Corporate Social Responsibility: Is it a misplaced virtue?
Corporate social responsibility (CSR) is not entirely a new concept as it has been in existence for over a century. It overlaps other disciplines and its continuous increase in importance has led to the proliferation of names such as corporate governance, corporate conscience, corporate citizenship, sustainable development inter alia. It is what Elkington refers to as the ‘Triple Bottom Line’ which means economic sustainability, social sustainability and environmental sustainability. Therefore, every CSR programme should incorporate these three “virtues”.
The European Union defined CSR as a “concept whereby companies integrate social and environmental concerns in their operations and in their interaction with their stakeholders on a voluntary basis (European Commission 2001).
Why practice CSR when the objective of every business is to make as much profit as possible for its shareholders? For Milton Friedman, an Economist and a Nobel Laureate whose article appeared in the New York Times in September, 1970, “the business of business is business” and as such, companies should channel their resources into making profits for their shareholders and forget about CSR. David Henderson agreed with Milton Freidman and stated that, CSR is a “misguided virtue” and its practice will reduce competition and “undermine the market economy”.
Wood (1991) believes however, that, business and society are not mutually exclusive. The two are interwoven and cannot be separated from each other and so CSR should be used as a vehicle for providing social services such as housing, roads, education, health among others.
Many business operators in Africa and for that matter, Ghana do not fully understand CSR and have limited the concept to philanthropy or charity (donation). For example, a company that donates huge amounts of money to the Black Stars of Ghana or Osu Children’s Home as part of its corporate responsibility but fails to pay taxes or comply with the environmental laws of the country is not socially responsible. A look at the pyramid of CSR indicates that, philanthropy or charity is the least in order of importance but which many in Africa have reduced the concept to. CSR goes beyond donations to cover such vital areas including; human rights, welfare of workers, the safety of the environment in which the company is operating in, the health and safety of workers and customers, the issue of child labour in the supply chain, community-company as well as government relationships, transparency and accountability, tax governance and legal issues. CSR thus addresses the concerns of both shareholders and stakeholders. In fact, it is the stakeholder theory that gave birth to the concept of CSR.
In addition, when a company is given a legal contract to operate in any community by the government or appropriate institution, it needs a “social contract” from the community to operate. For example, the government of Ghana in 2011 gave Ghana Gas the legal mandate to process gas in Atuabo in the Western Region. However, Ghana Gas needs a “social contract” from the people of Atuabo to operate without which the company will encounter difficulties.
Multinational corporations such as Tullow Oil Plc, Cosmos Energy, MTN Ghana, Airtel Ghana, and Guinness Ghana among others owe it a duty to respect the ethical standards and legal frameworks set by their host country. These include, environmental laws, human right laws, corporate tax laws and it is only by obeying such laws and incorporating it in their ‘Triple Bottom Line’ that, they would be given ‘informal license to operate in’.
President John Kufour is reported to have said shortly after Ghana discovered oil that, “oil is money, and we need money to do the schools, the roads, the hospitals. If you find oil, you manage it well, can you complain about that? Even without oil, we are doing well already. Now, with oil as a shot in the arm, we are going to fly (Gary 2009). Seven years down the line since the discovery of oil, can we say we are benefiting from our oil? Are we getting value for money? Ghana has been mining gold and other precious minerals for over a century now yet; there is nothing to show for it. Obuasi (Ghana) and Johannesburg(South Africa) are among the top gold producing cities in the world but there is poor housing, massive poverty, pollution in Obuasi whereas there is massive infrastructural development in Johannesburg comparable to any city in the world. Have we gone as a country or we have come after 57 years of independence?
It has been noted that, “the relationship between brand image and corporate social responsibility is strongest for familiarity, not for favourability. That is, if the company is well-known in its community, its corporate social responsibility activities will strengthen its brand image more than they would if the company were less known”. The end result of CSR should be a win-win situation and that explains why it is important for businesses whether big or small, to incorporate the concept in their operations. The notion that, “CSR rests on a mistaken view of issues and events, and its general adoption by businesses would reduce welfare and undermine the market economy” in itself is misguided and untrue.
What is required in Ghana and Africa as a whole is for the media and civil society organizations to play watchdog and vigilante roles in ensuring that businesses are socially responsible, accountable and transparent. Our governments should not sign contracts in secrecy and with confidentiality clauses in them. If our governments and businesses are transparent and accountable, the citizens become the greatest beneficiary and there will be development.
Francis Xavier Tuokuu is a freelancer and a CSR professional. He holds a masters degree in Corporate Social Responsibility and Energy (MSc) from the Robert Gordon University, Aberdeen, UK. You can reach him via firstname.lastname@example.org/0506425707.