Is Corporate Social Responsibility a fad diet or nutritional staple?

An extract of an article by Obiora Onyeaso, managing director of an investor relations firm in Nigeria.

  Like other fuzzy terminologies, CSR has several definitions. I like Geoffrey Heal’s best because it places CSR at the vortex of interactions where the company enjoys social subsidies in the process of creating private benefits for shareowners. Mr. Heal defines CSR as “a programme of actions taken to reduce externalised costs and avoid distributional conflicts”. His categorisation of CSR programmes as debts paid and obligations due and not the “thank you to our customers and community” they are frequently presented as is spot on. Peculiar Nigerian definition However, in a twist, among Nigerian companies it has come to be almost exclusively identified with donations and sponsorships. This one-dimensional conception of CSR as patronage reflects the expectations of demand communities around the company. A sunken borehole, refurbished school library, repainted dispensary block, food items for an orphanage, support for a cultural event and a new police patrol vehicle are a few examples of responses to such expectations. Although, companies on the Nigerian Stock Exchange spend several millions and non-trivial management time on such community outreach programmes, very few have any coherent publicly accessible policies that guide their engagements. Notable exceptions are Access Bank and Total which, in addition, publish CSR reports on their websites even though the thrust of their efforts are still overwhelmingly aimed at the philanthropy. As commendable as these commitments are, the often random selection process and allocation decisions may one day be challenged as misguided, unproductive or profligate. More than displays Corporate social responsibility is much more than widely publicised displays of the value-laden label “good corporate citizenship”. KLD Research & Analytics, publisher of the KLD400 Index, the leading benchmark on environmental, social and governance metrics for public companies and global authority on social research for institutional investors, lists eight indices for assessing CSR performance: community relations, corporate governance, diversity, employee relations, environment, human rights, product quality and safety, and controversial business issues. Until now, most local initiatives have focused on community relations, and specifically, donor activities. Examples include Zenith Philanthropy, Ecobank Cares and the Dangote Foundation. By extension, local CSR ratings like those published by SIAO, the consulting, tax, audit and HR firm, have emphasised such donor preoccupations. Reporting on the other seven indices is negligible.  In developed country markets, CSR has moved beyond the prevalent cosmetic do-gooder profiling to a set of stringent investment screening criteria judged according to these seven themes. Ethical funds and socially responsible money managers want to see much more than pictures of staff members clearing blocked drains or a company branded manicured lawn at a city centre roundabout.  These investors recognise that socially responsible organisations also tend to be well-run institutions. Over time, the sustained demand for a company’s securities by these funds and investors will raise its valuation, therefore shareholder returns, and more than make up for any prior costs in responsible behaviour. The task at hand for companies is to learn these criteria and work towards inclusion in the selection universe of these money managers. To view the complete article, please visit: http://customsstreet.com/csr-salad-is-corporate-social-responsibility-a-fad-diet-or-nutritional-staple/ Is Corporate Social Responsibility a fad diet or nutritional staple? We welcome your comments!