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Corporate Social Responsibility Money Wasted

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Corporate Social Responsibility – Wasted Resources

The concept Corporate Social Responsibility (CSR) is deemed to be that of philanthropic gestures by organizations as a means of giving back to the societies where they operate.

This was the perception I had when I first started to hear about CSR and this perception remained with me for many years. This was until I was assigned the role of Corporate Governance and Compliance in fast growing conglomerate based in Nigeria.

In as much as it is good for organizations to give back to the society for the use of the resources, it is also important that organizations understand the fact that their primary responsibility is to make profit and returns for the owners of the business – mostly believed to be the organization shareholders.

Yes the above is true, but the question that arises here is who exactly the organization shareholders are? The general belief is that they are the contributors of capital to the organizations and as such the priority is to make enough money to give back to them.

This to me is the most flawed perception, because without secondary shareholders of the organization, then such organizations would really be a dream that was never conceived to become a reality. Organizations must remember that they do not exist in isolation. Organizations need other people to purchase their goods and/or services to make a sale and invariably make a profit which would then provide returns for their shareholders (the providers of capital).

Let us imagine XYC limited conceived in the confines of my bedroom, it will require that I set up an office (physical/virtual), open a bank account, employ people, use the social amenities provided for the use of the community, customers who will buy its produced goods and/or services provided and suppliers who will supply it with the raw materials for the production and/or provision of its goods and/or services.

What then happens if all these other variables are not available, then my conception will only be a dream and never become a reality as I would not plant my cash in the soil to create a harvest?

In this regards, it has become pertinent that organizations must ensure that they are corporately responsible in order to ensure that the various resources required to continually create wealth for the owners are managed responsibly towards ensuring that  the resources continually generate enough wealth to buy its goods and/or services.

So coming back to the topic of discussion – Corporate Social Responsibility – Wasted Resources, it becomes obvious that organization who want to remain sustainable will have to ensure that they are corporately responsible not only for providing quality goods and/or services but also ensure that they do not kill the providers of the various resources that would enable them continue to be in business.

Looking at some of the arguments for the implementation of corporate social responsibility activities, I believe that organizations can sit back and decide if the resources spent on ensuring CSR are wasted resources or an investment in the future of their sustainability;

  • Firstly the case for CSR activities must be seen as a model by which businesses manage their relationships with a variety of their influential stakeholders who can be a huge influence on its license to operate. CSR must always be seen as building relationships with customers, suppliers, and others, which lead the business to retaining its talented people
  • Secondly, organizations must realize that their operations are not spelt out in black and white. There is the need for them to understand that CSR goes beyond philanthropy. They need to understand the value of their people to developing the organizational business and as much must be able to empower them as such. Like you know an employee is also a customer, so what happens to the publicity of the organization where employees are not treated properly?
  • Sometimes you hear organizations cry out about their inability to generate revenue, so why should they spend money on CSR activities? My take on this is simple – managing CSR is like managing other aspects of the business itself. You cannot afford to focus only on CSR activities whilst neglecting the core business operations. Even in difficult times, well managed CSR activities continually keep you in the eyes of the stakeholders would reward you for being a responsible business by patronizing your services and/or goods. Let’s look at some of the negative activities that you could engage in in bad times and see if you will not reap the rewards when things become better
    • Times are hard, therefore it is in my interest to pollute more and run an increased risk of prosecutions and fines, not to mention attracting the attention of environmental pressure groups
    • Times are hard; therefore I can afford to lose some of my most talented people – serving or potential – by erecting barriers on the basis of race, gender, age or sexual orientation. And it doesn’t matter if employment tribunals occur as a result of my poor employment practices.
    • Times are hard; therefore I need to ignore changing values in my customer base towards socially responsible goods and services. I can keep making things just the way I always have.
    • Times are hard, so I can ignore the fact that the local communities around my plant are poor living environments with low education achievement, meaning that my best staff won’t want to live in them and our future staff will need supplementary training in basic skills such as literacy which they should be getting at school. Our company can be an island of prosperity in a sea of deprivation.
  • Many organizations believe that it is the responsibility of government to deal with CSR issues. As much as this is true, most of the organization that are having a say and influencing major policies across the world today are those who are becoming more corporately responsible. This is because Governments have realized that such organizations would provide the needed environment for both themselves and other stakeholders to create more wealth as such creating more business opportunities. Taking a quote from the CEO of the Nigerian Stock Exchange (NSE) Mr. Oscar Onyema – “It is expected that companies will enjoy tangible business advantages from risk-oriented and/or ethically sensitive business partners and investors. In addition, competitors would be challenged to establish the same level of good governance by setting standards of excellence. Companies would not only set themselves apart from their peers, but also contribute to improving the climate for doing business in Nigeria.
  • Taking from the statements of the CEO of the NSE, I believe it is more economical to undertake such CSR activities which could create a 1% reduction in waste rather than increase your spending from marketing activities which would not guaranty increased revenues.

Finally looking at the benefits illustrated above, the challenge for organizations is to look back into their business operations and really ask the question – is Corporate Social Responsibility – Wasted Resources or is it an Investment in Sustainability.

This is because a company that creates continued wealth within its society invariably is preparing that business for new customers and new suppliers who looking at the theory of demand and supply will increase their customer base and increase supplier levels and quality thereby reducing the purchasing cost for the raw materials to deliver on their goods and/or services.

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