Comparative Analysis on Corporate Social Responsibility Laws: Perspectives From Uk, European Union and Nigeria
CHAPTER ONE
Objective of the study
The main objective of this study is to compare the legal framework guiding corporate social responsibility from UK, EU and Nigeria perspectives. To fulfil this purpose and to create a guideline for the research I have defined the specific objectives as:
- To evaluate what can be learnt from Nigeria in the continuous improvement journey of CSR worldwide
- To evaluate the understanding and reason for CSR in Nigerian organisations
- To examine how Nigerian companies implement CSR compared to UK
- To evaluate the learning experiences and solutions for the future with regard to business participation in creating a sustainable society
CHAPTER TWO
LITERATURE REVIEW
CONCEPTUAL FRAMEWORK
Meaning of CSR
Formal writing on social responsibility appeared in the Twentieth century particularly in the last 50 years. Much of the written work in this area is evident in the United States. CSR as a concept has evolved over the years since the 1950s to date with there being a splintering of writings into alternative concepts and themes such as corporate social responsiveness, Corporate Social Policy (CSP), public policy, business ethics, and stakeholder theory/ management. This evolution largely embraced core concerns of CSR (Carroll, 1999).
Bowen (1953, p.44) defined social responsibilities of businessmen as the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society. Davis (1960) defined social responsibility as businessmen’s decisions and actions taken for reasons at least partially beyond the firm’s direct economic or technical interest.
Modern definitions of CSR have accommodated multidisciplinary angles. An example is by McWilliams, A. & Siegel, D. (2001) who provided a definition that appears to further some social good, beyond the interests of the firm and that which is required by law. They have exposed five different dimensions of CSR. These are Environmental, Social, Economic, Stakeholder and Voluntariness dimensions. They conclude that though there may be various dimensions of defining CSR, the most important thing is to understand how CSR is socially constructed in specific contexts and how to take this into account when business strategies are being developed.
CSR covers a wide range of issues such as plant closures, employee relations, human rights, corporate ethics, community relations and the environment. CSR Europe, a membership organization of large companies across Europe, in their reporting guidelines consider workplace (employees), marketplace (customers, suppliers), environment, community, ethics and human rights (Moir, 2001) as important factors of CSR.Wood (1991) states that ‘the basic idea of corporate social responsibility is that business and society are interwoven rather than distinct entities’.
Galbreath (2010), states that discretionary responsibilities of a business refer to business activities that are not required by law or are not mandated, but are expected by stakeholders as a demonstration of good citizenship. Examples include investing in local social enterprises or providing training to employees.
The development of Corporate Social Responsibility
It is possible to trace back through history the concern and responsibility of business for society, however the concept of corporate social responsibility that is used today is a twentieth century idea that developed in particular from the 1950’s in tandem with a recognition of the growing influence of modern corporations, Carroll (1999).
The scope and importance of large corporations dramatically increased in the first half of the twentieth century, they were not simply small firms writ large but qualitatively different because the shareholders did not own or control them in the same way as a small enterprise run by its proprietor. The accountability of these entities became a pressing issue given their obvious power and influence, Wells (2002). A number of prominent writers questioned the previous laissez faire approach where big business was allowed to operate in a relatively unfettered way. Berle and Means (1932) who felt that corporations’ power rivalled that of governments, Galbraith (1952) argued that these large corporations possessed oligopolistic economic power, whilst Drucker (1955) noted that firms’ power over workers and consumers inevitably gave them a social and political dimension. Given their undeniable economic and social impact the natural corollary was that they also had economic and social responsibilities. This was a break with the past where philanthropy was applauded but regarded as a private matter separate from business, the new perspective was holistic; business and society were inevitably intertwined, they relied on each other and necessarily had duties towards each other.
CHAPTER THREE
CORPORATE SOCIAL RESPONSIBILITY FROM A EU PERSPECTIVE
The aim of this chapter is to provide a theoretical framework by providing information on definition, drivers and development of the concept Corporate Social Responsibility.
The definitions of Corporate Social Responsibility in the West
There are a myriad of definitions of CSR, each valuable in their own right, defined to fit the organisation in question. The majority of definitions integrate the three dimensions: economic, environmental and social aspects into the definition, what is usually called the triple bottom line. I have in this thesis, as for my own understanding, defined CSR according to the triple bottom line with the purpose of not narrowing the definition.
In the next section I will present some different definitions outlined by different authors and organisations.
Carroll´s Pyramid of Corporate Social Responsibility
One of the most used and quoted model is Carroll´s (1991) Pyramid of Corporate Social Responsibility. In indicates that CSR constitutes of four kinds of social responsibilities; economic, legal, ethical and philanthropic.
Carroll considers CSR to be framed in such a way that the entire range of business responsibilities are embraced. Carroll suggests that CSR consists of four social responsibilities; economic, legal, ethical and philanthropic. These four responsibilities can be illustrated as a pyramid.
The economic component is about the responsibility to profit and this responsibility serves as the base for the other components of the pyramid. With regard to the legal aspect, society expects organisations to comply with the laws and regulations.
Ethical responsibilities are about how society expects organisations to embrace values and norms even if the values and norms might constitute a higher standard of performance than required by law.
Philanthropic responsibilities are those actions that society expect for a company to be a good corporate citizen.
The pyramid illustrates the four components of CSR with economic performance as the basic block. Next is the responsibility to be ethical. At its most fundamental level this is the obligation to do what is right and to avoid harming stakeholders. Finally business is expected to be a good corporate citizen. This is embedded in the philanthropic responsibility, where in business is expected to contribute financial and human resources to the community and to improve the quality of life.
CHAPTER FOUR
CORPORATE SOCIAL RESPONSIBILITY LAW: THE NIGERIA PERSPECTIVE
The overall purpose of this study has primarily been to gain a first understanding of CSR from a Nigerian perspective compared to the west to form a baseline for further research. Due to the limited research on CSR in Nigeria there was a need for additional information to find out if the theoretical findings were in accordance with reality and to explore if it is possible to gain a deeper understanding of the CSR perception and practices in Nigeria. I therefore decided to conduct a field study to find out how some organisations in Nigeria perceive the research questions below.
Research question: What is the understanding and reason for CSR in Nigerian organisations?
Since the concept of CSR is of a later origin than in the West my purpose was to explore the understanding of CSR in Nigeria and to examine if national Nigerian companies have developed their own CSR definitions and understanding or if they have adopted already established Western definitions. According to the theoretical findings, the philanthropic motive, is given the highest priority as business driver for CSR in Nigeria. One of the research problems was to understand how this is being manifested and what the exact meaning of philanthropy implies for a Nigerian company.
Research question: How do Nigerian companies implement CSR?
According to the theoretical findings there is an awareness of CSR in national Nigerian companies but many formal CSR practices appear to be ad hoc initiatives. One of the research questions was to find out how CSR is being practiced, if possible both on a formal and informal basis.
Research question: What are the learning experiences and solutions for the future with regard to business participation in creating a sustainable society?
Since many have realized the need for new management models in Africa some new approaches are being developed that link management practices to cultural roots. One research question was to explore how the Nigerian organisations view their learning experiences and what they think will be needed for the future. Can some of the new management practices also be observed in the proposed CSR solutions for the future?
The following organisations were included in the field study. The organisations will be presented in the following section.
Organisations with formal CSR strategies United Bank for Africa PLc Celtel
CHAPTER FIVE
RECOMMENDATIONS
With the above discussed challenges which hinder the effective implementation of Corporate Social Responsibility in Nigeria, the following recommendations stand to be made.
1.The Government of Nigeria should put into law, which is providing a legal framework for companies on Corporate Social Responsibility. This will make CSR to be taken seriously and seen as obligatory as against non-obligatory.
2.Federal government agencies who are charged with the responsibility of implementing and enforcing CSR should maintain a high moral and ethical standard to ensure its effectiveness.
3.Federal government should provide enabling social and political environment to motivate companies in Nigeria to carry out sustainable social responsibility to improve the lives of Nigerians.
4.Nigerian Government should pass into legislation that would promote the interest of the government of the region. Legislation that would make the companies to pay heavy penalties for identified damages to the eco-system.
5.The Federal Ministry of Environment and other agencies saddled with the responsibilities of enforcing environmental laws in Nigeria should adequately be funded to be able to manage the activities of the government.
6.The Government of Nigeria should try as much as possible to domesticate International Corporate Responsibility Instrument, which include the Organisation for Economic and Development (OECD), the 1988 ILODeclaration on Fundamental Principles and Rights at works, Guidelines for Multinational Enterprises and the United Nation (UN) Global Compact.
7.Finally, Government should facilitate the process of passage of the Response, Compensation, and Liability for Environmental Damage (RECLED) Bill, the Nigerian Environmental Bill and the Petroleum Industry Bill by the legislature arms of the government, the National Assembly, into law. The bills if eventually made law would no doubt stimulate CSR in Nigeria
CONCLUSION
The concept of CSR has continued to be the subject of academic and business debate. CSR pertains to business actions taken for reasons beyond the direct profit interest. One of the key features addressed by CSR is its intent to cause companies to recognise responsibilities to stakeholders (customers, communities, employees and suppliers) outside of shareholders. The common reasons why businesses undertake in CSR activities include the ethical demand to be socially responsible; the economic consideration of the long-term financial benefit of CSR; employee motivation; risk reduction; market position enhancement; cost savings; and brand protection. The proponents of CSR emphasise that CSR offers a long-term financial benefit from taking care of all stakeholders; while the CSR antagonist are deterred at the idea that businesses should invest in CSR because they believe that it is a venture which does not produce immediate obvious financial gains. Noteworthy merits of pursuing CSR activities includes its potential to attract new customers, its potential to manage risks and create products and processes of better quality and its potential to recruit first choice employees. However, the empirical studies that had tried to confirm the validity of CSR by linking CSR to business financial performance indicate that there is no conclusive scientific evidence that CSR has actually won new businesses to companies that had actively pursued it. Therefore, the assertion that CSR can generate long-term financial profit is based on the conventional wisdom and the general belief that it can do so.
Without doubts, the profit maximising objective of businesses can conflict with the CSR objective because pursuing CSR activities may involve some profit sacrifices on the part of businesses. Therefore, CSR requires a balancing act of maximising profit whilst at the same time serving key stakeholders. The business objective of maximising profit can be balanced with the CSR objective by mainly serving the most influential stakeholders of the business. In other words, the least influential stakeholders may have to be ignored in order to equally achieve the profit maximisation objective and the CSR objective all at the same time.
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