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The Need For Corporate Social Responsibility

Source: Graphic Online

12/16/2009 12:52:42 PM -

Corporate social responsibility (CSR) is also known as corporate citizenship, corporate philanthropy, corporate giving, corporate community involvement, community relations, community affairs, community development, corporate responsibility, global citizenship, and corporate social marketing.

Corporate social responsibility has stepped boldly and unabashedly into the limelight in the 21st century, with many firms professing an undying love for CSR. But has it always been so?

Scholars note that for many years, the concept of social responsibility has been the object of intense ideologically influenced debates:

Antagonists have asserted that the business of business should remain business — simply making profits; while protagonists have spoken of the firm’s responsibility to maintain an equitable and working balance among the claims of the various directly interested groups — stockholders, employees, customers and the public at large.

It is now widely accepted that corporate governance and its CSR component has moved from the profit-centred model to the socially responsible model, a concept referring to the way in which companies exercise responsibility and accountability for the economic, social and environmental impact of their business decisions and behaviours.

Consequently, Henry Ford can boldly assert that a good company delivers excellent products and services, but a great company does all that and also strives to make the world a better place.

Why CSR?

CSR has become increasingly important because today’s heightened interest in the proper role of business in society has been promoted by increased sensitivity to and awareness of environmental and ethical issues.

Issues such as environmental damage, improper treatment of workers, and faulty production leading to customer inconvenience or danger are being highlighted in the Ghanaian media; elsewhere, investors and investment fund managers have began to take account of a firm’s CSR policy in making investment decisions; some consumers have become increasingly sensitive to the CSR programmes of the firms from which they buy their goods and services.

These trends have contributed to the pressure on companies to operate in an economically, socially and environmentally sustainable way.

In Ghana, the Corporate Social Responsibility Movement (CSRM) has argued that profit maximisation should not be the company’s single objective.

The Ghana Chamber of Mines also defines CSR as the broader responsibilities that results from the relationship that a company develops with both the environment and society in an effort to jointly achieve an integrated environmental management system and satisfy social objectives.

The Ghana Club 100 (GC 100), in ranking the nation’s best performing companies considers their social responsibility in areas such as: concern for health, education, poverty alleviation, environmental concerns, issues relating to the socially vulnerable, and contribution to sports development.

Do firms gain from CSR?

Although some opponents have lambasted CSR practice for being mere ‘greenwash’ or an exercise in publicity, a great volume of CSR research also concludes that companies have experienced a range of bottom-line benefits including: increased sales and market share; strengthened brand positioning; enhanced corporate image and clout; increased ability to attract, motivate and retain employees; decreased operating costs; and increased appeal to investors and financial analysts.

Government involvement and role in CSR

The Government’s involvement in CSR seems to rest mainly with the legal dimension – which enjoins businesses to obey the law. However, there is no comprehensive CSR policy or law in Ghana.

There are a variety of policies, laws, practices and initiatives that together provide the CSR framework in Ghana; the Government seeks to promote CSR by putting in place legislation that defines minimum standards for business performance. Examples include constitutional provisions, local government laws and requirements for environmental impact assessments contained in an Act of Parliament.

The Government also facilitates CSR by providing incentives to companies undertaking activities that promote the CSR agenda and drive social and environmental improvements. The role of the Government here is basically catalytic, secondary, or supportive.

Existing relevant documentation

In Ghana, firms’ CSR concepts clearly straddle several divides: Ofori (2006) found a somewhat haphazard indulgence in corporate good works by local Ghanaian firms; Ofori and Hinson (2007) compared the adoption of social responsibility by internationally connected firms in Ghana and their indigenous Ghanaian counterparts with no international connections.

They found that although both groups of companies concentrated on a few select areas such as education, safety, environmental damage, healthcare, consumer protection and philanthropy, the internationally connected companies are more strategic, moral and ethical in their approach to CSR.

Additionally, Ofori (2007) found that firms quoted on the Ghana Stock Exchange are alive to their societal obligations and respond more to all the concerns of their major stakeholders. More recently, Ofori (2008) found that both individual ethical values and organisational values influence executives and managers’ CSR approaches.

Finally, Ofori (2009) also found that CSR functions complement the overall functions of firms in Ghana which seem to engage in CSR to build corporate image and promote socio-economic development.

The Ghana Business Code and CSR - Beyond the individual firm level, three key business associations in Ghana; Association of Ghana Industries (AGI), Ghana National Chamber of Commerce and Industry (GNCCI) and Ghana Employers Association (GEA) with support from the Improving Business Practice (IBP) sub-component of the DANIDA-funded Business Sector Programme Support (BSPS) have introduced the Ghana Business Code, which is aligned to the UN Global Compact.

Although the Code is not binding it uses a 10-point format which addresses issues of human rights, labour standards, issues of the environment, anti-corruption and ethical business practices to ensure fair treatment of all business stakeholders.

The Ghana Club 100 and CSR - The Ghana Club 100 in ranking the nation’s best performing companies uses a weighted ranking system comprising: size of business (20 per cent); profitability (25 pr cent); growth (30 per cent); employment level (15 per cent); and CSR, including philanthropy (10 per cent).

The guidelines for determining social responsibility of companies include: health concerns, education, poverty alleviation, environmental concerns; issues relating to the socially vulnerable; and contribution to sports development.

The African Peer Review Mechanism (APRM) note on CSR - “It is recommended to clarify the concept of CSR in Ghana and make efforts to bring the full import of the concept to all stakeholders especially government, corporations, communities and CSOs”.

CSR in Ghana (2006): Report submitted to Friedrich Ebert Foundation (FES) Ghana – In its report on CSR, the FES says:

“It is recommended that a CSR policy be developed for Ghana and that the laws that regulate the various sectors of the economy (and aspects of social life) in Ghana be amended to include specific CSR provisions”; “It is recommended that modalities be put in place to ensure some measure of enforcement of business and professional codes of ethics by external stakeholders in order to improve CSR in the country”; “It is recommended that regulatory institutions include in their regulatory efforts, definitive efforts at facilitating the formation and supporting of the activities of CSR advocacy groups.

What are the promoting and hindering factors for CSR in Ghana?

What has been the experience of those Ghanaian companies that have embraced CSR? What factors have worked and what have been the hindering elements? A 2009 survey by GTZ has shown that there are several promoting factors for CSR in Ghana:

the commitment of company management and staff; the commitment of beneficiaries and identification of beneficiary needs; the establishment of a company CSR mission; effective planning; transparency; and sustainability.

The survey also uncovered several hindering factors for CSR in Ghana: inadequate project funds; inadequate trained human resources; a lack of CSR-company strategy fit; too many requests from the public; and a lack of insight into beneficiary needs.

Areas for development and future trends for CSR in Ghana

It seems the public expects a better and speedier response from firms to their requests, as well as a better understanding of their concerns and needs. Firms would prefer a better appreciation of the challenges they face in articulating and executing their CSR agendas.

It is also clear that in addressing CSR hindering factors, there is the need for a systemic and context-sensitive approach that relies on the potential of people, organisations and communities to design and implement their own solutions within tried and tested global CSR frameworks.

This requires more targeted capacity and skills building of CSR professionals and external stakeholders, as well as the resourcing of company CSR departments and units to better enable them to execute their mandate on behalf of their constituents.

The Government must also provide incentives and allocate the Government resources for CSR initiatives, and improve on its own CSR actions.

Ghanaian firms have also indicated that in the future, they expect to increase and improve their engagement in four key arenas for the meaningful application of CSR, namely: CSR in the marketplace, the workplace, the community and the ecological environment.

They intend to be especially proactive and more consistent in workplace and marketplace focused CSR projects/activities across all sectors.

Firms also intend their future CSR initiatives to have a closer correlation with company business, to be more focused and to concentrate on longer-term projects that may last over a year and could include other partners.