Emmanuel Thomas, Lagos
September 17, 2015 – Former Governor of Lagos State, Mr. Babatunde Fashola has called on chief executives of corporate organisations to pay as much attention to their Corporate Social Responsibilities(CRS) the way they do in matters relating to their balance sheet if they want to succeed in business.
Fashola gave the advice while speaking at the 10th anniversary of MTN foundation in Lagos.
“Indeed, I believe that any Chief Executive of a business who intends to prosper must pay the same if not a higher level of attention to its CSR compliance as he does to the company’s balance sheet.
“Thus, CSR should not be a means of assuaging the conscience or looking good in the society, while the corporate donor is busy filing false accounting returns.
See more on CRS below.
THE ROLE OF CSR IN NIGERIA’S SUSTAINABLE DEVELOPMENT, BEING TEXT OF A SPEECH DELIVERED AT THE MTN FOUNDATION’S 10TH ANNIVERSARY DINNER HELD IN LAGOS ON 15TH SEPTEMBER 2015
Distinguished Ladies and Gentlemen,
After I received the invitation letter asking me to deliver the keynote address at this conference, the theme “The Role of Corporate Social Responsibility in Nigeria’s Sustainable Development,” which I accepted, I realized that I had perhaps walked into some difficult territory.
Yes, a large number of corporate organizations are involved in what they call CSR. But is it really CSR?
Is this a subject we can openly talk about without ruffling feathers? Are people ready to hear plain speaking?
What are the operational guidelines of CSR?
Are the operators of CSR taking advantage of the state of our National development to spend some money in areas like health, road construction, education, security and such other sectors where there is a need, simply for the photo opportunity and the publicity?
How much is actually spent on the community and how much is spent on the publicity?
Does the gesture come from the heart or from a deep conviction of the altruistic value of the deed, or does it come from a desire to be simply seen to be giving something back because it is fashionable?
My first thought was to do some research about best practice in the West, where the origins of this concept are rooted, and come to share it here.
Of course I have done that, but it was not my first act.
My latter thought, which became my first act, was to look inwards. This is because I have always held the view that even if we drive European cars, use European made telephones, build our homes like them, we are not Europeans.
We are culturally different. We are Nigerians and Africans, and while there may be globally applicable standards of development, there will be variations in content.
This is necessarily the case; not because of the cultural difference alone, but also because of the different stages of development between us and the West.
So I needed local parameters, and thankfully I found them. And I will share them.
But before I proceed I will like us to at least have some clarity or possibly agreement about what we are talking about.
So can we start by asking what Corporate Social responsibility, which I will hereafter refer to as CSR, is?
There is a definition which I found on the internet, presented under the name, “Reset, Times for a Better World” which describes CSR as
“a concept whereby companies decide voluntarily to contribute to a better society…”
I think this is a simple enough definition which I propose that we adopt.
In doing so, some things become immediately striking namely:
- CSR is more attributable to the action of Companies rather than individuals, and this explains the use of the adjective “Corporate”
- CSR is voluntary, and this is important because there is no compulsion
- CSR seeks to “…better the society…”
In practice, the areas where CSR has been active are areas like Health, Education, Security, Environment and Sports.
With this definitional emphasis now set, some of the questions that readily come to mind then are:
What is the business of companies and corporations in voluntarily assuming responsibility for what Governments are elected to do, instead of focusing on their shareholder’s mandate to earn profit?
Are these corporations just busybodies who have nothing useful to do with their time or are they making too much profit and know not what to do with it?
Who is even regulating them? Should Government make laws to regulate what they voluntarily undertake to do or should they be allowed to regulate themselves?
These are some of the raging debates and questions being asked in the report from which I borrowed our definition, which is from Europe.
Indeed, some people have asked whether “CSR is designed to distract the public from the ethical questions that [the] activities [of these corporations] create?”
As I said earlier, we have cultural differences and different levels of development in Nigeria and Africa, as distinct from Europe and other parts of the West.
Therefore, I have looked for local content and examples and thankfully found some guide.
One of my local examples is the MTN Foundation whose 10th Anniversary we gather to commemorate today, and some others will reveal themselves in course of my address.
The revelations were fortuitously contained in an interview recently granted by the man I call Mr. MTN Nigeria, Dr Pascal Dozie himself.
As far as the journey of MTN as a corporate citizen is concerned he said:
“…we agreed that we…. will engage people who had a molecule of virtues, who understood the principles of Good Governance and what it takes to be responsible.”
In my view, he himself epitomizes those molecules of virtues, principles of Good Governance and what it takes to be responsible.
So do Mrs. Aminat Oyagbola, who was the first face of the MTN foundation that I had interactions with as well as Nonny Ugboma and Akinwale Goodluck, Executive Secretary and Director respectively that I have interacted with several times in the course of my work as Governor, and in collaboration with the MTN foundation.
As for how much progress MTN as a business had achieved, Dr. Dozie said and I quote:
“…Our mission was to be the best….. we are happy that we are closer to this mission”
These are the underpinning philosophies of MTN as a Telecommunications company, and Dr. Dozie provides clarity of vision and purpose behind the MTN foundation, which is the CSR platform of the MTN business in the same interview when he explained the reason for the foundation as follows:-
“We wanted to be a good corporate citizen and that has been the hallmark of all our operations”
Distinguished ladies and gentlemen, now that we know the purpose of the MTN foundation which is “…to be a good corporate citizen” by operational activity, the questions to ask are these:-
Has MTN as a company and by its foundation been a good corporate citizen by their operational activity?
By extension, can we review MTN’s conduct against some of the accusations levelled against European corporate CSR practitioners that they seek to mask or distract the public from the ethical questions that their activities create?
I must confess that I do not know all the details of the MTN foundation’s CSR interventions but I know some and it is against what I know that I will seek to assess them and answer those questions.
Let me start by asking whether anybody thinks that MTN’s operational activity as a phone company has adversely affected the vocational and technical skills and development of our youth in Lagos.
I ask this question because I know that the MTN foundation singlehandedly equipped a laboratory with vocational and technical equipment for the training of our young children in our technical college in Ikorodu and I know that Nigerite also set up a training school in the same college to train young people in modern roofing techniques.
Let me again ask if anybody can fairly allege or demonstrate that MTN’s operational activity is linked to increasing cases of Kidney diseases because I know that MTN foundation intervened in collaboration with us to provide 2 Haemodialysis machines in our General Hospital in Igando, Alimosho, although we have since completed the Gbagada Cardiac and Kidney centre that now has 24 dialysis machines.
Of course I will also ask if anybody can assert that MTN’s operational activity was responsible for the past neglect of public school infrastructure, because over 7 years, I know that MTN foundation was a major partner and donor to our ‘Adopt a School’ policy by which we got many individuals and corporates to partner with us to revamp the quality of our public schools.
Finally, at this point, I will ask if MTN’s operational activity was responsible for the absence of emergency telephone lines on our highways because I know that MTN foundation worked with our Government to install free emergency phones on the 3rd Mainland Bridge which was eventually unsuccessful because the phones were vandalized.
Therefore, ladies and gentlemen, on the basis of the evidence available to me, MTN foundation must stand free of any suggestion that they seek to mask or distract the public from the ethical question that their [operational] activities create.
Can MTN do more and improve itself operationally and in its CSR? Yes, I would think so.
In the interview of Dr. Dozie, he also revealed that the MTN foundation, which is the CSR platform of the MTN business, is funded with 1% of MTN’s profit after tax.
I will not go into the details of how much that is. It is not important. What is important is that CSR achieves its virtuous objectives and adheres to the principles of Good Governance that what is given to the community has been earned.
Therefore, it will seem to me that there will be ethical questions, if any part of MTN’s profit from which 1% goes to the foundation for CSR, was from a dropped call for which a subscriber is charged and does not get a refund.
Such income would not have been earned and that would not be giving back and neither will it be good governance.
I am sure that this issue of dropped calls and service levels to subscribers is not new.
It applies to all operators in the business and the MTN management has heard it severally.
Therefore, it seems to me that improving on its service level quality and solving these problems will certainly improve the levels of compassion that underlie MTN’s CSR initiatives.
This also applies to all other corporations who provide all sorts of services, because if the quality of your primary and contractual obligation does not give full value for money, what real value can attach to your voluntarily assumed obligation?
Distinguished ladies and gentlemen, you will recall that I had said I was resorting to local content for cultural consistency and that I found some examples.
I have shared one example with you, that of Dr. Dozie. The others are mine.
I have had cause to give two speeches on CSR and I recall that some of what I said deal with some of the related issues.
Instead of saying what I said in a different way, I seek your indulgence to simply permit me to repeat myself.
At a speech I gave on September 5, 2008, in acknowledgement of Zenith Bank’s CSR intervention in the rehabilitation of Ajose Adeogun street in Victoria Island, I said in part as follows:-
“This gathering is in recognition of Zenith Bank’s laudable effort of adding value to the life of the business community. It surely makes business sense not just to be socially responsible but to make a serious social mission intrinsic to one’s business, and then it will be talked about, studied, and publicized. Nothing travels faster than a success story. I am quite optimistic that if a few businesses can set an example here, we as government will surely recognize it. Society as a whole will fully appreciate it and this will greatly improve our environment for all our benefit. Furthermore, this will encourage all of us to participate in the much needed improvement of our beloved State.
This administration recognizes that the engine of growth and development for any developing nation today lies in the ability to strategically cultivate and harness private as well as public sector effort, thereby opening up vistas of opportunities for the public-private partnerships that will contribute not only to the millennium development goals but also the nation’s overall development. Zenith Bank’s rehabilitation and beautification of Ajose Adeogun Street in Victoria Island, a 1.3 kilometre dual carriage way, including the roundabout linking other streets, is a clear demonstration of good corporate social responsibility and citizenship. The entire street inclusive of the roundabout is always illuminated at night through an alternative power source. The landscaped area is constantly maintained.
I must say that Zenith Bank’s complete rehabilitation of Ajose Adeogun Street and the adjoining roundabout is a laudable effort worthy of emulation. I congratulate you for this gesture and thank you on behalf of the citizens of this State. Clearly you are a leader in the sphere of corporate social responsibility.
Corporate social responsibility (CSR) means different things to different organizations. For the purpose of this gathering, may I state that true corporate social responsibility entails an organization considering the interests of society by taking responsibility for the impact of its activities on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment.
This obligation is seen to extend beyond the statutory obligation to comply with legislation and sees organizations voluntarily taking further steps to improve the quality of life for the local community and society at large.
The practice of CSR has been subjected to much debate in recent past. There is a strong business case for CSR, in that corporations benefit in multiple ways by operating with a perspective broader and larger than their own immediate, short-term profits. To be considered effective, corporate responsibility must be an integrated part of day-to-day business, engaging all stakeholders and including strategies to support individual managers to make socially responsible decisions, conform to ethical behaviour and obey the law.”
Let me quickly point out that Zenith Bank’s CSR has moved beyond road construction to the annual Christmas Park on Ajose Adeogun where they light up the street for families and children.
It is an example I recommend to MTN and corporations to consider at Christmas around their corporate headquarters.
In similar vein, in a speech I delivered on December 13, 2011 at an International conference on corporate social responsibility with the theme:- “CSR for sustainable development in sub-saharan Africa.” I said amongst other things that:-
“The goals of this conference, ‘to raise awareness of CSR in Nigeria, to provide a forum for dialogue and current research and to promote the role and knowledge of private, public and academic enterprises on effective CSR practices’ are therefore goals to which I whole heartedly subscribe.
CSR is itself a controversial subject, especially in Nigeria where an attempt was recently made in the National Assembly to make it a legal obligation.
This approach may have stemmed from the misconceived notion that CSR starts and stops with a company donating to good causes or making money available for the development of its immediate or extended community.
Regarded in this way, CSR becomes at best an additional tax or an act of self-promoting philanthropy. It appears more or less as a tool for propagating the company’s image and developing its market, obviously with a view to boosting its business prosperity.
In my view, this unfortunate trend is, in fact, a corruption of the concept or, to put it mildly, a deviation from the intended purpose of CSR. It limits CSR to a system whereby companies work with local communities to better themselves.
In its original conception, to which I would urge a return, CSR connotes corporate conscience, corporate citizenship, or doing business in a wholesome, responsible and sustainable way.
It expects of companies the same sense of civic responsibility or community as is expected of an ideal member of the human society.
As stated by the Department of Trade and Industry in the U.K., CSR represents “the integrity with which a company governs itself, fulfils its mission, lives by its values, engages with stakeholders, measures its impact and reports its activities.”
Thus, a good CSR policy should compel businesses to comply with the letter and spirit of the law, to adopt fair trading practices, and generally to maintain high ethical standards in their relationships with shareholders and the general public in accordance with accepted norms.
For every corporate organisation, CSR should be an in-built mechanism that moderates business practices and shuts out the notion of profits at all costs. This is what gave rise to the view that CSR distracts from the economic role of business, but I think a closer look will reveal that it does not.
Indeed, I believe that any Chief Executive of a business who intends to prosper must pay the same if not a higher level of attention to its CSR compliance as he does to the company’s balance sheet.
In reviewing the concept of CSR, especially in this part of the world, I think the overarching thought should be that companies must be just before they are generous.
For instance, a company must first pay its due taxes before venturing to philanthropy. No amount of voluntary community service should properly replace statutory tax obligations.
Thus, CSR should not be a means of assuaging the conscience or looking good in the society, while the corporate donor is busy filing false accounting returns.
The importance of this requirement and the need to pay attention to CSR as is done to the balance sheet is that to do otherwise and prosper through sharp or unethical practices only serve to erode the growth of the community in which the business prospers.
Ultimately, the market is damaged, prosperity is reduced and business growth is diminished.
Governments and its regulatory agencies have perhaps the biggest role in this. We have seen, for instance, that international companies that act ethically in areas that are highly regulated, such as North America, do act in opposite manner in other parts of the world where they bribe officials, use child labour, evade taxes and even produce sub-standard goods. This underscores the role of strict regulatory compliance as a concomitant factor to CSR.
In my view, this assistance should stand over and above the existing tax and other statutory or regulatory obligations. I therefore find it very difficult to endorse the notion that CSR should be compelled by law, as that would indeed amount to a stealth tax.
However, the point must be made that extra statutory efforts should not and must not be taken for granted. The gesture of doing good flows from conviction rather than coercion. Since it is voluntary, CSR may not always appeal to shareholders or company management.
This is especially so when government does not meet public expectations and is perceived as wasteful or non-performing. I would therefore strongly suggest that governments have a big role to play in the promotion of CSR.
If government is seen to be playing its part, despite the obvious constraints of public resources, companies will be more easily persuaded to assist. However, the opposite is assured when people see government as wasteful or imprudent.”
Ladies and Gentlemen, I will now conclude by making the following summations and recommendations:
- CSR must remain voluntarily and should not be compelled by law in order to keep the lines of Governmental responsibility for social services distinct from the voluntary intervention of companies who act a matter of conscience and conviction for the common good.
- CSR activities will, in my view, be assisted by some form of regulation and standards but should be a matter for the corporate community, using platforms like the established Chambers of Commerce or Associations of Manufactures who can draw up a charter of ethics.
- Such regulations must be competitive and scored for public consumption and information so that companies are ranked, evaluated and penalized according to their compliance but there must be no discrimination or penalty for the companies that do not do CSR because it is voluntary.
- Corporations must be just before they can be generous; therefore, if your operations pollute the environment, harms citizens, disempowers your employees or their families, no amount of profit devoted to CSR from such unjust, unethical or harmful operations can assuage the deep ethical questions raised by such unsalutary conduct.
- The CEO, management and owners (shareholders) of every corporation that seeks to undertake CSR must pay as much attention to their CSR motives and activities as they do to their balance sheets.
They must ask some of these and other questions: –
- For example, are they running a financial institution who abuse the dignity of our womenfolk by using them to mobilize deposits and setting unreasonable targets for them?
- Are they operating a telecoms company whose network is still carrying unregistered subscribers who remain anonymous and threaten our national security?
- Are they employers who do not give enough paid leave to nursing mothers and therefore undermine our National exclusive breastfeeding policy?
- Will our nation be better served by the profits saved from such practices or by breeding a healthier generation of Nigerians who are breast fed by nursing mothers who get 6 months paid leave?
- Are they employers who deduct PAYE from their employees but fail to remit it, but instead treat it as their income from which they use a part as CSR?
- Are they operators in the oil industry whose activities pollute the waters and destroy the ecological life of the community they operate in and in return give them a school and health centre? Or put differently, does an ecologically devastated area further national development aspiration and efforts?
- Are they managing an airline which never keeps to schedule and cancels flights because commuter’s choices are limited and then they give free tickets for excursions? Or do they operate their aircraft with substandard fuel, equipment or fail to provide safety equipment for staff who do high risk work?
These are some industry specific issues, which are already in the public domain, and I think that shareholders must raise these questions at AGMs and set compliance levels periodically.
There are many more that are related to other sectors.
It seems to me that such practices in themselves undermine national development and no amount of CSR can replace it.
Therefore, the operational actions of corporations must first contribute to development before CSR can help to sustain it.
Ladies and Gentlemen, there is a deep moral issue embedded in CSR. Every CEO must seek to find it, redefine it, improve on it and set even higher standards.
CSR is more than charity. In it’s purest form, it is business and entrepreneurship with a conscience.
In this way, CSR will greatly assist in Nigeria’s quest for sustainable development.
I am done. Thank you for listening.
Babatunde Raji Fashola, SAN
