The term ‘corporate social responsibility’ came into common use in the late 1960s and early 1970s after many multinational corporations were formed. Corporate Social Responsibility can be easily described as a culture whereby corporate organizations align their activities with the social, economic, and environmental expectations of its stakeholders.
The goal of CSR is to embrace responsibility for the organization’s actions and encourage a positive impact through its activities on the economy, environment, consumers, employees, communities, stakeholders, and all other members of the public sphere. It is now an international best practice for an organization to have an effective CSR policy.
Schools of Thoughts
“First make money and then do good” is a popular statement accredited to former opponents of CSR; while “companies can grow well by doing good”, is accredited to proponents. Before now, there were two extreme schools of thought on the idea of CSR; the classical and the socio-economic schools of thought. The classical school are opponents to CSR, to them business is all about profit and they do not feel obligated to anybody to either initiate or support any CSR initiative or project. They are mainly capitalists and all they owe the society is to pay their taxes and run their businesses in accordance with the law. However in recent times, the classical school of thought have changed their view on the issue of CSR by developing a proposition called “triple bottom line” (people, planet, profit), and also the “shared value concept” being promoted by Michael E. Porter, a Harvard Business School professor, and Mark R. Kramer, a consultant and a senior fellow in the CSR program at the Kennedy School of Government at Harvard. In a bid to further promote the concept, Mr. Porter and Mr. Kramer, laid out their case in a lengthy article in the Harvard Business Review, “creating shared value: How to reinvent capitalism – and unleash a wave of innovation and growth”. Since then, Mr. Porter and Mr. Kramer have been championing the shared-value thesis in conferences, meetings with corporate leaders, and even a conversation with White House Advisers. The shared-value concept builds on the ideas of CSR, but it emphasizes profit-making not just as a possibility but as a priority. Shared value, Mr. Porter says, points toward “a more sophisticated form of capitalism”, in which “the ability to address societal issues is integral to profit maximization instead of treated as outside the profit model”.
The socio-economic school of thought comprises of original proponents of CSR, they finance corporate initiatives that address social concerns including environmental pollution, natural-resource depletion, public health and the needs of the poor. This school of thought unlike the classical, see all they do as “impact investing” and not a profit making venture. Bill Gates in his article ‘Making Capitalism More Creative’, narrated this discussion; “a few years ago I was sitting in a bar with Bono (the U2 front man), and frankly, I thought he was a little nuts. It was late, we’d a few drinks, and Bono was all fired up over a scheme to get companies to help tackle global poverty and disease. He kept dialing the private numbers of top executives and thrusting his cell phone at me to hear their sleepy yet enthusiastic replies. As crazy as it seemed that night, Bono’s persistence soon gave birth to the RED campaign. Today, companies like Microsoft, Gap, Hallmark and Dell sell RED-branded products and donate a portion of their profits to fight AIDS. It’s a great thing: the companies make a difference while adding to their bottom line, consumers get to show their support for a good cause, and most importantly lives are saved.” For this school of thought CSR is a way of giving back to society. Bill Gates proposes that creative capitalism isn’t some big new economic theory. And it isn’t a knock on capitalism itself. It is a way to answer a vital question which Bill Gates poses: How can we most effectively spread the benefits of capitalism and the huge improvements in quality of life it can provide to people who have been left out?
There are four main categories of CSR, namely: Legal responsibility, ethical responsibility, economic responsibility, and discretionary responsibility. But over the years, different corporations and organizations have defined it their own way, and so we have creative capitalism, triple bottom line, impact investing, creating shared value, and a host of others which are all forms of corporate social responsibility.
CSR in Nigeria
The idea of CSR is one that majority of companies in Nigeria are yet to take advantage of, probably because these companies view CSR as a burden on their finances, but in a fast growing business world, companies in Nigeria can use an innovative and creative CSR approach to further grow their businesses, and also improve the image of their organization and enhance public confidence, which is one key benefit of embarking on CSR projects. There are several dire social, environmental, economic, youth and community development issues that need attention in Nigeria. Companies that seek to attain global relevance can take the initiative to sponsor or personally embark on CSR projects that can help in addressing some of these issues while also promoting their brand image. In Rivers State for example, the government has so far constructed over 200 primary and secondary schools, and there are several businesses whose target market comprises mainly of children, their older siblings, or even their parents. It will be strategic if such companies or any other one that seeks to build its brand image and create visibility will partner with the government in providing the kids with exercise books and other learning materials that will be branded with the company’s PR information. This will command respect for such an organization and also cause more consumers and customers to look its way. A CSR initiative that genuinely tries to meet certain societal needs often appeal to the emotions of the populace, and it brings a lot of goodwill to the organization unlike CSR projects that are embarked upon due to legal factors or communities-youth outcry. Beyond focusing on sponsoring entertainment shows, companies can seek to use CSR to address needs in the areas of environmental sanitation, public health, road safety, educational development, youth development, leadership & governance, poverty alleviation, public enlightenment, etc A lot of world class organizations and businesses are setting up foundations and funds to sponsor or initiate CSR projects. Some of these projects eventually engenders the development of new products and services, and consequentially, new markets. CSR just like other policies should be given serious attention, and should be included in the annual budget of organizations. Like the socio-economic school of thought, the proponents of CSR term it ‘Impact Investing’; every investment has the potential to yield profits and rewards, likewise CSR. Below are possible rewards that an organization can derive from investing in CSR:
- Marketing/PR: You can make the most of a CSR initiative by publicizing it. Ensure that customers, suppliers and the local community know what you are doing. CSR lends itself to good news stories – Activities such as involvement with the local community are ideal opportunities to generate positive press coverage. Publicity like this can be a key part of using CSR to win contracts. People want to buy from businesses they respect. CSR can be particularly effective for targeting ethical companies, the public sector and not-for-profit organisations.
- Capital of Influence: Your involvement in CSR could bring you into a public-private sector circle of influence. Good relationships with local authorities make doing business easier and it gives you great advantage when bidding for or executing contracts or business projects.
- Business Growth: Understanding the wider impact of CSR can help you develop new products and services. CSR can make you more competitive and reduce the risk of sudden damage to your reputation (and sales). Investors recognize this and are more willing to finance you (if need be).
- Brand Casting: You can leverage on the emerging media to build your brand. There is facebook and twitter with which your CSR activities can be circulated, and there are several promotional materials like; T-Shirts, Roller Banners, Biros, Jotters, Folders, Banners, Stickers, Hand bands, Face Caps, and so on, to further promote your activities.
5. Stickiness Factor: Brand casting as stated above in addition to the overall impact of CSR initiatives will bring about what is termed “stickiness” in the advertising world. Bonanzas and promos come and go with the customers and general public not having a ‘lasting’ impression of the brand. That is why some businesses no matter how profitable they were still get to experience constant low sales. The promos and bonanzas could increase sales but just for the duration of such promos and bonanzas. CSR initiatives helps make brands stick in the minds of as many consumers as possible.
6. Legacy: Organizations who initiate and successfully implement genuine CSR projects targeted at alleviating poverty, improving health care, enhancing the quality of education, or any other societal or environmental issue, will be consequentially registering their names in the hall of fame of legendary organizations.
As much as most companies may believe that business must first of all be profit driven, it is very important to be sure that the motive for embarking on or sponsoring CSR projects isn’t necessarily because of the perceived rewards alone, but as a result of the need to genuinely address certain societal challenges. The motive is very important because the populace will see to be manipulative any organization that is more interested in profit-making or its perceived rewards more than addressing a need to affect lives positively or to contribute to the development of the society. In all of these, it is imperative to be constantly reminded that the company’s integrity and reputation is at stake in all of its activities as the entire world is watching, though it may be silent.
Several individuals, non-governmental bodies, and government agencies are on the lookout for companies they can partner with to achieve their business oriented goals. They however require companies and business organizations with a track record of credibility to partner with them. CSR should be propagated and encouraged because it will place all stakeholders on the winning side while addressing some of the challenges stated earlier in this article. CSR is also a good sustainable development platform; companies should leverage on CSR and develop a policy on it in adherence to international best practices for the good of the community in which they do business and for their own growth.
Maple Dappa is a multi-talented young man who spends time thinking and reading on how sustainable development can be achieved through improvement in governance, a thriving private sector, human capacity development, youth development, and social re-engineering. He is the principal consultant of Mapemond Resources, a firm that is into brand management, publishing, business solutions, outsourcing, recruitment, and training.
You can reach him via Twitter: @mapledappa, Facebook/Maple Tammy Dappa, or Email: firstname.lastname@example.org