In the last two decades, some Nigerian companies have thrived and prospered against many odds. The likes of GT Bank PLC in the financial services sector, Globacom in the telecoms sector and Dangote Group in the consumer goods sector all belong in this honours class. These companies have dominated their respective markets within Nigeria and are quickly expanding and extending their influence into the West African markets and beyond. What’s more? They have all achieved their enviable market-leader positions notwithstanding the unfavourable socio-political and economic environment of business in the country. Multiple taxation, inconsistent fiscal policy regimes, widespread corruption, the poor state of public infrastructure across the nation and a frightening atmosphere of conflicts and insecurity are among the many reasons why a Nigerian company could fail to prosper, but not these ones.
Now, here is the catch: competing in the global markets will definitely impose specific pressures on these fledgling multinationals, different from the ones they might have confronted and overcome back home in Nigeria. In particular, they will be forced to examine and measure their ethical values and Corporate Social Responsibility (CSR) practices, as well as those of their entire supply value chain, against standards that are much higher and quite different from what exists at home. Environmental regulations, labour laws and human rights laws are all issues that will task and/or challenge the growth ambitions of our Nigerian corporate flag bearers.
Since it was invented, the concept of CSR has been controversial. In Nigeria, business leaders often get uncomfortable each time CSR is being discussed in any setting, formal or informal. The really forward looking managers sense that pressure groups, governments and the media are becoming very determined at holding businesses to account for the social impacts of their operations, and for pursuing “profit” as the only bottom line. The really old school managers on the other hand observe or participate in conversations relating to CSR with a measure of vexation. To them CSR is a distraction. It is corporate hypocrisy and insincerity. As far as they can see, government regulations and strict enforcement, rather than voluntary measures, are sufficient for ensuring that companies behave in a socially responsible manner.
All of these mean that the Boards and Management of Nigerian multinationals need to realise that CSR has now become their new business priority. They also need to recognise that ethical issues may no longer be regarded simply as a costly hindrance or nuisance. In addition, they need to learn how to use CSR methodologies as a strategic tactic to gain public support for their presence in foreign markets.
There are many organizations that now rank the CSR programmes of companies and give these rankings considerable global publicity. This development should be of serious concern to the Nigerian multinationals because it is only a matter of time before they are placed somewhere in the ranks. Some of the Nigerian companies have already done much to give back to society and to improve the ways they manage their social and environmental impacts, yet these efforts have not been nearly as productive as they could be, mostly because they adopt ill-fitting CSR policies and deploy programmes that sometimes set them on a head-on collision course with the society.
The so called best practices in CSR that many companies have naively bought from international experts and consultants are not nearly as effective in practice as they appeared in the conference rooms. Nigerian companies need to go a step further and analyze their prospects for CSR using the same frameworks that guide their core business decisions e.g. financial management, safety, security, HR and procurement. This type of analysis might help them discover that CSR can be much more than a cost, a constraint or a charitable deed. That CSR can be a source of opportunity, innovation, and competitive advantage.
I believe that consumers, governments, the media and pressure groups are using CSR to gradually re-structure the relationship between business and society in a way that does not treat corporate success and social welfare as mutually exclusive objectives. From this perspective, CSR can be a source of tremendous social progress, as businesses apply their considerable resources, expertise, and insights to activities that deliver social value to society. This thought should be a guiding principle for Nigerian multinationals.
It is important for the Nigerian multinationals to note that their “role models” from the west did not start paying attention to CSR voluntarily. Many only began to do so after being shocked by the public response to issues they thought were outside their business responsibilities. For example, Shell’s decision to sink the Brent Spar, an obsolete oil rig, in the North Sea and the killing of an environmental activist in the Niger Delta Region of Nigeria by her military government combined to change the way Shell and other IOCs manage CSR and community engagements, for good. The first led to protests by Greenpeace and to international headlines while the second brought the CSR practises of IOCs in the Niger Delta Region under intense public scrutiny causing them undergo significant reforms. Today, even fast-food and packaged food companies are being held responsible for obesity and poor nutrition in some parts of the world.
It is also important for Nigerian multinationals to note that the CSR debate has crept into the boardrooms. Each year, hundreds of CSR-related shareholder resolutions are filed in various countries on issues ranging from labor conditions to global warming. Some of these resolutions are sponsored by activists who become shareholders solely for the purpose of gaining the legitimacy required to do this. This clearly demonstrates the extent to which stakeholders are seeking to hold companies socially accountable and responsible. They also underscore the potentially destructive financial risks for any company whose conduct is deemed socially unacceptable by the general public.
The really serious company will use CSR as a self-regulating mechanism that encourages it to meet legal obligations as minimum requirements, and to observe global as well as local standards of business ethics. The CSR-focused company will proactively promote public interest by encouraging community growth and development, and voluntarily eliminating practices that cause harm in the public sphere, regardless of what loops holes exist in the laws of the land. Such a company will honour the concept of the Triple Bottom Line: People, Planet and Profit.
Effective CSR strategies must align with one fundamental principle: that a company is responsible for creating more value (or benefits) than just profits for shareholders. That the company has a role to play in treating employees with decency, preserving the environment, developing sound corporate governance, supporting philanthropy, fostering human rights, respecting cultural values and helping to promote fair trade. All are meant to have a positive impact on the communities, cultures, societies and environments in which the company operates.
The best fit strategy for a particular company depends on the context of the society in which it operates and not just on the preferences of its Board and Management. The strategy must encourage the business to deliver value to society and to shareholders at the same time. It must also ensure that CSR is mainstreamed and fully integrated into the business i.e. considered at all stages of business decision making beginning from conceptualisation of ideas, products, projects and services to execution and close out.
CSR should be managed the way safety is managed in the engineering sector. The industry mantra in this regard is “if it is not safe, do not do it”. A similar CSR mantra should be adopted by the Nigerian multinationals, “if it does not deliver value to society; do not do it”. One danger that must be avoided at all costs is “to start what cannot be finished or sustained”. Any company that does this will leave a string of bad legacies behind in the society and it will be remembered in this light for years to come and by future generations of consumers, shareholders and stakeholders.
Uzo Nduka
Lagos, December 2010
