FINANCE - 15 NOV 2015

Triple Bottom Line

Triple Bottom Line
Speakers at the ARCSR

Stears is a proud partner of Thistle Praxis Consulting as it embarks on the fifth edition of the Africa CEO Round-table & Conference on Corporate Social Responsibility (AR-CSR) which will hold on November 19 & 20, 2015 at the Eko Hotel & Suites, Victoria Island, Lagos, Nigeria.

The road to Corporate Social Responsibility (CSR) has been a challenge for many businesses, both internationally and domestically. CSR is a concept best understood in practice, when affected communities feel the impact of non-profit activities. Part of this new CSR approach, as popularised by John Elkington, has become the Triple Bottom Line.

In 1970, free-market advocate Milton Friedman wrote that the only social responsibility of any business is to increase profits. Today, companies concerned about stock prices, stakeholder pressure or government regulation have begun to embrace CSR as a part of good Corporate Governance. But there are crucial differences between Corporate Governance and CSR. 

Corporate Governance is about how a company is run. It includes not just how a company is directed and controlled, but also how a company is performing, how the performance can be enhanced, and how a company should account to interested parties such as shareholders and employees. Traditionally, the focus is internal, usually bolstered by regulation. For example, under Nigeria’s Securities and Exchange Commission (SEC) Code of Corporate Governance for publicly listed companies, companies are expected to include a report of their compliance with the Corporate Governance guide in their annual reports. There leaves a lot to be desired in implementation of good Corporate Governance, but the wheels are in motion.

On the other hand, CSR is a beast of its own. Unlike Corporate Governance, it is self assessing, and requires the company to internally consider the social impacts of its actions and adhere to ethical and environmental standards. Nigerian companies do poorly with CSR, and this is a wider problem reflected in our communal attitudes towards the sources of development. As a political economy, there is a tendency to look to governmental solutions for everyday problems, regardless of other possible mechanisms available for resolving such challenges. This mental vacuum must be aggressively challenged by businesses, especially where companies have influential links to communities or local pressure groups.

Nigeria’s history of Corporate Social Responsibility is a sorry tale of abandonment, dating back to the influence of oil multinationals in protecting Niger Delta communities. The infamous case of Ken Saro Wiwa and the Ogoni Nine represents the lowest point of distrust between local communities and the businesses operating in those regions. Ken Saro Wiwa’s trial and execution raised questions about the relationships between local communities and companies operating in those regions, questions which have still not been sufficiently answered. CSR encourages companies to entrench values into their business plans that take into account their roles as influential organisations. Although profit is king, good CSR requires companies to share the concerns of the people negatively affected by their actions – a tough ask for companies that only focus on their bottom lines.

So what can Nigerian CSR do differently?

The triple bottom line (TBL) is a unique approach to company management. If it is true that what you measure is what you get, because what you measure is what you are likely to pay attention to, then measuring the impacts of companies’ activities outside profits becomes a prerequisite for CSR.

TBL attempts to aggregate financial, social and environmental impacts, but the real trick is in measuring the non financial aspects. According to the TBL, the first focus of any company is guaranteeing its financial success, but the best companies are those whose employees find more reward in their experience than their salaries. The second focus is on social issues like training and development, welfare and career retention or charitable contributions to affected communities. As with most business decisions, the directors are responsible for deciding which non-commercial objectives fit in best with the company’s financial goals.

Finally, TBL focuses on environmental impacts, a particularly sore topic in polluted South-South regions of the country. Oil spillages, water consumption, gas flaring and greenhouse gas emissions are issues more commonly discussed in tabloids and TV interviews than in the boardroom of companies. TBL requires an understanding of these impacts, pushing companies to engage with such activities in a productive manner.

Nigerian working conditions have left most employees wanting, with directors demonstrating a marked inability to empathise with the plight of their workers. This extends from domestic workers in the home, to trade unions and lobbyists in influential companies. CSR is especially important to growing companies because directors are given the opportunity to incorporate such values into their businesses at an early stage. But this should not be understood as blind implementation of foreign CSR values in Nigeria – we must develop ours. 

Corporate Governance is already an ongoing Nigerian conversation, bolstered by domestic and international regulation. The same cannot be said for CSR. Considering the potential and actual impacts that Nigerian companies have on their local communities, the case cannot be made any clearer – it is time to step up and shift CSR to the centre of our business agenda.

 

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Timeyin Preston Ideh

Timeyin Preston Ideh

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