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SPECIAL REPORT: Corporate Social Responsibility People and planet alongside profit
Corporate social responsibility (CSR), also known as corporate citizenship, corporate social investment, community outreach, and many other terms that are used interchangeably, simply means that private and public sector companies should consider the social and environmental impact of their policies alongside profit when determining investment strategy and management practices. And there is now growing pressure to ensure that CSR plays a major role in African corporate thinking. Neil Ford reports.
All too often, CSR is thought of as charitable giving or public relations, and many companies pay lip service to the notion by funding development projects in the areas within which they operate. This is similar to the community investment or corporate philanthropy of the past and can involve multinationals paying for schools, clinics, roads, water supplies, or power connections in local communities. This strategy has been pursued for decades in Sub-Saharan Africa and often results in competition between local communities for such support. Local groups that protest longest and loudest often secure the greatest benefits, so paying for projects can almost be seen as collaborating with a protection racket.
The CSR movement seeks to move far beyond this approach, as companies and their employees are required to become fully involved with local communities. Rather than considering support for community projects as a cost of doing business, some corporations are seeking to embody sound social and environmental practices within all aspects of their business with the intention of “doing good”, but also because of the view that responsible investment policies actually generate greater profits in the long run. Until a few years ago, CSR conferences were dominated by social issues but environmental concerns are now increasingly coming to the fore, partly because of a growing concern over climate change, although it is often difficult to separate social and environmental problems. For instance, the use of lead in paint in toys can affect the health of workers in the factory, people living nearby, and the children who will ultimately play with the toys in question. By adopting a holistic approach, CSR seeks to address the whole range of effects. Even in industrialised nations, many CSR policies are little more than window dressing or are poorly implemented, although more and more large corporations are taking corporate responsibility seriously.
In most African countries, however, CSR is far less recognised because of difficulties such as corruption, lack of transparency within governments and businesses, weak financial and banking systems, security concerns, wide income disparities and lack of environmental and employment legislation. As a result, unscrupulous investors are able to take advantage of weak regulation and the lack of monitoring of those standards that already exist. Given the proportion of African investment controlled by foreign companies, it is important to consider the social and environmental practices of both non-African firms operating in Africa and of African companies themselves. However, the two are linked, as the importance attached to CSR depends on the corporate climate within each jurisdiction. Socially and environmentally responsible companies need partners within the country of operation but there is often too little government social responsibility and so it is difficult to engender a culture of CSR.
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