The Politics of Corporate Social Responsibility - by Kenneth Amaeshi

THE recent national debate over an alleged “gift” of a church building from an Italian company – Gitto Construzioni Generalli Nigeria Limited (CGC) – to President Jonathan’s hometown (Otuoke, Bayelsa State), together with the Central Bank’s financial donations to some State Governments, raises a fundamental question about Corporate Social Responsibility (CSR) in Nigeria: Is CSR mainly about corporate philanthropy or could there be more to it?

In a study I conducted about 6 years ago with some colleagues (Amaeshi, Adi, Ogbechie and Amao, 2006 - Corporate Social Responsibility in Nigeria: Indigenous practices or Western influences?, Journal of Corporate Citizenship, 24: 83-99), we found that corporate philanthropy – also known as corporate community investment or corporate giving – was the dominant understanding of CSR in Nigeria. That understanding is still very much the case today. This has included donations to schools, hospitals, local communities, prisons and orphanages; construction of roads and decoration of public spaces; economic empowerment and poverty alleviation.

It must be pointed out that whilst these are laudable corporate activities, they tend to distort the true and broader meaning of CSR. The emphasis on corporate philanthropy gives the broad CSR agenda poor characterisation and invariably an underserved negative reputation; and I will give valid reasons why.

A view that is rarely mentioned in CSR discourse in Nigeria is the idea that CSR is a business philosophy, one which aims to enhance the positive, as well as reduce the negative, impacts of corporate activities on society and its ecosystem. These impacts could be at the production, sale or consumption point.  A good example of a negative impact is the pollution from a production plant, which may cause some health hazards to residents not involved in the business’ operations. Another example could be the impacts of binge drinking on society, which is not factored into the production and sales of alcohol. In such instances, the social costs, including health costs arising from the use of alcoholic products, are borne by society.

These negative impacts on society are hardly accounted for in the profit and loss statements of most companies, nor is there any mention of such influences in their balance sheets. In other words, the firms externalise some of their costs by free-riding on available public or common resources. Other possible negative corporate impacts on society as a whole include: child labour, bribery and corruption, corporate connivance with oppressive government regimes to sell products and services (companies involved in arms and ammunitions are often accused of such deals), human rights abuses, et cetera.

Agreeably, businesses do not only generate negative impacts. They also create many positive impacts, which include jobs, tax contributions, contributions to economic development, and investments in human capital development, production of quality goods and services, profits et cetera. In some cases, firms voluntarily incur extra costs which go beyond the minimum expected by regulation, by providing education and other social infrastructure through philanthropic or other citizenship activities.

Traditionally, the burden of governing corporate impacts has always been borne by the State. In order to curtail negative impacts, the State uses regulatory mechanisms as taxes, subsidies and quotas. These regulatory mechanisms are not foolproof, however, not least due to information asymmetries between businesses, as generators of impacts, and the regulators, as governors of impacts. If these information asymmetries are not properly addressed, society at large suffers. And this is where true CSR, as a form of self regulation, serves as a very potent mechanism for addressing information asymmetries between businesses and the regulators.

It is a form of self-regulation that should be completely voluntary and driven by the values and philosophy of a business. From a best practice perspective, therefore, true CSR is a business orientation and culture that recognises the firm as an entity embedded in a network of relationships with different stakeholder groups; one that recognises that its success and sustainability is dependent on its genuine commitment and responsiveness to these stakeholder groups. This should afford any firm that is truly committed to it a richer and more advanced paradigm to continuously challenge its business purpose and align itself with its core values, aspirations and mission. It is a way of maintaining the legitimacy of a firm’s actions in the larger society by bringing its stakeholder concerns to the foreground and minimizing information asymmetries between actors.

CSR should not undermine the role of the government or other public governance modes in regulating corporate impacts. It should rather complement them. The ultimate goal of true CSR is to contribute to a better society.

CSR is beyond corporate philanthropy. It is a holistic business culture. It is a way of life – the ‘how’ of “how we do business”. The idea of CSR as corporate philanthropy is the most basic and lowest expression of CSR. By implication, the dominant view of CSR as corporate philanthropy amongst most Nigerian businesses needs to be seriously challenged. Nigerian businesses need to progress from this narrow understanding of CSR as corporate philanthropy to the understanding of CSR as a business philosophy. It is the government’s responsibility, above all, to provide an enabling environment for this type of CSR.

In that regard, Gitto’s operations in Nigeria should be thoroughly subjected to this broader test of CSR, and not the narrow view of corporate philanthropy, which can sometimes share a thin border with corruption and primordial politics.

Dr. Amaeshi is the Director of the Sustainable Business Initiative, at the University of Edinburgh, UK, and a Visiting Faculty at the Lagos Business School, Pan-African University, Nigeria. He is also a member of Thought Leadership Forum, Nigeria (Email: kenneth.amaeshi@ed.ac.uk ).