CSRFiles Edition 2 by ThistlePraxis Consulting Journals

PROMOTING DISCUSSIONS ON SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY ACROSS THE AFRICAN CONTINENT VOL1, ISSUE 2, 2011 N 750 . 00 NGN $5 . 00 USD £3 .00 GBP

from thought to action

Feature

Areas for Added CSR Commitment in Sub-Saharan Africa

Cover Story FROM THOUGHT TO ACTION: Now that I understand what CSR is all about, what next?

column Moving from rhetoric to action

In Print Environmental Assessment of Ogoniland

special report

2011 Africa CEO Roundtable/ Conference on CSR

EDITORIAL PUBLISHER Ini Onuk

LET’S TAKE ACTION!

he reviews we received for the maiden edition of CSR Files™ were no doubt, encouraging even as it reiterated the need to steer the discourse and engage the increasingly relevant voices that have so far emerged on CSR and Sustainability in Africa. Our second edition is themed, ‘From Thought to Action: Now that I understand what CSR is all about, what next?’ this follows our previous edition, where we thoroughly examined the concept of Corporate Social Responsibility within the African business environment and made several business cases for the integration of CSR into core business policies and blueprints. Here, we intend to walk practitioners and interested individuals a step further from having a mere understanding of the concept to how to practically engage the process of defining their organisation’s CSR policies. Wayne Visser helps us to achieve this in a very detailed and explicit cover article. Our Special Report features an indigenous and bold attempt to create a platform for the discourse of Sustainability issues in Africa, The Africa CEO Roundtable & Conference on Corporate Social Responsibility (AR-CSR™); a ThistlePraxis Consulting initiative, which held in June 2011. We also review another report by the United Nations Environment Programme (UNEP) on the Niger Delta’s Ogoniland. Our underlying aim remains a clear-cut intention to define and somewhat, redefine the concept and practice of CSR situated in this context within the African Business Environment. We will be pleased to discuss passionately and disagree with a free hand for opinion pieces and rebuttals. I must congratulate our Lead Consultant & CEO, Ini Onuk on her invitation to the World Entrepreneurship Forum 2011 as a ThinkTank Member. As she continues to champion the inclusion of Corporate Social Responsibility in core business strategy formulation and execution within the continent and beyond, we are convinced the effects of Sustainability will become more evident in the African Business Environment in a short while. Please send all comments, enquiries, requests and reviews to the Editorial team: csrfiles@thistlepraxisconsulting.com or to me directly: emilia@thistlepraxisconsulting.com. Please remember this is an open, unending conversation which would not be possible without your opinion. I look forward to reading from you and do hope you enjoy this edition.

Regards,

Emilia emilia@thistlepraxisconsulting.com

EDITOR-IN-CHIEF Emilia Asim–Ita COPY EDITOR Amarachukwu Iwuala CONTRIBUTORS Julius Che Tita Wayne Visser Uwem E. Ite Obinna Igwebuike Craig Smith Ini Onuk RESEARCH Amarachukwu Iwuala Oyewale Oketunji DESIGN Diana Ubah Unit 3 Designs ADMINISTRATION Emeka Uwanna Ife Aderoju EDITORIAL CONSULTANCY A’Lime Media Limited

PUBLISHED BY: ThistlePraxis Consulting Limited: 81b, Lafiaji Way,Dolphin Estate, Ikoyi, Lagos, Nigeria. www.thistlepraxisconsulting.com csrfiles@thistlepraxisconsulting.com info@thistlepraxisconsulting.com

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Cover Image: www.gettyimage.com

PUBLISHER’S NOTE benefit the business while making an impact in society. Many more organizations have fallen into the trap of “strategic philanthropy” and “cause-related marketing” – all of which fall short of any core social impact. Rather, they lend more credence to publicity for the organization. The emphasis on any sustainable CSR initiative should be to address important social and economic goals while concomitantly targeting areas of competitive advantage where the organization and society benefit. Businesses must begin with an Impact Assessment of where they are right now, what strategies should be in place for a clearly defined and efficient Sustainability Plan as well as engage the right minds and stakeholders for initiatives with clear benefits rather than green washing. There must be a deliberate move from charitable causes to more strategic CSR approaches. There must be a culture change within organizations, which involves a greater internal appreciation of the strategic opportunities of CSR; improved planning and programme management that assess performance against cost. In other words, what is the return on investment or value for money? Of course, there should be more compelling communication both internally (employees, management, board) and externally (reported data and the credibility of the same; increased transparency and the evidence of impact of initiatives).

omewhere in my very many readings, I have learned that what you think can sometimes (maybe many more times) not be what you want to do or would eventually do at all. As the discourse on Corporate Social Responsibility and Sustainability gains momentum, so many apostles and prophets have appeared with different methods and ways of spreading the message, but, of course, carrying the same message. Going from an understanding of what all these issues are and truly taking action are poles apart, particularly in Africa. We are yet to understand the enormity of the change that we seek and

we do little to seek pragmatic/effective ways to ensure that issues of Sustainability are on the front burner of our engagements as businesses – small, medium or large and as individuals. The questions that constantly seek to derail the action train range from: What causes should we align with? How do we measure/audit the impact of our CSR initiatives so far? How do we derive value for the organization in all the expenditure on CSR? Are we working with the right implementation partners? In truth, most companies feel compelled to “do” CSR, but lack a clear understanding of what it entails and how it can become sustainable initiatives that

At ThistlePraxis Consulting, we take you through a process: from a CSR Assessment to what your CSR Objectives should be, thereby helping you create a CSR Strategy; which you implement and we review. These give your organization a world class standard in ensuring sustainable practices. It is important that as we move from Thought to Action, we must also move from the bare essentials to the core of the business. I welcome you to this edition and do hope that as we broaden these discussions, you will take advantage of the excellent contributions from our various experts, practitioners and intellectuals so that together, we would engage Africa for the better. Sustainably Yours,

Ini Onuk Publisher

VERBATIM

PUTTING CORPORATE SOCIAL RESPONSIBILITY TO PRACTICE ... Linda Qian CSR Communications at Intel

Satyanarayana Rudra G.M. (Mines) in a reputed organization, Karimnagar Area, India

Rajat Panwar Chapple Chair and Assistant Professor of Social Responsibility), Northland College, Wisconsin, USA.

At Intel, we use the objective “Care for our people and planet, and inspire the next generation” I think this really encompasses the whole idea of CSR in simple terms. You need to consider social and environmental impacts of your actions in the present AND future.

Definitely it is a commitment by a corporate firm in lieu of the benefits/earnings; it is getting through to people/society by setting up industries. This commitment should be honest & reach the much needed groups and contribute to the overall development of society.

CSR is a two-stage consideration of the imapct of business on society. First, it means being responsive to social and environmental wellbeing in the course of conducting business. Second, it refers to philanthropic contributions that business may use in order to propmote broader well being. So, it relates to both how businesses earn as also to how they spend.

Judith Cousin Director, The Business Community Partnership, United Kingdom

Dinesh Singh Co-ordinator, Kanpur Parivartan Forum, India

Jan Pieter Six CEO, SIX*CSR Consulting, Netherlands

I like this definition from Rob Challis - “Corporate Social Responsibility is the discipline by which responsible behaviour is evidenced and quantified to stakeholders. In doing so, their trust in and commitment to the business and confidence in its brand is built and sustained”.

CSR, to me, is commitment of profit making organizations to remit back to society/groups so that a positive changes arrives in the lives of the masses.

My advice would be to avoid new definitions of CSR. An excellent and widely accepted definition can be found in the brand-new ISO 26000.

Stephanie Sharma Strategic Consultant, Lead the Difference, Seattle, USA

Carlos Viesca Lobatón Chief Sustainability Officer/ Chief Scientific Advisor, DESUS, Mexico

Melanie Brooke-Lander, CSR-P Director HSE Programs and Corporate Social Responsibility, Baker Hughes Incorporated, Texas, USA.

If integration and incorporation into the “way a firm does business” is believed to be core to CSR, then the executive leadership team must lead according to this additional value. This may require an additional stream of information, education and accountability to ensure executive leadership incorporates CSR into business priorities and operations, across time.

…secure loyalty from internal and external stakeholders by incorporating human development to the value chain of companies.

...the consideration of the social and environmental impacts, not only the financial impacts of our business decisions and actions. It encompasses the concept of Sustainability and should result in benefits to society, the environment and the company.

Source: www.iso.org

FAQs

UNDERSTANDING

26000 WHAT IS ISO 26000? ISO 26000 is an International Standard (by the International Standards Organisation, ISO) created to guide organisations on Social Responsibility. It is drawn up to provide support or a reference for all kinds of organisations in both the private and public sectors whether in the developed and developing countries as well as those who may be referred to as ‘being in transition’. Instead of a law or an index, this document provides a mere guide to complement the diverse efforts of organisations all over the world in attaining Social Responsibility. ISO also likes to note that the ISO 26000 document only contains a voluntary guidance, not requirements. Therefore, it should not be used as a certification standard like ISO 9001:2008 and ISO 14001:2004. WHAT MAKES THIS STANDARD DIFFERENT FROM OTHERS? Sustainability in business enterprises involves all the efforts and activities (both internal and external), which ensure that an organisation operates in a socially responsible manner. With increasing pressure from all stakeholders, there is the need to develop standards and benchmarks on credible business practices at all time. Since many experts across the board agree that CSR or SR or CR – all mean different things and vary from organisation to organisation; the ISO 26000 provides a rallying point for all kinds of organisations – especially private and public enterprises as well as large corporations, small and medium-sized enterprises, public administrations and government agencies. The contents of this document is simple and easy to un-

derstand – even for non-specialists or practitioners of CSR. This standard complements the many other high-level declarations, conventions and individual CSR or SR initiatives that have been established, adopted or imbibed by organisations. Thus, the guide provides a plan to implement these lofty ideas What also stands ISO 26000 out is the amount of input and work from ISO’s far-reaching networks and nationalmember organisations. ‘ISO’s expertise is in developing harmonized international agreements based on double levels of consensus – among the principal categories of stakeholders, and among countries (ISO is a network of the national standards bodies of 163 countries).’ Therefore, ISO can and should be trusted to ‘distil a globally-relevant understanding of what Social Responsibility is and what organizations need to do to operate in a socially responsible way’. WHAT DOES THIS STANDARD COVER? The contents of ISO 26000 are summarised as follows: Scope, Terms and Definitions of Social Responsibility, Understanding Social Responsibility, Principles of Social Responsibility, Recognizing Social Responsibility and engaging stakeholders, Guidance on Social Responsibility core subjects, Guidance on integrating Social Responsibility throughout an organization and examples of voluntary initiatives and tools for Social Responsibility. HOW WAS THIS DEVELOPED & HOW DO I TRUST ITS CREDIBILITY/EXPERTISE? The membership of the ISO/WG SR was

the largest and the most broadly-based in terms of stakeholder representation of any single group formed to develop an ISO standard. Six main stakeholder groups were represented: industry; government; labour; consumers; Non-Governmental Organizations; service, support, research and others, as well as a geographical and gender-based balance of participants. Under the joint leadership of the ISO members for Brazil (ABNT) and Sweden (SIS), it was made up of experts from ISO members (National Standards Bodies – NSBs) and liaison organizations (associations representing business, consumers, labour, inter-governmental or Non-Governmental Organizations). Membership was limited to a maximum of six experts per NSB and two experts per liaison organization. In July 2010, the ISO/WG SR had 450 participating experts and 210 observers from 99 ISO member countries and 42 liaison organizations. The ISO nationalmember bodies (NSBs) of 83 countries nominated experts to participate whilst the ISO members of 16 countries observed the work of the ISO/WG SR. About 42 organizations had liaison status with the ISO/WG SR and nominated experts to participate in its work. NB: The International Standard, ISO 26000:2010, Guidance on Social Responsibility, provides harmonized, globally-relevant guidance for private and public sector organizations of all types based on international consensus among expert representatives of the main stakeholder groups, thereby encouraging the implementation of best practices in Social Responsibility worldwide.

FEATURE

Areas for Added CSR Commitment in sub-Saharan Africa Julius Che Tita

Source: www.connectedprincipals.com

ublic Relations practitioners for TransNational Corporations (TNCs) face the unenviable task of simultaneously responding to the expectations of diverse stakeholders present in their host and home environments as their corporations expand abroad. Globalization has facilitated the establishment of foreign subsidiaries as a result of the proliferation of global and regional economic unions; faster, easier and cheaper transportation; and technological advances in communication and information processing (Daniels, Radebaugh, & Sullivan, 2009). The increase in international business has also been marked by deteriorating global environmental conditions and a noticeable decline in the social and economic circumstances of the communities that harbour these new extensions especially in developing countries. The rich natural resources and the cheap labour present in the Sub-Saharan region offer TNCs a likely destination for 10

international expansion. The ill effects of globalization in the Sub-Saharan African region following the increasing establishment of new subsidiaries have been more dramatic because of the existing poor socio-economic conditions, which are prevalent. Corporate Social Responsibility (CSR) offers the opportunity for TNCs to justify their existence, improve their image and build relationships with their local communities. CSR is demanded from TNCs because corporations were originally given the permission to perform specific functions with the understanding that they bore the interest of the public in mind (Starck & Kruckeburg, 2003). They believe it is the role of Public Relations to ensure discussion and deliberation with communities that are increasingly diverse to ensure that the views of the majority are not perpetuated at the expense of the few. CSR offers Public Relations the possibility â&#x20AC;&#x153;to

restore and maintain the sense of community that has been lost in contemporary societyâ&#x20AC;? (Kruckeberg & Starck, 1988, quoted in Starck & Kruckeberg, 2003, p. 34) especially because they possess the knowledge and skills to achieve this. Menand (2001) confirms this responsibility of Public Relations in that corporations were considered as individuals when they were attributed these rights to perform business functions and the understanding was that these rights were not for personal benefit, but for the good of society. This paper highlights the areas that need further attention in Sub-Saharan Africa, following a qualitative and quantitative study of the coordination of CSR by 45 TNCs in Cameroun. Both the qualitative and quantitative research findings indicated that formalization was the most popular coordination mechanism used by TNCs in Cameroun with a lesser use of socialization and little evidence of

FEATURE centralization. The study also found out that the international business strategy of the TNCs was not related to the importance of local CSR issues. Positive associations were found between transnational, multinational and international business strategies and local CSR. Positive associations were also found between the multinational business strategy and global CSR. The findings of both the qualitative and quantitative research confirm that adequate financial and human resources were not put at the service of CSR in TNCs in Cameroun. Although the CSR motivations of the TNCs strongly favoured business and moral motives, the moral motives outweighed those of business. The quantitative data from the study failed to support the relationship between subsidiary role and importance with the use of coordination mechanisms. Additionally, the study discovered that government regulations, social organizations and the political environment provided no environmental pressure on the corporations in the formulation of the CSR initiatives. Besides the findings of the study, there was evidence that there were other

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For CSR to be relevant to the local community, there must be engagement of the local stakeholders in the formulation, implementation, and evaluation process. The prevailing socio-political and economic conditions in Africa together with the effects of globalization have led to a lot of poverty, political conflict, rising crime, power shortages, bribery, and corruption ... The UN Millennium Development Goals have identified the need to ameliorate the situation of poverty and hunger ...

areas of attention, especially the importance of involving the local community in decision-making; the need for formally-reporting CSR; the need for more CSR research cooperation by organizations; and awareness of the possible Public Relations implications of a less strategic implementation of CSR.

Participation of the Local Community in CSR Decision Making If Public Relations is the relationship building and cultivation discipline that facilitates communication with stakeholders to ensure the understanding of ideas, ideals, and culture (Starck & Kruckeberg, 2003; Wilcox, Cameron, Ault, & Agee, 2006), giving credibility and power to organizations by legitimating its work; CSR provides the vehicle for TNCs to justify their existence, improve their reputation, and cultivate relationships with local communities. Looking at the coordination of CSR by TNCs showed how responsibilities were shared between the parent company and the subsidiary. For CSR to be relevant to the local community, there must be engagement of the local stakeholders in the formulation, implementation, and evaluation process. The prevailing socio-political and economic conditions in Africa together with the effects of globalization have led to a lot of poverty, political conflict, rising crime, power shortages, bribery, and corruption (Forje, 2006; Visser, 2008). The UN Millennium Development Goals have identified the need to ameliorate the situation of poverty and hunger; universal primary education; gender inequality; child mortality; maternal health; HIV/AIDS, malaria, and other diseases; and environmental sustainability in this region. Besides, development experts see CSR as a potential, pivotal and powerful prospect to immensely curtail these difficult conditions in the region and generate development (Blowfield, Frynas, 2005; Fox, 2004; Fox, Ward, & Howard, 2002).

(p. 124); highlights the importance of the process by which CSR decisions are taken and the importance of participation and relationships that is central to Public Relations. Participation is the amount of input provided by the beneficiaries or target community in the decision making process and in the implementation of development programmes in their various communities (Melkote & Steeves, 2001). It involves the collaboration of the beneficiaries in terms of ideas and execution. The argument for locating CSR in the Pubic Relations department is because of its skill and ability to facilitate internal and external communication in an organization (Bowen, 2006) as well as the ability of Public Relations to carry out environment analyses of stakeholders, assess their needs and devise strategies on how to communicate and build relationships with them whilst securing the support of senior management (Clark, 2000). TNCs have been known to wield enormous power and influence in developing countries and this has generated much resentment from within and without their local environment. It is therefore in the interest of TNCs to show their engagement with the local community. In the course of the study, there was a marked absence of local consultation in the formulation, implementation and evaluation of CSR activities. It is for the above reasons that an examination of how effectively TNCs in this region engage the beneficiaries in the formulation, implementation, and evaluation of their CSR activities is urgent considering the serious development capacity of these efforts. Rigour is required in the formulation, implementation, and evaluation of strategic CSR justifies McKinsey CEO, Ian Davis, observation that CSR “represents a strategic opportunity as well as a set of obligations, and that MNEs would be well advised to analyze CSR issues and opportunities with the same tools and skills they apply to market strategy”. (Oppenheim, Bonini, Bielak, Kehm, & Lacy, p. 87)

For the potential of this private sector partnership in alleviating development in this region to be felt, the participation of the stakeholders is a sine qua non. Bazu and Palazzo’s (2008) definition of CSR; as “the process by which managers within an organization think about and discuss relationships with stakeholders as well as their roles in relation to the common good along with their behavioral disposition with respect to the fulfillment and achievement of those roles and relationships”

Formal and Reliable CSR Reporting Public Relations contributes in the communication of CSR activities of clients and organizations (Kim & Reber, 2008). The communication of CSR is important not only to improve the reputation of the corporation but also to provide information, on which subsequent research can be based. In the study of coordination of CSR activities in Cameroun, evidence on the field showed that little of the activities of the corporations was documented. While there

Areas for Future Attention

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FEATURE

Source: www.meship.com

was one corporation in the qualitative study that had an excellent quarterly publication that condensed its CSR activities, and another with an annual CSR publication, most others limited the documentation of their CSR activities within internal communication channels. For one of the respondents, it was official policy not to disseminate their activities outside the corporation. One participant acknowledged the low concern for communication of CSR activities to the public, claiming it could raise expectations from communities when their capacity to provide for them was limited. For others, the official CSR report of the parent company was all they could show and this publication did not mention the activities of the subsidiary. Most importantly, communication of the CSR activities is needed for accuracy. During the fieldwork, there was evidence that some of the information provided during the interviews by some corporations did not match with the information that was recorded on the questionnaires for the same corporations. Communication helps to assure transparency about CSR performance. The GRI sees a need for corporations to report their Sustainability performance because it helps to compare the performance of corporations. More daunting is the prospect that with the full autonomy witnessed with locally generated CSR, in addition to the pressure mounted by influential individuals on corporations and the always present possibility of unethical behaviors by both top and middle management in corporations, there is always the possibility that allocations for CSR could be badly managed at best or not used at all in the worst case scenario. This may 12

explain the reticence of some corporations towards the study. Research on the communication of CSR would paint a better picture of the situation in Cameroun and maybe, provide an informed basis for making intelligent recommendations on the implementation of CSR. Defining CSR to Facilitate Implementation CSR is based on the simple idea that corporations have responsibilities that transcend their desire to make profit. Undoubtedly, CSR makes sense and means something to everybody, but there is no unanimity of what it means to various people, because there is no agreed universal definition (Scherer & Palazzo, 2008). Okoye (2009) claimed that identifying and defining what this simple idea means is open to contest. CSR is an essentially contested concept with lack of agreement, ranging from its meaning, how it should be performed and the areas which it covers. Carroll (1999) identified and discussed 25 different conceptual definitions of CSR from academic literature. Although the importance of CSR is no longer debated, how it is performed is closely linked to what it means to those who engage in it. The development of CSR has been greatly influenced by what people perceive it to mean. It also has or should have a relationship with the immediate socio-economic and political environment, in which it is being practiced. Presently, despite initial attempts by African scholars to define CSR (Akpan, 2006; Amaeshi, Adi, Ogbechie, & Amao, 2006), their models and theories are heavily embedded in Western democratic-capitalist institutional frameworks (Godfrey & Hatch, 2007). There is a need to define CSR that takes the

African society, economy, politics and culture into account. Although a new concept in this region, there is need for a common ground for effective implementation without which applicable regulation becomes difficult. Improved Research Cooperation Required from TNCs Considering the difficulties in data collection facing this study, plus the importance of Public Relations and CSR of TNCs in this region, it would be fundamental to examine why there was a committed lack of cooperation from the corporations. During the qualitative research, the researcher found nonAfrican and non-Asian respondents more candid, welcoming and corporative with the research. It took less time to recruit them, their interviews lasted longer because they were more open and willing to attend to all the research questions. This cooperative attitude was lacking in the Camerounian respondents. A study on organizational research issues in this region will provide guidance to facilitate future data collection so that the limitations experienced by the study, regarding the low response rate could be ameliorated for better generalizations about studies of TNCs in this region. Granted that the CSR management processes of TransNational Corporations are important for theory building and in practice, only when researchers can gain access to these corporations can this effort be accomplished.

Julius Che Tita, PhD University of Florida To be continued in the next issue

COVER STORY

Source: www.gettyimage.com

FROM THOUGHT TO ACTION Now that I understand what CSR is all about, what next? Wayne Visser

he first task is to get leadership support and understanding. Ideally, you would hold a strategy session with senior management that examines the social, environmental and governance trends, and articulates how the company wants to position itself to minimize the risks and maximize the opportunities. After establishing a bold and inspiring vision (such as Walmart aiming for 100% renewable energy and Unilever planning to double in size and halve its environmental footprint), this can be turned into a management programme with policies, objectives, targets, training, reporting, auditing, etc.

COVER STORY

CSR has undoubtedly had many positive impacts, for communities and the environment. Yet, its success or failure should be judged in the context of the total impacts of business on society and the planet. Viewed this way, as the evidence already cited shows, on virtually every measure of social, ecological and ethical performance we have available, the negative impacts of business have been an unmitigated disaster, which CSR has completely failed to avert or even substantially moderate. The Failure of CSR Why has CSR failed so spectacularly to address the very issues it claims to be most concerned about? In my view, this comes down to three factors – call it the Triple Curse of Modern CSR, if you like: Curse 1: Incremental CSR One of the great revolutions of the 1970’s was total quality management, conceived by American statistician, W. Edwards Deming, and perfected by the Japanese before being exported around the world as ISO 9001. At the very core of Deming’s TQM model and the ISO standard is continual improvement, a principle that has now become ubiquitous in all management system approaches to performance. It is no surprise, therefore, that the most popular environmental management standard, ISO 14001, is built on the same principle. There is nothing wrong with continuous improvement per se. On the contrary, it has brought safety and reliability to the very products and services that we associate with modern quality of life. But when we use it as the primary approach to tackling our social, environmental and ethical challenges, it fails on two critical counts: speed and scale. The incremental approach to CSR, while replete with evidence of micro-scale/gradual improvements, has completely and utterly failed to make any impact on the massive Sustainability crises that we face, many of which are getting worse at a pace that far outstrips any futile CSR-led attempts at amelioration. 16

Curse 2: Peripheral CSR Ask any CSR manager what their greatest frustration is and they will tell you: lack of top management commitment. This is ‘code-speak’ for saying that CSR is, at best, a peripheral function in most companies. There may be a CSR manager, a CSR department even, a CSR report and a public commitment to any number of CSR codes and standards. But these do little to mask the underlying truth that shareholder-driven capitalism is rampant and its obsession with short-term financial measures of progress is contradictory in almost every way to the long-term, stakeholder approach needed for high-impact CSR. The reason Enron collapsed, and indeed why our current financial crisis was allowed to spiral out of control, was not because of a few rogue executives or creative accounting practices, it was because of a culture of greed embedded in the DNA of companies and the financial markets. Whether you agree or not (and despite the emerging research on ‘responsible competitiveness’), it is hard to find any substantive examples, in which the financial markets consistently reward responsible behaviour. Curse 3: Uneconomic CSR This brings us to Curse 3. If there was ever a monotonously repetitive, stuck record in CSR debates, it is the one

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The incremental approach to CSR, while replete with evidence of micro-scale/gradual improvements, has completely and utterly failed to make any impact on the massive Sustainability crises that we face, many of which are getting worse at a pace that far outstrips any futile CSRled attempts at amelioration.

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Why is all this potted history of CSR important in a discussion about the future? Well, first, we must realise that CSR is a dynamic movement that has been evolving over decades, if not centuries. Second, and perhaps more importantly, we must acknowledge that, despite this seemingly impressive steady march of progress, CSR has failed.

about the so-called ‘business case’ for CSR. That is because CSR managers and consultants, and even the occasional saintly CEO are desperate to find compelling evidence that ‘doing good is good for business’, i.e. CSR pays. The lack of corroborative research seems to be no impediment for these desperados, endlessly incanting the motto of the business case, as if it were an entirely self-evident fact. The rather more ‘inconvenient truth’ is that CSR sometimes pays, in specific circumstances, but more often does not. Of course, there are low-hanging fruit – like eco-efficiencies around waste and energy – but these only go so far. Most of the hard-core CSR changes that are needed to reverse the misery of poverty and the sixth mass extinction of species currently underway require strategic change and massive investment. They may very well be lucrative in the long term, economically rational over a generation or two, but we have already established that the financial markets do not work like that; at least, not yet. CSR 1.0: Burying the Past What would be far more productive than all this wishing and pretending that CSR is good for everyone and will help to solve the world’s problems is to simply see it for what it is: an outdated, outmoded artifact that was once useful, but the time for which has past. We need to let the ‘old CSR’ die gracefully and give it a dignified burial. By all means, let us give it the respect it deserves – a fitting eulogy about brave new frontiers of responsibility that it conquered in its heyday. But then, let us look for the next generation of CSR – the newborn that will carry the torch forward. If we succeed in admitting the failure of CSR and burying the past, we may find ourselves on the cusp of a revolution, in much the same way as the internet transitioned from Web 1.0 to Web 2.0. The emergence of social media networks, user-generated content and open source approaches are a fitting metaphor for the changes CSR will have to undergo if it is to redefine its contribution and make a serious impact on the social, environmental and ethical challenges the world faces. For example, in the same way that Web 1.0 moved from a one-way, advertisingpush approach to a more collaborative Google-Facebook mode, CSR 1.0 is starting to move beyond the outmoded approach of CSR as philanthropy or

COVER STORY Public Relations (which has been widely criticised as ‘green wash’) to a more interactive, stakeholder-driven model. Similarly, while Web 1.0 was dominated by standardised hardware and software, but now encourages co-creation and diversity, so too in CSR, we are beginning to realise the limitations of the generic CSR codes and standards that have proliferated in the past 10 years. CSR 2.0: Embracing the Future If this is where we have come from, where do we need to go? Let us explore , in more detail, this revolution that will, if successful, change the way we talk about and practice CSR and, ultimately, the way we do business. There are five principles that make up the DNA of CSR 2.0: Creativity (C), Scalability (S), Responsiveness (R), Glocality (2) and Circularity (0). The 5 Principles of CSR 2.0 are a way to test all new CSR programmes: Are they creative, scalable, responsive, global and circular? If not, do not do them. The 4 DNA Elements are translated in Key Performance Areas for the business enterprise. E.g. if inclusive business is part of the economic development goal, you can set about quantifying the shared value through an economic value added statement, and measures of income disparity in the business; similarly, for good governance, societal contribution and ecological integrity. Principle 1: Creativity (C) In order to succeed in the CSR revolution, we will need innovation and creativity. We know from Thomas Kuhn’s work on The Structure of Scientific Revolutions that step-change only happens when we can re-perceive our world, when we can find a genuinely new paradigm, or pattern of thinking. This process of ‘creative destruction’ is today a well accepted theory of societal change, first introduced by German sociologist, Werner Sombart, and elaborated and popularised by Austrian economist Joseph Schumpeter. We cannot, to paraphrase Einstein, solve today’s problems with yesterday’s thinking. Business is naturally creative and innovative. What is different about the Age of Responsibility is that business creativity needs to be directed to solving the world’s social and environmental problems. Apple, for example, is highly creative, but their iPhone does little to tackle our most pressing societal needs. By contrast, Vodafone’s MPESA innovation by Safaricom in Kenya,

which allows money to be transferred by text, has empowered a nation in which 80% of the population have no bank accounts and where more money flows into the country through international remittances than foreign aid. Or consider Freeplay’s innovation, using battery-free wind-up technology for torches, radios and laptops in Africa, thereby giving millions of people access to products and services in areas that are off the electricity grid. All of these are part of the exciting trend towards social enterprise or social business that is sweeping the globe, supported by the likes of American Swiss entrepreneur Stephen Schmidheiny, Ashoka’s Bill Drayton, e-Bay’s Jeff Skoll, the World Economic Forum’s Klaus Schwabb, Grameen Bank’s Muhammad Yunus and Volans Venture’s John Elkington. It is not a panacea, but for some products and services, directing the creativity of business towards the most pressing needs of society is the most rapid, scalable way to usher in the Age of Responsibility. Principle 2: Scalability (S) The CSR literature is liberally sprinkled with charming case studies of truly responsible and sustainable projects and a few pioneering companies. The problem is that so few of them ever go to scale. It is almost as if once the sound-bites and PR-plaudits have been achieved, no further action is required. They become shining pilot projects and best practice examples, tarnished only

by the fact that they are endlessly repeated on the CSR conference circuits of the world, without any vision for how they might transform the core business of their progenitors. The Sustainability problems we face, be they climate change or poverty, are at such a massive scale, and are so urgent, that any CSR solutions that cannot match that scale and urgency are red herrings at best and evil diversions at worst. How long have we been tinkering away with ethical consumerism (organic, fairtrade and the like), with hardly any impact on the world’s major corporations or supply chains? And yet, when Walmart’s former CEO, Lee Scott, had his post-Katrina Damascus experience and decided that all cotton will be organic and all fish MSC-certified, then we started seeing CSR 2.0-type scalability. Scalability is not limited to the retail sector. In financial services, there have always been charitable loans for the world’s poor and destitute. But when Muhammad Yunus, in the aftermath of a devastating famine in Bangladesh, set up the Grameen Bank and it went from a one $74 loan in 1974 to a $2.5 billion enterprise, spawning more than 3,000 similar microcredit institutions in 50 countries reaching over 133 million clients, which is a lesson in scalability. Or contrast Toyota’s laudable, but premium-priced hybrid Prius for the rich and eco-conscious with Tata’s $2,500 Nano, a cheap and eco-friendly car for

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COVER STORY

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the masses. The one is an incremental solution with long term potential; the other is scalable solution with immediate impact. Principle 3: Responsiveness (R) Business has a long track-record of responsiveness to community needs – witness generations of philanthropy and heart-warming generosity following disasters like 9/11 or the Sichuan Earthquake. But this is responsiveness on their own terms, responsiveness when giving is easy and cheque-writing does nothing to upset their commercial applecart. The severity of the global problems we face demands that companies go much further. CSR 2.0 requires uncomfortable, transformative responsiveness, which questions whether the industry or the business model itself is part of the solution or part of the problem. When it became clear that climate change posed a serious challenge to the sustainability of the fossil fuel industry, all the major oil companies formed the Global Climate Coalition; a lobby group explicitly designed to discredit and deny the science of climate change and undermine the main international policy response, the Kyoto Protocol. In typical CSR 1.0 style, these same companies were simultaneously making hollow claims about their CSR credentials. By contrast, the Prince of Wales’s Corporate Leaders Group on Climate Change has, since 2005, been lobbying for bolder UK, EU and international legislation on climate change, accepting 18

that carbon emission reductions of between 50-85% will be needed by 2050. CSR 2.0 responsiveness also means greater transparency, not only through reporting mechanisms like the Global Reporting Initiative and Carbon Disclosure Project, but also by sharing critical intellectual resources. The Eco-Patent Commons; set up by WBCSD to make technology patents available without royalty and to help reduce waste, pollution, global warming and energy demands; is one such step in the right direction. Another is the donor exchange platforms that have begun to proliferate, allowing individual and corporate donors to connect directly with beneficiaries via the web, thereby tapping ‘the long tail of CSR’. Principle 4: Glocality (2) The term glocalization comes from the Japanese word dochakuka, which simply means global localization. Originally referring to a way of adapting farming techniques to local conditions, dochakuka evolved into a marketing strategy when Japanese businessmen adopted it in the 1980’s. It was subsequently introduced and popularised in the West in the 1990’s by Manfred Lange, Roland Robertson, Keith Hampton, Barry Wellman and Zygmunt Bauman. In a CSR context, the idea of ‘think global, act local’ recognises that most CSR issues manifest as dilemmas, rather than easy choices. In a complex, interconnected CSR 2.0 world, companies (and their critics) will have to become far more sophisticated in understanding local

contexts and finding the appropriate local solutions they demand, without forsaking universal principles. For example, a few years ago, BHP Billiton was vexed by their relatively poor performance on the (then) Business in the Environment (BiE) Index run by UK charity, Business in the community. Further analysis showed that the company had been marked down for their high energy use and relative energy inefficiency. Fair enough. Or was it? Most of BHP Billiton’s operations were, at that time, based in Southern Africa, home to some of the world’s cheapest electricity. No wonder this was not a high priority. What was a priority, however, was controlling malaria in the community, where they had made a huge positive impact. But the BiE Index didn’t have any rating questions on malaria, so this was ignored. Instead, it demonstrated a typical, Western-driven, one-size-fitsall CSR 1.0 approach. Carroll’s CSR pyramid has already been mentioned. But in a sugar farming cooperative in Guatemala, they have their own CSR pyramid – economic responsibility is still the platform, but rather than legal, ethical and philanthropic dimensions, their pyramid includes responsibility to the family (of employees), the community and policy engagement. Clearly, both Carroll’s pyramid and the Guatemala pyramid are helpful in their own appropriate context. Hence, CSR 2.0 replaces ‘either/or’ with ‘both/and’ thinking. Both SA 8000 and the Chinese national labour standard have their

COVER STORY

Principle 5: Circularity (0) The reason CSR 1.0 has failed is not through lack of good intent, nor even through lack of effort. The old CSR has failed because our global economic system is based on a fundamentally flawed design. For all the miraculous energy unleashed by Adam Smith’s ‘invisible hand’ of the free market, our modern capitalist system is faulty at its very core. Simply put, it is conceived as an abstract system without limits. As far back as the 1960’s, pioneering economist, Kenneth Boulding, called this a ‘cowboy economy’, where endless frontiers imply no limits on resource consumption or waste disposal. By contrast, he argued, we need to design a ‘spaceship economy’, where there is no ‘away’; everything is engineered to constantly recycle. In the 1990s, in The Ecology of Commerce, Paul Hawken translated these ideas into three basic rules for Sustainability: waste equals food; nature runs off current solar income; and nature depends on diversity. He also proposed replacing our product-sales economy with a service-lease model, famously using the example of Interface ‘Evergreen’ carpets that are leased and constantly replaced and recycled. William McDonough and Michael Braungart have extended this thinking in their Cradle to Cradle industrial model. Cradle to cradle is not only about closing the loop on production, but about designing for ‘good’, rather than the CSR 1.0 modus operandi of ‘less bad’. Hence, CSR 2.0 circularity would, according to cradle-to-cradle aspirations, create buildings that, like trees, produce more energy than they consume and purify their own waste water; or factories that produce drinking water as effluent; or products that decompose and become food and nutrients; or materials that can feed into industrial cycles as high quality raw materials for new products. Circularity needn’t only apply to the environment. Business should be constantly feeding and replenishing its social and human capital, not only through education and training, but also by nourishing community and employee wellbeing. CSR 2.0 raises the 20

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The Sustainability problems we face, be they climate change or poverty, are at such a massive scale, and are so urgent, that any CSR solutions that cannot match that scale and urgency are red herrings at best and evil diversions at worst. How long have we been tinkering away with ethical consumerism (organic, fairtrade and the like), with hardly any impact on the world’s major corporations or supply chains?

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roles to play. Both premium branded and cheap generic drugs have a place in the solution to global health issues. CSR 2.0 is a search for the Chinese concept of a harmonious society, which implies a dynamic yet productive tension of opposites – a Tai Chi of CSR, balancing yin and yang.

importance of meaning in work and life to equal status alongside ecological integrity and financial viability. Shape-shifting: From CSR 1.0 to CSR 2.0 Now that you understand CSR 2.0, what should you do next? First, diagnose what stage of maturity at which your own CSR practice is. This can be achieved informally (using the concepts and examples explained above) or formally, using the CSR 2.0 Self-Assessment Diagnostic tool developed by CSR International and Hexagon. Then have an internal dialogue about how to move from the current stage through to higher levels of maturity, and ultimately to transformative CSR. For each CSR stage (philanthropic, promotional, strategic and systemic), there are best practices that can be studied and adapted to begin improvement. Although CSR specialists still have a role to play, each dimension of CSR 2.0 performance is embedded and integrated into the core operations of companies. Standardised approaches remain useful as guides to consensus, but CSR finds diversified expression and implementation at very local levels. CSR solutions, including responsible products and

services, go from niche ‘nice-to-haves’ to mass-market ‘must-haves’. And the whole concept of CSR loses its Western conceptual and operational dominance, giving way to a more culturally diverse and internationally applied concept. How might these shifting principles manifest as CSR practices? CSR will no longer manifest as luxury products and services (as with current green and fair-trade options), but as affordable solutions for those who most need quality of life improvements. Investment in self-sustaining social enterprises will be favoured over cheque-book charity. CSR indexes, which rank the same large companies over and over (often revealing contradictions between indexes) will make way for CSR rating systems, which turn social, environmental, ethical and economic performance into corporate scores (A+, B-, etc., not dissimilar to credit ratings), which analysts and others can usefully employ to compare and integrate into their decision making. Reliance on CSR departments will disappear or disperse, as performance across Responsibility and Sustainability dimensions are increasingly built into corporate performance appraisal and market incentive systems. Selfselecting, ethical consumers will become irrelevant, as CSR 2.0 companies begin to choice-edit, i.e. cease offering implicitly ‘less ethical’ product ranges, thus allowing guilt-free shopping. Postuse liability for products will become obsolete, as the service-lease and take-back economy goes mainstream. Annual CSR reporting will be replaced by online, real-time CSR performance data flows. Feeding into these live communications will be Web 2.0 connected social networks, instead of periodic meetings of rather cumbersome stakeholder panels. And typical CSR 1.0 management systems standards like ISO 14001 will be less credible than new performance standards, such as those emerging in climate change that set absolute limits and thresholds. CSR 2.0: The New DNA of Business All of these visions of the future imply such a radical shift from the current model of CSR that they beg the question: do we need a new model of CSR? Certainly, Carroll’s enduring CSR Pyramid, with its Western cultural assumptions, static design and wholesale omission of environmental issues, must be regarded as no longer fit for purpose. Even the emphasis on ‘social’ in

COVER STORY Corporate Social Responsibility implies a rather limited view of the agenda. So what might a new model look like? The CSR 2.0 model proposes that we keep the acronym, but rebalance the scales, so to speak. Hence, CSR comes to stand for ‘Corporate Sustainability and Responsibility’. This change acknowledges that ‘Sustainability’ (with roots in the environmental movement) and ‘Responsibility’ (with roots in the social activist movement) are really the two main games in town. A cursory look at companies’ non-financial reports will rapidly confirm this – they are mostly either Corporate Sustainability or Corporate Responsibility reports. However, CSR 2.0 also proposes a new interpretation on these terms. Like two intertwined strands of DNA, Sustainability and Responsibility can be thought of as different, yet complementary elements of CSR. Hence, Sustainability can be conceived as the destination - the challenges, vision, strategy and goals, i.e. what we are aiming for – while Responsibility is more about the journey – our solutions, responses, management and actions, i.e. how we get there.

business. It is a complete misnomer to believe that the purpose of business is to be profitable, or to serve shareholders. These are simply means to an end. Ultimately, the purpose of business is to serve society, through the provision of safe, high quality products and services that enhance our wellbeing, without eroding our ecological and community life-support systems. As David Packard, co-founder of Hewlett-Packard, wisely put it: Why are we here? Many people assume, wrongly, that a company exists solely to make money. People get together and exist as a company so that they are able to accomplish something collectively that they could not accomplish separately - they make a contribution to society. Making a positive contribution to society is the essence of CSR 2.0 – not just as a marginal afterthought, but as a way of doing business. This is not about bailing out the Titanic with a teaspoon - which is the current effect of CSR 1.0, but turning the whole ship around. CSR 2.0 is about designing and adopting an inherently sustainable and respon-

The DNA of CSR 2.0 can be conceived as spiralling, interconnected, non-hierarchical levels, representing economic, human, social and environmental systems, each with a twinned Sustainability/Responsibility manifestation: Economic Sustainability and Financial Responsibility; Human Sustainability and Labour Responsibility; Social Sustainability and Community Responsibility; and Environmental Sustainability and Moral Responsibility. This is a war without end in sight, as our economic, social, human and environmental performance will always be able to be improved. However, battles are won when we can see significant improvements in the issues we are trying to tackle (e.g. education, health, biodiversity, corruption, etc.). There are many tools, from codes (like the UN Global Compact) to guidelines (like ISO 26000) and standards (like IS0 14001), plus practical methods for calculating carbon footprints water balances or diagnosing the ethics of a corporate culture. To success, the principles of CSR need to be understood, embedded, measured and incentivised in every department and operation. The Purpose of Business When all is said and done, CSR 2.0 comes down to one thing: clarification and reorientation of the purpose of

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sible business model, supported by a reformed financial and economic system that makes creating a better world the easiest, most natural and rewarding thing to do.

for you. Look at what other companies have done and learn from best practice. For management, construct a business case for CSR, based on the benefits of better risk management, cost reduction, staff motivation and market opportunities. Even revolutions involve a transition, so what might we expect to see as markers along the road to transformation? Paternalistic relationships between companies and the community based on philanthropy will give way to more equal partnerships. Defensive, minimalist responses to social and environmental issues are replaced with proactive strategies and investment in growing Responsibility markets, such as clean technology. Reputation-conscious Public-Relations approaches to CSR are no longer credible and so companies are judged on actual social, environmental and ethical performance (are things getting better on the ground in absolute, cumulative terms?). Record your successes and know that you are on the right track with guidelines like the Global Reporting Initiative, the Carbon Disclosure Project, Responsible Care and others, which propose CSR indicators that can measure progress. However, avoid choosing too many or measuring for the sake of reporting. Rather, only those issues and impacts that are material (i.e. critically important or high impact) should be tracked. Also, don’t fall into the trap of only measuring activities or only corporate performance. You need to know whether conditions are getting better or worse on the ground in order to judge your success. Is poverty less or more? Are income gaps less or more? Is biodiversity less or more? Are health conditions better or worse? Ultimately, the dual test for CSR 2.0 is admission and ambition: will you admit that business is contributing to the problems, and will you be ambitious in setting bold goals to solve the problems? CSR is dead! Long live CSR!

A few steps can be taken to develop a CSR policy or make a case to the management of the company accordingly so that the CSR policy that would emerge is not created in a vacuum. It should be based on a strategic review (e.g. using scenarios) of the major social, ethical and environmental challenges and dilemmas, facing the world, your country, your industry and your company. It should also be a multi-stakeholder, consultative process. Try to avoid simply hiring a consultant to write a policy

Reference: Visser, W. (2010) The Rise and Fall of CSR: Three Curses of CSR 1.0 and Five Principles of CSR 2.0, CSR Inspiration Series, No. 7. Dr. Wayne Visser is Founder and Director of CSR International (www.csrinternational.org) He is also the author/ editor of eight books on CSR, including The World Guide to CSR. His new book is The Age of Responsibility (Wiley 2011). He is an Adjunct Professor at La Trobe University in Australia and Senior Associate at the University of Cambridge Programme for Sustainability Leadership. His personal website is www.waynevisser.com. 21

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COLUMN

MOVING FROM RHETORIC TO ACTION Uwem E. Ite

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he concept of Corporate Social Responsibility (CSR) has redefined the role of business in society. Business entities are now expected to account for their social and environmental impacts and also make positive contributions to the communities in which they operate. Many business leaders have now accepted that CSR is ‘the right thing to do’. However, the activities of many business organisations have attracted increasing scrutiny. In the process, the culture of mistrust and anti-business sentiments have also increased amongst consumers. There is no doubt that notions of business accountability through CSR have captivated the imaginations of business practitioners and academics, with both assessing the impacts of business on society and calling for the adoption of more ethical business practices. Although CSR is a comprehensive set of principles calling for fundamental and practical changes to the way businesses operate, it has also put pressure on 24

organisations to minimise their environmental impact, improve consumer and employee rights and operate in a transparent and accountable manner. As such, this diverse agenda of practice and policy changes expected of business is an undoubtedly complex one, which can lead to confusion for many organisations interested in moving from CSR rhetoric to practice. It is pertinent to note here that while the relationship between businesses and the resulting rights and responsibilities of each party has been sealed within Western expectations of CSR, it is not a universal notion. The responsibility a business has to local communities and the role it is expected to play in society are subjective notions. They are totally reliant upon political space, cultural understandings and dominant CSR discourses. Although the dominant form of the business-community relationship is only relevant to the developed world, it has increasingly been

applied to developing country contexts. This attempt to ‘transfer’ Western notions of business-community relationship, to developing countries without adjustment or acknowledgement of the vastly different environments into which it is being relocated leaves its potential success highly questionable. The differences in the circumstances of developed and developing countries, coupled with diverse perceptions of business-community interactions within the multifarious cultural, social, political and economic environments both highlight the need for CSR policies to be developed and implemented with relevance to the context of each geographical region. The prospect and potential for businesses to complement existing development projects, or undertake new initiatives, offers a radical future for developing countries struggling to cope with many social and environmental problems. In recent times, many ad-

COLUMN vocates and commentators on CSR issues have called on business entities to take an increasingly active role in the development of countries in the South. However, a Western bias inherent in CSR principles has been identified, leaving doubt upon the ability for such policies to be effective within developing country contexts. It is evident that the core elements of CSR are more relevant to Western cultures and business environments. Moreso, the development issues facing developed countries are drastically different from those in the developing world. These include: the lack of basic institutions such as the rule of law, a free press as well as democratic and civil society organisations. As such, the differences between developed and developing societies have a vast influence upon developing countries’ understanding and practice of CSR. It is therefore not surprising that Western proponents of CSR have largely overlooked these differences, when they attempt to put CSR into practice in developing countries. CSR cannot operate in isolation from the wider political, economic, social

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It is clear that there are a plethora of Corporate Responsibility codes and standards that specify CSR good practice with different emphases and approaches developed for different businesses in different sectors. As a result of this diversity of views and approaches to CSR, many business organisations in Africa are faced with the challenge of knowing how and where to start the process of putting CSR principles into practice.

and cultural landscape of a country. For example, a study by Edelman Asia Pacific observed that the key drivers for CSR in Asia were less altruistic than Western CSR was perceived to be . In Africa, the concept of CSR is rapidly gaining some prominence and attention from the business community even though it is usually associated with corporate philanthropy. Similarly, there are many private sector-related initiatives and business activities in Africa that might be described as expressions of CSR, as well as the emergence of specialist CSR organisations. It is clear that there are a plethora of Corporate Responsibility codes and standards that specify CSR good practice with different emphases and approaches developed for different businesses in different sectors. As a result of this diversity of views and approaches to CSR, many business organisations in Africa are faced with the challenge of knowing how and where to start the process of putting CSR principles into practice. The good news is that any business organisation interested in putting CSR theory into practical action could start the process by first defining its CSR mission. Some of the pertinent questions they could possibly answer include: • Why does this organization exist? • What kinds of activities or programmes will the organization undertake to accomplish its purpose and justify the reason for its existence? • What is the ultimate result of its work? • Who are the expected beneficiaries of the outputs and outcomes of the proposed CSR activities? A mission statement says a lot about an organization. Although, it concentrates mainly on the present, it also defines the organization’s purpose of existence and its primary objectives. A good mission statement should incorporate socially meaningful and measurable criteria. In addition, it should address concepts such as the moral and ethical position of the organization, its public image and the target population it seeks to serve or reach out to. Similarly, it should clearly state the products or services it can and will offer to the population, the geographic domain and coverage of the organization and its expectations of growth. The mission statement of an organization can be used to remind the leadership and members of the organization of the overall CSR goals they are expected to collectively pursue and

achieve. In other instances, a mission statement is used for internal communication - to define the key measures of the organization’s success and as an on-going guide without a specific time frame. Nonetheless, changes in the social, political and environmental circumstances of the organization might lead to regular changes in the mission statement to reflect current realities and expectations. There is also a need for an organisation to develop its CSR vision statement which outlines what an organization wants to be and concentrates mainly on the future. It is a source of inspiration and provides clear decision-making criteria. Vision is more specific in terms of objective and future state, and is related to some form of achievement, if successful. A vision statement also defines the organization’s purpose in terms of values, especially with respect to the guiding beliefs about how things should be done. The vision statement therefore communicates both the future purpose and values of the organization. The process and outcomes of developing an organizational vision for CSR may be tedious, but the long-term benefits are quite substantial, including the identification of a clear direction and purpose of the organization. To conclude, the process of putting CSR principles into practice involves defining a path from the present to the future. This requires a strategic focus, which can be achieved through the definition of CSR mission and vision statements by the organisation. This strategic framework must have senior management buy-in, which in turn must promote transparency in CSR delivery, accountability to stakeholders and effective measurement of CSR performance.

Dr Uwem Ite is a CSR professional and an expert on Sustainable Development. He is currently the Team Leader, Audit Compliance, Monitoring and Evaluation within the Sustainable Development and Community Relations Department of the Shell Petroleum Development Company of Nigeria Limited. The perspectives presented in this article are personal and does not in any way reflect the views of his employers. His previous publications on CSR and Sustainability can be found in various international journals including: Corporate Social Responsibility and Environmental Management; Sustainable Development; Journal of International Development and Review of African Political Economy. He can be contacted on phone: (0802 4299915) and e-mail:uwem.ite@gmail.com

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OPINION

WHY AFRICAN BUSINESSES NEED TO ADOPT SUSTAINABLE CAPITALISM Obinna Igwebuike

ccording to a recent report in allafrica.com entitled: Climate Change and Rise in Sea Level, “Floods were recorded in many states of Northern Nigerian last year, leading to loss of crops in vast farmlands, destruction of homes and the outbreak of diseases as well as deaths in extreme cases”. Experts at the Nigerian Institute of Oceanography and Marine Research (NIOMAR) say the rising sea level is a ‘disaster in waiting’ except something fundamentally changes in the way the environment is treated. These significant impacts, as far as I am concerned, are a major motivation for the region to step up in its attempts to develop sustainably. Arguments have been adduced for the pointlessness of this with the fact that industrial activity in the developed world will still negatively affect the climate situation in Africa. My response to this is quite simple. Primarily, it is our responsibility to ensure that we protect ourselves, whether we get help from others or not. It is simplistic and escapist to play the victim here. We have our responsibilities too. Even if Africa was not significantly affected, we still need to play our part in ensuring responsible global environmental stewardship. Whilst we need to accelerate the pace of advocacy for the developed world to be more concerned about the developing world, it would be seen as cacophony if there is no progress in what 26

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With economic activities contributing what seems to be the lion share to environmental depletion, businesses need to take the front seat in ensuring responsible environmental practices.

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(Continued from the maiden edition)

Africans themselves do to better the situation. With economic activities contributing what seems to be the lion share to environmental depletion, businesses need to take the front seat in ensuring responsible environmental practices. The Triple Bottom Line John Elkington coined this phrase in his 1998 book; Cannibals with Forks: the Triple Bottom Line of 21st Century Business. This concept is perhaps the biggest single contributor to management thinking in social responsibility. It posits that businesses should view their performance not just from a fi-

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nancial point of view, but also from a social and environmental perspective. As firms strive to maximize profit, they should also strive to maximize their social and environmental responsibility. This will not just involve having goals and objectives on environmental and Social Responsibility, but also tracking organizational performance just as is done for financial objectives. Sustainable Development has to be Strategic Surely, this is not a case of mere green washing. It has to be something tied to the organization’s strategic competitiveness. If we look closely at the drivers of the Triple Bottom Line as espoused by Elkington, we will see that the mo-

OPINION tivations are as market-determined (for profit) as they are socially and environmentally determined. If this thinking is true, then: Why should they be treated less strategically than the other more obvious financially rewarding strategic actions? Also, just like strategic actions such as cost cutting and quality control, Sustainability has to ring through the whole organization. There must be high level Board support A few weeks ago, I read a McKinsey Quarterly interview of Bill Ford, Executive Chairman of the Ford Motor Company. He is the great grandson of Henry Ford and former president, Chief Executive Officer of the company. Bill is a poster child for the link between business and the environment in the US. When he introduced the idea of Sustainability in Ford, it was met with a lot of opposition. If he wasn’t passionate and persistent about it, he would not have been able to convince the doubters internally. Perhaps more importantly, if he wasn’t that highly placed within the system; chances are that Ford will not have adopted its Sustainability model as at the time it did.

A Business Case for Sustainable Capitalism From a business point of view, why change track to the road less travelled, when companies in Sub-Saharan Africa are still grappling with basic infrastructural problems, which are not encountered in the developed world? Is there any economic gain in internalizing externalities? Some of the principles of the World Business Council for Sustainable Development (WBCSD) are a guide in presenting the business case for sustainable development. This CEO-led global association of some 200 international companies deals exclusively with issues around business and sustainable development. Firstly, it is practically impossible for businesses to work in a failing environment. It is imperative for future profitability that business leaders think of

ways of reducing how much they contribute to the potential failure of the environment. Organizations should be worried if environmental depletion increases poverty in a business’ operating environment. Sustainable development, therefore, must be part of a

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Primarily, it is our responsibility to ensure that we protect ourselves, whether we get help from others or not. It is simplistic and escapist to play the victim here. We have our responsibilities too. Even if Africa was not significantly affected, we still need to play our part in ensuring responsible global environmental stewardship.

“

Sustainability Reporting is very important Sustainability performances can only be improved when companies measure, monitor and report them. This increases transparency and accountability. The Global Reporting Initiative (GRI) Sustainability Reporting Guidelines are very useful in doing this.

Source: www. bing.com

business’ long term growth strategy. Secondly, Sustainability eliminates waste. General Electric has identified opportunities to save about $150 million dollars, through its Sustainability initiative - Ecomagination Treasure Hunts. The National Health Service in the UK has also seen potential savings of £180 million per year from reduced carbon emissions. For smaller businesses, savings may be less significant in economic value, but what is perhaps more important is the culture of continuous improvement in cost savings, which this brings into the organization. Finally, the potential of being regarded as a responsible corporate citizen is as significant as any economic value from savings. With information diffusion at an all time high, coupled with a high level of consumer interactivity, there is a very high cost of being socially and environmentally irresponsible. I think businesses in Africa have a platform for future sustainable growth and competitiveness in these business motivations. (Concluded) Obinna Igwebuike is an MBA student at the Bristol Business School. His interests are in Macroeconomics, Corporate Finance, Corporate Strategy and Business Sustainability. He can be reached on obinnaigwebuike@ymail.com or obigwebuike@gmail.com. 27

FEATURE

The Many Business Cases for CSR Strategy N. Craig Smith

Scenario Planning for CSR Strategy These four factors - industry, stakeholder activism, market positioning and history - speak volumes to a company’s exposure to CSR pressures at any given moment. But strategy is not just about the here and now. How a company formulates a CSR strategy will also be dependent on changes in the broader business environment or the social and environmental context. In times of economic uncertainty, environmental change and rapid technological development, any kind of prediction becomes difficult. But it is possible to future-proof your CSR strategy - at least to some extent - by systematically considering the possibilities. Drawing on the approach and results of a research project on the future of Corporate Social Responsibility (conducted prior to the current global economic crisis), Ward & Smith, 2006; we offered a framework for envisaging possible futures. The research asked: What is the likely role of CSR in 2015? 2015 is the date set for all 191 UN members to meet the United Nations Millennium Development Goals, MDGs. We conducted individual interviews and multistakeholder dialogues with thought leaders from key sectors (business, government, campaigning NGOs, noncampaigning NGOs/think-tanks, labour unions, the academia). While we resist the temptation to predict the future in this article, we provide ways of thinking about recent developments in CSR and ways of framing future scenarios, using universally applicable constructs. Note too that while the audience was mainly UK-based, their origins were not uniquely British and the brief emphasized the importance of universality. Following a simple scenarios development process, we asked our participants in the multi-stakeholder dialogues to “tell stories” about possible futures for CSR. We encouraged them to think about external contextual factors that could have an impact. Their 28

suggestions predictably included: the growing importance of Brazil, Russia, India and China (the BRIC countries); diminishing natural resources; climate change; technological advances; global economic downturn; the rise of religious fundamentalism; radical political swings to the left or right. There was even some prescient talk of limited access to capital and the future of current financial and economic models, but we stress once again that the aim was not to prophesy rather to construct a framework that could help businesses, governments and NGOs in their planning. At the same time, we encouraged the stakeholders to think about more specific drivers of Corporate Social Responsibility. Some of these issues, such as the legitimacy of campaigning NGOs or the influence of think-tanks on policymakers, were of interest only to certain stakeholders. However, others were universally applicable - across multiple firms, industries and country/ regional settings. We identified the two most fundamental of the universal determinants of Corporate Social Responsibility as the strength of the business case and the extent of government appetite for intervention. These then became the basis of a grid framework for generating “futures”. The next step in our research was to superimpose the more imaginative “what if?” storytelling on to the rigid grid. Participants worked in four mixed stakeholder groups, each of which considered just one of the four possible scenarios represented by the four quadrants of the grid. They were asked to consider the following questions: What currently discernable trends could potentially lead in the direction of that scenario? Who would win and who would lose in that scenario? The groups were also given one major “external shock” and asked to assess the impact it might have on their scenario. Their answers are summarized below: Strong Business Case and Low Government Appetite for Intervention

(top left quadrant) As we have seen, it is of doubtful value to talk about the business case for CSR. However, if recent trends for ethical consumerism and/or investing continue, then CSR is in most companies’ economic interest, regardless of industry, history or market positioning. In support are various specific trends, such as: celebrity endorsement campaigns (e.g., “Make Poverty History”, Bono’s project RED) and a growth in the fair trade market for all kinds of goods. For the most part, this is a “business wins” scenario, but some businesses would win more than others. Potentially, there might be problems around “bottom feeders” seeking to take advantage of a lack of government intervention or a level playing field (e.g. some of the non-major oil companies today). Generally, consumers would be win-

“

... the growing importance of Brazil, Russia, India and China (the BRIC countries); diminishing natural resources; climate change; technological advances; global economic downturn; the rise of religious fundamentalism; radical political swings to the left or right. There was even some prescient talk of limited access to capital and the future of current financial and economic models ...

“

(Continued from the madien edition)

FEATURE tervention. Such a party might be attracted to market-based instruments of various kinds, which might deliver good regulatory outcomes. Companies and individual consumers, responding positively to such a scenario, might take on more responsibilities themselves. Strong Business Case & High Government Appetite for Intervention (top right quadrant)

Source: Prof. N. Craig Smith

ners under this scenario. They might lose out if bottom-feeding businesses prospered. But for the major part, consumers would benefit from safer, cleaner and more ethical products/services. What if, in this scenario, a major economic recession unfolded? The impacts would likely depend on its causes. If the source was a high oil price, businesses working to short-term “business cases” might go out of business or, at least, substantially reduce their attention to CSR. Government intervention might increase and businesses with stronger values might succeed. Weak Business Case & Low Government Appetite for Intervention (bottom left quadrant) This scenario was believed most likely in the event of the economy stagnating. Firms would look harder at cheaper labour markets—possibly where labour standards were relatively unregulated. There might be a growing sense that Corporate Social Responsibility was not working and that the business case for most companies was unfounded and thus there likely would be little investment from business in sustainable development. On the government side, the WTO and multilateralism might have failed. All this could lead to a particularly negative outcome of no government intervention and little attention to sustainable development. The principal losers in this scenario would be primary producers in developing countries, marginalized countries and people, SMEs and labour. Big branded companies might feel that they were operating in a more risky environment. In essence, this scenario represents a bad environment associated with a low sense of morale. What if, added to this scenario, oil prices

were to hit US$200 a barrel? Resource wars might break out, industries would decline, travel and logistics would be constrained. There would be worldwide insecurity and a desperate search for renewable energy sources. Government would intervene heavily as it might in wartime favouring a closed, protectionist, interventionist economy, albeit potentially promoting greater energy efficiency. Nearly everybody loses who isn’t forearmed with knowledge of how to deal with this scenario. Weak Business Case & High Government Appetite for Intervention (bottom right quadrant) Our participants reported initially that they considered this scenario implausible. But then they recalled that governments may be in hock to vested interests, leading to bad; but highly interventionist policies (e.g. US energy bill; over-regulation of the labour market). This scenario would be associated with the “dark side” of government intervention that leads to bad sustainable development policies, all of which could be worsened by a rise in protectionism and of the anti-globalisation movement. Losers in this scenario are taxpayers who end up paying for public “bads” not public goods. Customers would routinely lose. People in poor countries who might otherwise be afforded opportunities to compete would lose because they would be denied those opportunities. A “shock” for this scenario might be the election of a hard right political party (i.e., ultra liberal, laissez-faire and conservative government), leading to a massive roll-back in government in-

This scenario might emerge out of government intervention, driving a financial return from CSR and triggering a virtuous circle (regulation reinforcing business initiatives). Current trends that point in this direction include: businesses working positively towards sustainable development; emissions trading; and increased penalties for transgressions (especially in light of abuses revealed during the recent financial crisis). This scenario marries Corporate Social Responsibility as a voluntary activity with corporate accountability via regulation. Most (attentive) businesses would by definition win, because there is a good business case and regulation levels the playing field. What if, added to this scenario, there was severe flooding as a result of climate change? Insurance companies might fold, and there would be immediate downward pressure on equity markets. If the flooding really was catastrophic, there would likely be global consequences, triggering serious recession, which would undermine the short-to-medium term business case for most companies. Corporate Social Responsibility would come back down to earth with a bump. The implication drawn was that there must be a real business case for action on climate change - at least within relevant industries (sooner rather than later). Although from today’s perspective, at least, it is difficult to see how business action on climate change can ever be sufficient to address the problem to any significant extent and is thus largely a forerunner and legitimizer of the major policy changes required of governments. (Concluded) Prof. N. Craig Smith is the Chaired Professor of Ethics and Social Responsibility at INSEAD, the leading international business school with campuses in France, Singapore and Abu Dhabi, where he is also the Academic Director of CSR and Ethics Research Group in the INSEAD Social Innovation Centre. He was previously on the faculties of the London Business School, Georgetown University and the Harvard Business School 29

GLOSSARY

h i

HYBRID VEHICLES Hybrid vehicles use a combination of conventional and electric-powered engines to enhance fuel efficiency and reduce carbon emissions.

INTERNATIONAL CARBON REDUCTION AND OFFSET ALLIANCE (ICROA) The International Carbon Reduction and Offset Alliance (ICROA) is the global trade association for the carbon offset industry. Formed in 2008, the group requires its members to adhere to a code of best practice designed to ensure they only sell robust, quantifiable and audited carbon offsets that have been developed in line with agreed standards.

JOINT IMPLEMENTATION (JI) The UNâ&#x20AC;&#x2122;s Joint Implementation (JI) scheme is a sister carbon offsetting initiative to the Clean Development Mechanism (CDM), which allows emission reduction projects in industrialised countries to issue carbon credits.

KYOTO PROTOCOL The Kyoto Protocol is an international environmental agreement intended to stabilise and then reduce greenhouse gas concentrations in the atmosphere in order to limit the effects of climate change. The Protocol was adopted on 11 December 1997 in Kyoto, Japan, although it was not enforced until 16 February 2005.

l 30

LIGHT EMITTING DIODE (LED) Light Emitting Diodes (LEDs) are a highly energy efficient form of solid state lighting technology based on semiconductor diodes. Increasingly popular in a wide range of applications, including domestic lighting, street lights, traffic lights, and consumer electronic devices, LEDs typically use a fraction of the

energy required by conventional incandescent and fluorescent lights. They also tend to offer a brighter light than other forms of energy efficient lighting such as CFLs and are widely regarded as a long term alternative to numerous existing lighting technologies.

GLOSSARY

MARKET BASED INITIATIVES (MBIS) The use of market forces to reduce the impact of production on pollution. Cap and Trade and Emissions Taxes are examples of MBIs. Environmentalists prefer MBIs to Command and Control because it market-led nature encourages producers to continuously improve their performance.

MARKET FAILURE A scenario in which the production or usage of a good or service does not occur where marginal cost equals marginal benefit for the society. In simple terms, if the social cost of production is more than the social benefit at the marginal level, then the ‘social market’ is basically in a failed state.

MICRO WIND TURBINE Micro wind turbine is an umbrella term for small scale wind turbines that are typically deployed on or near buildings and used to generate electricity that is transmitted direct to the property.

NIMBY NIMBY is an acronym that stands for the term “Not-in-my-backyard”. It refers to the local opposition to developments that the majority of people support in principle, but object to when located in their neighbourhood. Renewable energy projects, most notably in the form of wind farms, have become frequent victims of NIMBY protests, facing local opposition and objections to planning proposals despite repeated polls; showing the majority of the public are in favour of switching to greener sources of energy.

o Source: 1. www.gotrenewables.com 2. www.rlinsight.com 3. www.thefullwiki.org

NEGATIVE EXTERNALITY A cost, borne by the society for producing a product, because this cost has not been factored into the product price

OCEAN FERTILISATION Ocean fertilisation is a proposed form of geoengineering that involves the introduction of iron particles to the upper ocean to stimulate a phytoplankton bloom. In theory, the phytoplankton will then absorb CO2 before dying and sinking to the bottom of the ocean where the carbon will be sequestered.

4. 5. 6. 7.

www.onecornell.com www.zhwind.en.made-in-china.com www.johaneconblog.wordpress.com www.planetgreen.discovery.com

FEATURE

Is Africa Ready for an Alliance on CSR? Ini Onuk

t the premier edition of the Africa Roundtable and Conference on Corporate Social Responsibility (The AR-CSR™), which held in June, 2011, in Lagos, Nigeria; the organizers of the event launched a framework named the “Africa Alliance on CSR”(AACSR) – a continent-wide organizational membership framework modeled after the European Alliance for CSR. Walking away from the conference and trying to put together the strategic direction the Alliance would take brought up a number of questions and key among them all has been: Is Africa ready for an Alliance on Corporate Social Responsibility? Let me begin by analyzing the setup of the European model and how it works. In March 2006, the European Commission published a new communication on CSR, stressing the potential of Corporate Social Responsibility to contribute to the European Strategy for Growth and Jobs while announcing their backing for a European Alliance on CSR. The Alliance marked a new political approach on CSR based on a double commitment. On the one hand, the European Commission sought to strengthen a business-friendly environment while on the other hand, and through a voluntary approach, enterprises will further focus their efforts on innovating their CSR 32

Source: africachamberofcommerceandindustry.com

strategies and initiatives, in cooperation and dialogue with their stakeholders. The Alliance serves as a political umbrella for mobilizing the resources of large and small European companies and their stakeholders in and around three (3) areas of activities: • Raising awareness and improving knowledge on CSR as well as reporting on its achievements • Helping to mainstream and develop open coalitions of cooperation • Ensuring an enabling environment for CSR; The European Alliance on CSR has three business organizations that act as support platforms by helping to coordinate its work and providing feedback to the European Commission and other interested parties. They are: CSR Europe, BusinessEurope, and the European Association of Craft, Small and Medium-sized Enterprises (UEAPME). The Alliance is an open partnership for European enterprises of all sizes and their stakeholders. Companies can express their support to the European Alliance through one of the three organizations. Using this as a milieu therefore, it is undoubtedly imperative that Africa needs an Alliance on CSR. The social and political changes brought about by globalization have raised new questions as well as expectations about governance and Social Responsibilities.

More and more companies of all sizes and in every sector are recognizing the importance of their role in society and the real benefits of adopting a proactive approach to CSR. An increasing number of African businesses are promoting their Corporate Social Responsibility strategies as a response to a variety of social, environmental and economic pressures. They aim to send a signal to the various stakeholders with whom they interact: employees, shareholders, investors, consumers, public authorities and NGOs. In doing so, companies are investing in their future and they expect that the voluntary commitments they adopt will help to increase their profitability. The Corporate Social Responsibility concept is mainly driven by large companies, even though socially responsible practices exist in all types of enterprises: public and private, including SMEs and cooperatives. The existence of an Alliance for CSR in Africa is clearly necessary. A lack of understanding, inadequately trained personnel, non availability of authentic data and specific information on the kinds of CSR activities, coverage, policy etc. further adds to the need for a platform that pushes the agenda. An Alliance on CSR in Africa will enable the creation of structures and a framework for CSR to come out of the purview of ‘doing social good’ and become a ‘busi-

FEATURE

In Africa, legislation and enforcement are poor, civil society scrutiny is largely absent, and consumer activism for responsibly-produced products is relatively weak. While major projects in Africa must meet international standards and codes such as the Equator Principles, and these standards have a trickle-down effect on local or regional suppliers to multinational companies, much of the CSR discourse in Africa is focused on ethics and anti-corruption measures. Inside boardrooms, the debate is raging about the value of CSR. In a recent article, the McKinsey Quarterly reports disagreements among CFOs, investors and CSR professionals about the appropriate metrics for measuring the value of CSR to shareholders. One finding of the McKinsey survey is that some CFOs and investors think the values of CSR programmes are too much in the long term, making measurement difficult. The current CSR agenda is associated with a number of multilateral guidelines, including the UN Global Compact, which was launched by Kofi Annan in 1999; the Organization for Economic Cooperation and Development (OECD); Guidelines for Multinational Enterprises (2000); and the Global Reporting Initiative (1997). A major CSR driver is the Socially Responsible Investment (SRI), which allows investors to integrate personal values and societal concerns with investment decisions. In the US, for example, one in every eight dollars or 13% of the $16.3 trillion in investment assets is invested in socially responsible funds, an 82% increase since 1997. For many years, companies have been told that CSR is good for business, but relatively few studies document the business case for engaging in CSR activities. This is one area the Alliance will work on. Currently, there are several CSR organizations in Africa that have overlapping responsibilities and spheres of influence. Some of them include: The Centre for Corporate Governance, Kenya; The African Leadership and Progress Network; Business Action for Africa; The Business Ethics Network of Africa; The African Institute of Corporate Citizenship; The Africa Corporate Sustainability Forum; Private En-

terprise Foundation, Ghana; Center for Corporate Citizenship amongst others. The need to pull together all these initiatives and make sense of them all for the eventual growth of CSR in Africa is critical and urgent. CSR in Africa is different from CSR in Europe or America. It has different driving forces. The strength of regulation in Europe and America encourages improved environmental performance and ethical business practices. Institutional investors and shareholders play less of a role in how the companies they invest in behave. The level of environmental and social awareness from consumers and employees is not at the same intensity and expectations about how businesses should operate are different. Interestingly, in Africa, because companies are so embedded in the fabric of society, businesses are expected to help in developing the communities in which they operate. Consequently, there is a large difference in the potential impact of CSR in Africa compared to the more developed countries. Because of these differences, there has been an encouraging debate about what exactly is CSR in Africa? Is it just window dressing to improve corporate reputation or does it really add value to both the company’s financial bottom line and the community? A recent seminar in Monrovia, Liberia in 2010, hosted by the Brenthurst Foundation looked at developing guidelines for CSR in Africa. This demonstrates that there is a need for clarity. An initiative like the Alliance on CSR in Africa can help develop an understanding of how the private sector can create sustainable development and alleviate poverty. Beyond that, it can also serve as a meeting point for all the CSR organizations in Africa to bolster the ongoing discourse on CSR and Sustainability in Africa. According to Wayne Visser, Africa needs ‘teeth’ on issues of Corporate Social Responsibility and Sustainability. The Alliance would become this ‘teeth’. It will work with experts within and outside the continent to develop, sustain and engineer a process that will engage the relevant stakeholders; representing an advocacy front for the African continent whilst encouraging standards that organisations can aspire to. The AA-CSR would have the following characteristics: Voluntary participation, Africa-wide,

“

An Alliance on CSR in Africa will enable the creation of structures and a framework for CSR to come out of the purview of ‘doing social good’ and become a ‘business necessity’.

“

ness necessity’. The ‘business case’ for CSR is gaining ground and corporate houses are realizing that ‘what is good for workers - their community, health, and environment is also good for the businesses.

Sub-regional structures (Divisions & Country Chapters), Balance in participation (from all sectors), Guiding principles for membership, Adoption of consensus regulatory frameworks and Active engagement of governments

Another key role of the Alliance would be to localize the CSR agenda to fit into national needs within the Africa continent and specific areas of focus and not a westernized way of implementing CSR objectives. In order to further encourage the adoption of socially responsible practices in the business community, the Alliance would serve as an umbrella for CSR initiatives in and around Africa. That Africa is ready for an Alliance is evident in the varied and many apostles of Corporate Social Responsibility/ Sustainability that have emerged in the last few years. The interest and energy must look beyond asking organizations to give back but rather understand the interplay between policies and strategies that are necessary for sustainable development. The 2011 Africa Progress Report presented at the World Economic Forum (WEF) clearly shows Nigeria and indeed most of Africa as struggling with almost all the performance indicators on the MDGs. The role of the private sector in this regard cannot be overemphasized. References: http://www.csreurope.org http://www.csreurope.org/pages/en/priorityareas. html http://www.waynevisser.com/csr_pyramid.htm http://www.kpmg.ca/en/industries/enr/energy/documents/SustainabilityBusinessCase.pdf Ini Onuk is the convener of the Africa CEO Roundtable & Conference on Corporate Social Responsibility (ARCSR™) and curates a Thought Leadership Series on Sustainable Development, themed “Sustainable Conversations™.” Ini lectures at the CSR Centre of the Pan-African University, Lagos Nigeria; serves as the Vice President of the SERAs jury - Nigeria CSR Awards and is a think tank member of the World Entrepreneurship Forum. She can be reached at ini@thistlepraxisconsulting.com. 33

IN PRINT

ENVIRONMENTAL ASSESSMENT OF OGONILAND UNEP Ogoniland oil assessment reveals extent of environmental contamination and threats to human health Introduction A major new independent scientific assessment, carried out by the United Nations Environment Programme (UNEP), shows that pollution from over 50 years of oil operations in Ogoniland has penetrated further and deeper than many may have supposed. Over a 14-month period, the UNEP team examined more than 200 locations, surveyed 122 kilometres of pipeline rights of way, reviewed more than 5,000 medical records and engaged over 23,000 people at local community meetings. Detailed soil and groundwater contamination investigations were conducted at 69 sites, which ranged in size from 1,300 square metres (Barabeedom-K. dere, Gokana local government area (LGA) to 79 hectares (Ajeokpori-Akpajo, Eleme LGA). Altogether more than 4,000 samples were analyzed, including water taken from 142 groundwater monitoring wells drilled specifically for the study and soil extracted from 780 boreholes. Key Findings Some areas, which appear unaffected at the surface, are in reality severely contaminated underground and action to protect human health and reduce the risks to affected communities should occur without delay says UNEP’s Environmental Assessment of Ogoniland. In at least 10 Ogoni communities where drinking water is contaminated with high levels of hydrocarbons, public health is seriously threatened, according to the assessment. In one community, at Nisisioken Ogale, in western Ogoniland, families are drinking water from wells that is contaminated with benzene - a known carcinogen - at levels over 900 times above World Health Organization guidelines. The site is close to a Nigerian National Petroleum Company pipeline. UNEP scientists found an 8 cm layer of refined oil floating on the groundwater which serves the wells. This was reportedly linked to an oil spill which occurred more than six years ago. 34

While the report provides clear operational recommendations for addressing the widespread oil pollution across Ogoniland, UNEP recommends that the contamination in Nisisioken Ogale warrants emergency action ahead of all other remediation efforts. While some on-the-ground results could be immediate, overall the report estimates that countering and cleaning up the pollution and catalyzing a sustainable recovery of Ogoniland could take 25 to 30 years. This work will require the deployment of modern technology to clean up contaminated land and water, improved environmental monitoring and regulation including collaborative action between the government, the Ogoni people and the oil industry. Achim Steiner, UN Under-Secretary General and UNEP Executive Director, said the report provided the scientific basis on which a long overdue and concerted environmental restoration of Ogoniland, a kingdom in Nigeria’s Niger Delta region, can begin. “The oil industry has been a key sector of the Nigerian economy for over 50 years, but many Nigerians have paid a high price, as this assessment underlines,” he said. “It is UNEP’s hope that the findings can break the decades of deadlock in the region and provide the foundation upon which trust can be built and action undertaken to remedy the multiple health and sustainable development issues, facing people in Ogoniland. In addition, it offers a blueprint for how the oil industry and public regulatory authorities might operate more responsibly in Africa and beyond at a time of increasing production and exploration across many parts of the Continent,” said Mr Steiner. “The clean-up of Ogoniland will not only address a tragic legacy, but would also represent a major ecological restoration enterprise with potentially multiple positive effects ranging from bringing the various stakeholders together in a single concerted cause to

Source:www.unep.org/nigeria

achieving lasting improvements for the Ogoni people,” said the UNEP Executive Director. The report says that fish tend to leave polluted areas in search of cleaner water. However, the fisheries sector is suffering due to the destruction of fish habitats and highly persistent contamination of many creeks. Where entrepreneurs have established fish farms, for example, their businesses have been ruined by an “ever-present” layer of floating oil. Remote sensing revealed that in Bodo West, in Bonny LGA, an increase in artisanal refining between 2007 and 2011 has been accompanied by a 10% loss of healthy mangrove cover or over 307,380 square metres. Currently, Shell Petroleum Development Company SPDC, applies this technique on the land surface layer only, based on the assumption that given the kind of oil concerned, factors such as temperature and an underlying layer of clay and hydrocarbons will not move deeper. However, in 49 cases, UNEP observed hydrocarbons in soil at depths of, at least, 5 m. Recommendations Through a combination of approaches, individual contaminated land areas in Ogoniland can be cleaned up within five years, while the restoration of heavily-affected mangrove stands and swamplands will take up to 30 years. However, according to the report, all sources of ongoing contamination must be brought to an end before the clean-up of the creeks, sediments and mangroves can begin. Further information can be sourced from: www.unep.org/nigeria.

2011 Africa roundtable /conference on csr 2011 Africa roundtable ,conference on csr 2011 Africa roundtable/ conference on csr 2011 Africa round-

SPECIAL REPORT

2011 Africa ceo roundtable conference on csr The first Africa CEO Roundtable and Conference on Corporate Social Responsibility, AR-CSR, organized by ThistlePraxis Consulting held between the 15th and 17th of June, 2011 at Eko Hotel and Suites, Victoria Island, Lagos. Themed: THE BUSINESS CASE FOR CSR AND ITS IMPACT ON AFRICAN ECONOMIES, the keynote address was delivered by Mary Robinson, first female President of Ireland while the conference was chaired by Prof. N. Craig Smith, INSEAD Chaired Professor of Ethics and Social Responsibility. Amarachukwu Iwuala

L -R: Ex-President Mary Robinson, D. Sulaiman, Wayne Visser & N. Craig Smith

Former Irish President, Mary Robinson & Ini Onuk Keynote Speaker and first female President of Ireland, Mary Robinson

L -R: Ini Onuk, Mary Robinson, Wayne Visser & N. Craig Smith

Wayne Visser, CEO CSR International

rof. N. Craig Smith, INSEAD Chaired Professor of Ethics and Social Responsibility set the roundtable in motion through his presentation titled: Is there a Business Case for Corporate Social Responsibility? According to Prof. Smith, a McKinsey CSR survey in 2005 revealed that business executives all over the world overwhelmingly believe that corporations should balance their obligations to shareholders with explicit contributions to the broader public good. He noted that it is in the enlightened self-interest of businesses to engage in CSR as it is a ‘license to

operate’. In other L -R: D. Sulaiman, W. Visser, Mary Robinson, Ini Onuk, N. Craig Smith, Chibuzo words, it increases Ugwoha & Morin Desalu business reputation and trust. Referring to Morality and the Market: Consumer Prespositive, but small. He equally noted sure for Corporate Accountabilty, his book, that the traditional view that the busiwhich goes back two decades ago; he ness of business is business remains a remarked that the book’s central idea great obstacle for CSR. He explained is consumer influence over firms that the imperatives of mainstreaming engage in unethical and socially-irreCSR, because in many organizasponsible practices; citing boycotts in tions, it is in a public affairs ghetto – a South Africa over apatheid. Prof. Smith marginalized and marginal activity. also enumerated the challenges of Therefore, mainstreaming CSR imCSR, saying that CSR does not destroy plies getting it out of the ghetto and shareholder value, though a certain integrating it into everyday practice. study revealed that its overall impact is

2011 Africa roundtable /conference on csr 2011 Africa roundtable /conference on csr 2011 Africa roundtable/ conference on csr 2011 Africa roundta

Africa roundtable /conference on csr 2011 Africa roundtable /conference on csr 2011 Africa roundtable /conference on csr 2011 Africa roundtable /

L -R: Dotun Sulaiman, Morin Desalu, Wayne Visser, N. Craig Smith, Chibuzo Ugwoha, Thelma Ekiyor and Aigboje Aig-Imoukhuede

Prof. Craig Smith, INSEAD Chaired Professor on Corporate Responsibility; Lead Discussant presenting his paper at the CEO Roundtable

L - R: Barr. Ita, Ini Onuk, Ifueko Okauru and Ken Amaeshi

Debo Adesina, DMD, The Guardian Newspapers

Factors Pay taxes Provide needed goods & services; jobs and returns to shareholders Philanthropy (increased community contributions) Address company social & environmental impacts Address broader social problems (not of company’s making)

MNC  ?  ? ?

Local    ? ?

Source: Prof. N. Craig Smith

Morin Desalu, CEO Riskwatch Insurance Ltd

MNC = Multi-National Corporations

CSR Scorecard for Africa.

During discussions at the Roundtable, moderated by Thelma Ekiyor, Executive Director/CEO T. Y. Danjuma Foundation; Aigboje Aig-Imoukhuede, GMD/CEO, Access Bank Plc, explained

that CSR requires a certain level of enlightenment to take root. According to him, however, poverty in Africa unfortunately constitutes a major hindrance to this. Mr. Chibuzor Ugwoha, MD/CEO,

Niger Delta Development Commission affirmed that it is vital to identify the needs of the people for whom CSR programmes are initiated with a view to setting acceptable priorities. He posed:

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A cross section of guests

Jumoke Oduwole, ED, The Kuramo Foundation

Dr. Wiebe Boer, Executive Director, Tony Elumelu Foundation

L - R ... Audrey Ezeigbo & Femi Aderibigbe

L -R : Audrey Ezeigbo, Rean Rossouw & Ini Onuk

should pay attention to. Dotun Sulaiman, Chairman, Arian Capital Ltd

‘why build a school rather than a church or why build a road instead of a market’? Morin Desalu, CEO of Riskwatch Insurance Brokers took a look at SMEs, noting that they can also make meaningful contributions, regarding CSR. She opined this, owing to the notion that CSR is exclusively for big corporations. Air and noise pollution, waste disposal and local infrastrucural support are some of the areas she believes SMEs

The panel was divided on the issue of legislation. Mr. Dotun Sulaiman, Chairman, Arian Capital Limited, remarked that legislating CSR is akin to legislating conscience. Conversely, those who called for regulation advocated that minimum requirements be stipulated for organizations, wishing to operate in a given environment. Wayne Visser, Founder and Director of CSR International and author of several books on the role of business in soci-

ety, re-echoed what Imoukhuede said about abysmal education and clarity of CSR’s principles. He further questioned whether businesses are a net part of the solution or a part of the problem, declaring that the overriding principle is how a business makes money in the first place and not what the money is used for when it is made. Undoubtedly, the Chief Executive Officers could not agree less with a report by Porter and Kramer in Harvard Business Review, 2006 that ‘CSR has emerged as an inescapable priority for business leaders in every country’. Additionally, Wayne Visser advised companies to go the extra

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Journalists at the CEO Roundtable

L - R : Ken Egbas, Romie Goedicke, Ini Onuk, Bolanle Babatunde, Audrey Ezeigbo and Soumya Saklani

L-R: Rean Rossouw, NextGeneration Consultant, Karen Sai, IPPF Africa Region and Romie Goedicke, Global Reporting Initiative

Kazeem Abimbola and Prof. N. Craig Smith

mile in CSR, which means adopting Sustainability. He said: ‘Great leadership with the ability to think Sustainability would get companies go the extra mile and not dwell on basic CSR.’ Mr. Ugwoha cautioned against the duplication of CSR activities. He believes that planning for these projects is important so as to identify the gaps or areas of need. He wondered why three different organizations will build six classroom blocks in a school that requires just one set of blocks; neglecting other areas of need of the institution or nearby institutions. Mrs. Desalu reiterated Mr. Ugwoha’s opinion when she noted that giving back is easier when what the society can relate with is employed in the process. She recommended that organizations centre their CSR initiatives around their areas of competence. In her welcome address, Mrs. Ini Onuk, Conference Convener and Lead Consultant/CEO, ThislePraxis Consulting, stated that it has become more crucial than ever for businesses to become very responsible as Africa is now the new business destination. The chief host of the event and the Executive Governor of Lagos State, Mr. Babatunde Fashola; represented by the Executive Chairman of the Lagos State Internal Revenue Service; Mr. Tunde

Fowler; reminded organizations to undertake their businesses in global best practices, noting that CSR should be an important, but not an overriding concern of the private sector. In her keynote address, Mary Robinson, former President of Ireland and former United Nations High Commissioner for Human Rights, asserted that CSR is key to the private sector reaching its goal and key to the future of Africa. She also said that companies need expert guidance to monitor their progress in CSR. The first session of the conference was tagged: CSR – AFRICA & THE WORLD. In his presentation, An Overview of CSR: Evolution and Practices, Dr. Kenneth Amaeshi of the Edinburgh Business School, United Kingdom, identified the issues and challenges, facing CSR which include: health and safety; product responsibility; human rights; financials and the environment. Speaking on CSR in Southern Africa, An Overview and Insight into the Practice, Reana Rossouw, CEO, Next Generation Consultants, South Africa, differentiated between Corporate Social Investments, CSI; Corporate Social Responsibility, CSR; and Sustainability, observing that

Director, Oando Foundation; Tokunbo Durosaro asking a question

Sustainability is the way forward. She defined CSI as philanthropy; a percentage of a firm’s profits donated to social causes, which she said is driven by legal and ethical obligations. On the other hand, she stated that CSR is largely concerned with managing business impacts and is mainly driven by corporate reputation, peer pressure (ratings) and/or ethical obligations. According to her, Sustainability is a business approach that seeks to build long-term competitiveness without unduly compromising short-term profitability and cash flows. This, she went ahead to say, is strongly informed by an appreciation of the radical transition that is underway across the triple bottom line of people, planet and profit. In other words, Sustainability denotes creating value that upholds

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Cobhams Asuquo performing at the gala night Members of the Crown Troupe of Africa performing

The Crown Troupe of Africa performing Ali Baba & Ini Onuk

Mr. & Mrs. Ogwo Thelma Ekiyor & Funmi Balogun Alexander

to CSR rather than the amount of funds so committed.

Mary Akpobome & a guest

or enhances the systems on which that value depends. She urged people to go beyond the fixation that education is a piece of paper or certificate; stressing the need for qualitative education, job creation and environmental protection. She also underscored the importance of the impact of funds committed

Thelma Ekiyor, ED/ CEO, TY Danjuma Foundation chaired the second session – THE SHIFTING LANDSCAPE OF PHILANTHROPY AND SOCIAL INVESTMENTS IN AFRICA. Dr. Wiebe Boer, CEO, Tony Elumelu Foundation, spoke on Impact Investing, which is the use of profits from investments to address social and environmental challenges. It further involves taking responsibility for achieving results by focusing on specific and measurable goals plus owning issues. Dr. Boer further stated that catalytic philanthropy goes beyond

doling out money as it lays emphasis on solving problems. In other words, CSR should not be pedestrian and ought not to be thought of as charity; but must be thoroughly thought-through for effectiveness and efficiency. Cause Marketing and Sponsorships: Connecting the Dots was the caption of the Managing Director of Connect Marketing, Mr. Tunji Adeyinka’s paper in which he said that firms invest resources in worthy causes under this arrangement. He cited the example of a 5-year agreement signed in 2006 between Barcelona Football Club and UNICEF, in which the latter got 1.5 million Euros each season in addition to having their logo on the club’s jersey. The third and final session for the day was chaired by Funmi BalogunAlexander, Director, External Rela-

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A cross section of guests at the gala night

Segun Adefila, leader of The Crown of Troupe of Africa

Some members of staff of ThistlePraxis Consulting

A participant making a point

tions & Advocacy, International Planned Parenthood Federation, African Region. Captioned: PUBLIC-PRIVATE PARTNERSHIPS – EXPERIENCES, CHALLENGES AND PROSPECTS; Messrs. Ayo Gbeleyi and Noble Pepple of the Lagos State PPP Office and the Rivers State Sustainable Development Agency respectively gave examples of how these partnerships work in both states. Mr. Gbeleyi’s presentation was made by Mrs. George, who represented him. Participants reconvened later that evening for the CSR ball, featuring great performances by Cobhams Asuquo and the Crown Troupe of Africa. The first session of the second and final day of the conference – CSR & AFRICAN ECONOMIES - was chaired by Dr. Jumoke Oduwole, ED, Kuramo Foundation. Dapo Oyewole of CAPPS Consult showed how CSR can aid the attainment of the Millenium Development Goals; MDGs through his presentation titled: Implications of CSR for Poverty Reduction & Development. In his riveting presentation, Dr. Wayne Visser, Founder, CSR Internation-

The penultimate session: MONITORING, MEASURING AND REPORTING emphasized the need for organizations to monitor, measure and report the effectiveness of their Corporate Social Responsibility efforts. Beyond Reports: Sustainability, Authenticity and Synergy; ROI on CSR: Monitoring and Measuring Impact; Reporting CSR Initiatives – The Place of GRI in Africa were topics of the papers presented by Mobolanle Babatunde, Soumya Saklani and Romie Goedieke respectively. The session was chaired by Ken Egbas, the managing partner of TruContact Dr. Uwem Ite chaired the session: SHAPING AFRICA’S CSR FUTURE: STRATEGIC ALLIANCES, which was the last at the ARCSR, 2011. Speaking on The Role of the Media in Reporting CSR, Mr. Debo Adesina of The Guardian Newspaper called on the media to play an agenda-setting role, pointing organizations to areas that need attention. He equally called on them to celebrate worthy organizations while criticizing irresponsible ones. In concluding the presentations with Building Effective Business Alliances Across Borders, Ini Onuk called for synergy, enumerating the benefits of such an alliance. She equally announced her organization’s plans to give CSR ‘teeth’, a word that had been used by Wayne Visser earlier in calling for various CSR initiatives to make the desired impact.

al, looked at the various ages and stages of CSR; which he identified as: de- Emilia Asim-Ita of ThistlePraxis Consulting, fensive CSR giving the vote of thanks at the gala night in the age of greed; charitable CSR in the age of philanthropy; promotional CSR in the age of marketing and Participants at the conference made strategic CSR in the age of manage- remarkable contributions. For inment. He called on every organization stance, Tokunbo Durosaro of Oando to embrace the new age of CSR, which PLC called for public enlightenment he tagged: systemic CSR in the age of that would reduce the suspicion responsibility. According to him, the with which a number of these iniage of responsibility or transformative tiatives are viewed. Thelma Ekiyor CSR is marked by creativity, scalability, emphasized the need to broaden responsiveness, glocality and circularity. the scope of CSR, ‘Africannizing’ it. She equally urged the gathering to FROM ‘BUSINESS CASE’ TO ‘GOVERN- consider the opportunities that legMENT CASE’ was chaired by Dr. Kenneth islation presents, insisting that legisAmaeshi while Senator Uche Chukwu- lation must not necessarily have pumereije and Mrs. Ifueko Omoigui-Oka- nitive measures as penalty. Another uru, Executive Chairman, Federal Inland participant also stressed the need for Revenue Service, FIRS presented papers. wide consultations before any such The controversy over legislation was re- laws are passed.

011 Africa roundtable/ conference on csr 2011 Africa roundtable /conference on csr 2011 Africa roundtable /conference on csr 2011 Africa roundtabl

9 QUESTIONS

Albert Okumagba, BGL’s GMD, on Sustainability, Impact Investing and other business concerns

Source: BGL Group

BGL Plc is a leading investment bank in Nigeria, whose business is mainly providing financial advisory and brokerage services to firms. In this edition, Albert Okumagba, BGL’s group Managing Director, answers 9 questions; baring his mind on a number of issues.

1. What does Sustainability mean to you as a Business Leader and how sustainable is BGL Group’s business model? At BGL, we integrate our business processes, bringing all financial activities together, involving clients, investors and shareholders to create sustainable long-term value. It is important to note that our vision is to create wealth that makes a positive impact on society. For this reason, we engage actively and work with other stakeholders to create change in our business environment that will transform our economy and develop our nation. In the past, our business model was centred on equity trading. We have, however, diversified into the advisory business, which has resulted in an expansion in income and revenue sources. Currently, the top revenue earners for BGL are financial advisory and debt raising for sub-nationals. BGL is currently the highest ranking investment bank in raising bonds for sub nationals and we have also diversified into corporate bonds. At the same time, we have not abandoned our traditional equity trading. Despite the downturn of the capital market, BGL has remained among the top five equity trading companies. Therefore, in moving forward, we have identified other new business areas that we seek to pursue. We are currently leading the market in creating a viral Over The Counter (OTC) market as well as a commodity exchange market. All of this we are doing in a bid to revitalize

and deepen the capital market. 2. Does BGL Group have a different approach to CSR; can you share this approach, what informed this model and the impact you expect or have measured from it? I wouldn’t describe BGL’s approach to CSR as different. I’d rather refer to it as unique. Most organizations tend to focus on areas that benefit their businesses directly, but we have decided to focus on the future. We have decided to focus on education because we believe that this is the fundamental area that has a direct impact on the future of any society. We work directly with Non-profits that focus on education because we realize that they have the reach and are more connected to the grass roots. For example, we have supported various initiatives related to the education sector: some are KCOBA (Kings College Old Boys Association) and FEGOCOWOSA (Federal Government College Warri Old Students Association). We are also working closely with the Federal Government to create a sustainable Education Roadmap in conjunction with the Nigerian Economic Summit Group. 3. The financial industry in Nigeria has experienced major reforms recently. How do these reforms affect Corporate Social Investments and Sustainability practices? The recent global financial meltdown and its attendant effect on the domestic financial system in particular continue to exert pressure on corporate balance sheets, which potentially lim-

its companies’ ability to invest socially while rebuilding their balance sheets. Unfortunately, the global meltdown exposed the weakness in the domestic financial system, necessitating a wide array of reforms. Some of these reforms imply increased costs of doing business to players in the financial industry. In other words, the central focus of key players in the industry today, especially the banking sector in the process of the ongoing Mergers and Acquisitions (M&As)/corporate restructuring is how to emerge better and well-positioned so as to remain financially viable with a sustainable business model. I expect that such models will efficiently include more robust Corporate Social Investment processes. 4. In your opinion, who should control the economy so that business enterprises serve national interest and not just service the pockets of a few? Nigeria is not a socialist economy. Hence, the issue of who should control the economy - if we interpret that to mean the investment and business activities - does not arise. The position of government in a capitalist system like ours is to create an enabling environment that allows business enterprises to thrive while ensuring that the common good is not destroyed in the process. Public policies and programmes are to focus on ensuring that the activities of business entities promote social welfare, create employment opportunities and do not destroy the environment. An efficient 41

9 QUESTIONS tax system that redistributes income from the rich to the poor is also necessary. However, this system must be structured in such a way as not to kill the entrepreneurial spirit. There must be attractive rewards for entities that invest substantially in social ways in the form of tax and other incentives. 5. So much has been said about the mandate on lending to industries such as Agriculture and SMEs; what does this mean to your brand in the light of reputational risks associated with such Impact Investing? The growth and development of every society depends on many factors. Some of the most important factors are the nation’s ability to feed its populace and to provide jobs and encourage enterprise. We understand this fact in BGL and also understand the peculiarity of the Nigerian environment. However, this peculiarity does not mean that we will not be involved in sectors that will accelerate the growth of the nation. We invest in such businesses after a lot of due diligence, thereby investing in reputable organizations within these sectors. 6. BGL’s Agricultural Report 2010 opens with, ‘Agriculture is the nobrainer that keeps eluding successive administrations in Nigeria given that it remains the surest path to achieving mass affluence’ What successes has BGL recorded in fostering investments in that sector till date? BGL has been involved in supporting many state governments in raising funds from the capital market via bond issuance in the last 10 years. A substantial proportion of money raised via this process has been dedicated to the development of agricultural projects at the state level. This is in addition to supporting many firms, whose activities are related to the agricultural sector. We have also played an active role, as a member of the organized private sector, in influencing government policy towards Agriculture. For instance, BGL Plc was actively involved in the Job Creation Committee of the Federal Government, in which we identified specific opportunities in Agriculture as central to job creation. Overall, we believe that Nigeria needs some central reforms in the agricultural sector such as in the area of fertilizer distribution. We believe there should be an end to the fertilizer subsidy regime and the introduction of free markets for agricultural distributions. 7. 42

Socially Responsible Invest-

ments (SRIs) now account for about 10% of total assets invested in the US and Europe. As publishers of the ‘BGL Financial Monitor’, what do your research findings predict for the African investment landscape? Community responsibility is a long standing tradition in Africa. Considering the inadequacy of many social infrastructure such as clean water, communication, energy etc, the required investment in Corporate Social Responsibility projects may far exceed 10% of total assets invested in Africa today. Social Responsibility is somewhat self-preservation in countries where the majority live in poverty. In the absence of public amenities, especially in war, drought and famine ravaged areas, companies have had to step in and provide employees with basic needs like clean water or HIV/ AIDS medicines. We know that a number of local and multinational companies are doing great in this respect. For instance, Safaricom and Ericsson are examples of pioneers, driving the social and environmental agenda in Kenya. In Nigeria, the mobile network operators have done well in this respect. In our opinion, Social Responsibility Investments can only get bigger in Africa. 8. What role does BGL play in the financial industry to encourage proactive engagement through investments that upgrade E&S Standards? The potential of the investment sector lies in the influence it has over large companies. BGL sends signals to the industry in the pricing of new capital for companies and in the on-going valuation of quoted companies as well as directly through the use of our rights as shareholders and owners. To date, investors are probably less interested in the environment than bankers. However, a number of pressures are emerging: Leading companies have become increasingly frustrated with the failure of the investment community to recognize and reward the environmental progress they have made. There is growing interest from individual investors in environmentally responsible investments, which has led us to contemplate expanding our funds pool by introducing some progressive environmental investment funds. Institutional investors have also started to explore this area; reassured by the good investment performance of such funds. The potential market for “green” products with no price or quality premium is likely to be substantial. Finally, a few organizations

among the investment sector have also started to take environmental issues more seriously and may be creating some pressure for change. While much skepticism exists and should not be underestimated, there are signs that attitudes may be changing. A key concern for the investment sector is the relationship between environmental and investment performances. Here, the evidence on balance sheets suggests that environmental performance does contribute to good financial performance. However, many in the investment sector remain unconvinced and action is needed both to persuade doubters and reinforce signals: e.g. through the development of environmental taxation. To encourage the investment sector to incorporate environmental issues, a number of obstacles need to be overcome. Two key obstacles are (i) market inertia in investment practices and (ii) the balance between short and longterm analyses. However, the most important issue seems to be difficulties in obtaining good quality information in ways that the sector can understand and use. This obstacle needs to be overcome. 9. Looking ahead, in the African business environment, what do you see? I see growth, which will be driven by a wide array of opportunities that have been largely unexplored. The global economic dynamics are fast changing. The direction of trade is also reversing; the West-East movement of goods and capital looks set to became East-West as the industrialized economies remain enmeshed in turbulence and slow growth over the next three years. Emerging and developing economies have the opportunity to take the drivers’ seat by leveraging off the huge savings that have been accumulated over the years plus Foreign Direct Investments (FDIs) in order to develop industries as well as boost local capacity and exports. The opportunities before us are massive; signifying greater benefits for Socially Responsible Investments and Sustainability of African economies for many years to come.

Editor’s Note: Do your opinions differ? What are your thoughts on the role of financial institutions in Sustainable Investments and Impact Investing? Send us a mail:csrfiles@thistlepraxisconsulting.com