forming and supporting partnerships that are designed to create win-win situations, with various stakeholders working collectively towards shared values and societal goal,

?          Providing soft law approaches that promote and incentivise voluntary action by business as a complement to state regulation,

?          Developing mandating instruments that allow governments and relevant agencies to monitor and enforce corporate accountability.

In Nigeria, an attempt was made within the last five years to legislate CSR through an Act of the National Assembly. If the bill was successfully passed into law, it would have created a very bad impression as well as provide public evidence of the failure of the Nigerian government to use the vast amount of resources available in the country for the purposes of social, economic and environmental development. This is because governments have the constitutional and ultimate responsibility for the development of any nation or country. These include the maintenance of law and order and the provision of basic socio-economic infrastructure. As such, the current CSR initiatives and social investments by private sector organizations in Nigeria are meant to support and complement the development efforts of the Nigerian government. In other words, CSR projects and programmes should not (and cannot) be expected to replace the legitimate role of government in the development process, as evident in the Niger Delta dilemma.

The legislation of CSR in Nigeria would have also increased the financial burden on private sector organizations currently and actively undertaking CSR initiatives and activities in Nigeria.

Yet, good corporate governance, functional leadership and creativity are more likely to deliver a more positive impact for the society than legislation of CSR. Instead of full-scale legislation on CSR, several countries (e.g. Belgium, United Kingdom, Canada, Finland, Germany, Netherlands, Poland and Sweden) have developed policies and guidance documents outlining their approach to CSR and expectations from private sector organizations.

To conclude, it is important to remember that CSR is a voluntary initiative undertaken by organizations as their contribution to sustainable development.

The best and innovative CSR activities and initiatives would not be derived through legislation by the government.

Instead of imposing CSR on organizations through legislation, the Nigerian government should actively explore ways of encouraging the promotion of CSR by providing the enabling environment as outlined earlier above. CSR is a two-edged sword.

It can be used to address the needs of disadvantaged communities, or to damage the same communities, whether by mistake or design.

 

 

 

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