…As Naira appreciates in forex market The Minister of Finance, Mrs. Kemi Adeosun, has urged the Central Bank of Nigeria (CBN) to extend Bank Verification Number (BVN) to account holders in Microfinance Banks (MFBs), to facilitate the detection of bank accounts opened and operated for ghost workers by fraudulent syndicates. The Minister said the introduction…
BY CHINYERE ANYANWU
Mr. Eustace Onuegbu is the President of International Network for Corporate Social Responsibility (INCSR) and the CEO of De Bernards Consulting Ltd. He is a seasoned CSR resource person and an avid advocate of instituting global best practices in the conduct of Corporate Social Responsibility (CSR) in Nigeria and Africa in general. In this interview with Daily Sun, he speaks on the challenges of changing business thinking in the region.
Yes, it is an international organisation of CSR consultants, practitioners and auditors as well as human rights advocates focusing on business related human rights issues. It succeeds our former organisation, the Institute of Human Rights and Business Africa, which was an offshore Non-Governmental Organisation (NGO) formed to promote the implementation of United Nations Guiding Principles on Business and Human Rights in Africa. INCSR has a wider approach as it promotes Corporate Social Responsibility in line with global best practices, therefore, UN GP is now one of the focus areas. We also have a different view and understanding of CSR from other similar organisations, especially in Nigeria. Almost all our board members and country representatives have international experience having practised in Europe and United States; our approach, therefore, is in line with global best practices.
Change of name of the organisation
On the platform of the institute, we successfully organised the 1st International Conference on Business and Human Rights in Africa in collaboration with Faculty of Law, University of Lagos. This was in December 2015. After the 1st conference, as CSR practitioners we also did a lot of work with other international CSR & Human Rights Consultants, especially in the area of research, training and capacity building in Nigeria, South Africa and a few other African countries. It was during this period that we found out about the misconception regarding the meaning of the term, “Corporate Social Responsibility” in this region of the world. Though various terms are used to describe CSR initiatives in different organisations such as “Corporate Responsibility”, “Corporate Accountability”, “Corporate Citizenship” and “Sustainability”, they all mean the same thing in principle.
In order to properly cover the subject area, we needed to change the name of the organisation since business and human rights are just one focus area within a CSR programme in line with international standards.
What is CSR?
According to Business for Social Responsibility, CSR simply means achieving commercial success in ways that honour ethical values and respect people, communities and the natural environment. This ranges from the respect for local labour laws, for example, to international human rights norms such as the UN Guiding Principles (GP). In other parts of the world, there are legislations in place to check the activities of businesses as well protect businesses from abuse either from the host community or even the government. What this means is that a business should have defined standards of operation – minimum wage, avoid child labour, respect the environment, ensure safe working environment, among others. There are also a number of international agreements and initiatives in different sectors aimed at protecting both employers and employees thereby ensuring business sustainability – international programmes such as the Extractive Industries Transparency Initiative, Global Reporting Initiative, ISO 26000, Sustainable Palm Oil Initiative, United Nations Principle for Responsible Investment, etc. require multinational companies (MNCs) to apply CSR programmes globally.
Large international brands like General Electric, Unilever, GlaxoSmithKline, British American Tobacco, Coca-Cola, McDonald’s, Mars, Cargill, Carlsberg, Pepsico, Diageo, Schlumberger Oil, BP, Halliburton, Airtel, SAB Miller, etc. expect all their operations to comply with their corporate codes irrespective of country of operation. Suppliers must meet CSR standards for responsible sourcing, etc. The issue here though is implementation – are the standards the same across board both in the developed and developing economies?
CSR and global best practices in Africa, Nigeria
For clarity, it may be good to apply another definition by the World Business Council for Sustainable Development, which defines CSR as, “the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.”
You can clearly understand from the above definition that what most organisations in this part of the world term as CSR is simply “Corporate Philanthropy” where they return a share of their profit to the society irrespective of the way they conduct their business. By developing a web page with photos of you building a small healthcare centre, classroom block or constructing a road for the host community does not mean that your organisation is CSR compliant. I often get amazed when in the process of research or otherwise, I come across company websites that involve in what I term as “Image Laundering”. Worst still is the fact that there are a number CSR awards being given out each year by a number of organisations that (with all due respect) don’t even know the true meaning of CSR. Here you have an organisation that may have not paid its workers a living wage, may have never conducted a CSR audit being given a CSR award by maybe an organisation that does not have a CSR professional and did not engage any CSR audit company to properly assess the activities of the organisation.
I have often challenged the merits for such awards. One can only conclude that this is another image laundering approach being deployed by some organisations which is made possible due to lack of good governance. Organisations are required to conduct annual CSR audits in most parts of the world to ascertain both existing and potential risks that the organisation may be facing and with the help of a qualified usually external CSR auditor(s), design an intervention CSR strategy to mitigate against such risks.
Please, get this right – corporate philanthropy is good but should be a small part of the entire CSR strategy in an organisation. An organisation should have a CSR strategy that creates shared stakeholder value – both internal and external stakeholders.
The 1st International Conference
Through research, consultation and advocacy, I found out that businesses operating in the region are either completely unaware of the UN GP or apply double standards when it comes to their operations in Africa compared with what is obtainable in other parts of the world. The implementation of the UN GP and other known international human rights norms was almost not on the agenda of both the public and private sectors. Africans living and working in their own country are being treated like second class citizens by international companies operating here because our governments failed to protect their own people. In the first three months of founding the organisation, we received over 100 requests for assistance from people. They ranged from non-severe human rights abuses such as a foreign employer (usually) beating up his Nigerian staff for one flimsy excuse or the other to workplace negligence that resulted to loss of life. It was that serious and alarming. In fact, a lady approached me on one occasion at the Zone 2 Police headquarters in Lagos to help with her matter but we don’t have the mandate to litigate or the funding to directly engage human rights lawyers on these issues. We are mainly involved in research, training and advocacy programmes.
Further investigation revealed that there are actually three categories of companies involved – some Asian transnationals which have little or no respect for human rights or business sustainability principles both in their corporate country of origin as well as in the host country. Another group comprised some (emphasis on some) multinationals that apply double standards. By this we mean, for instance, better employment conditions for their expatriate staff with same qualifications, experience and productivity level compared with local employee or when an MNC’s environmental and waste disposal policies differ between their operations located in Europe or United States of America and those in Africa. The last category is the large national companies who often do not have any knowledge of CSR and human rights. In fact, to our greatest surprise, a number of regulatory agencies in Nigeria do not have any CSR/sustainability programme in place. That means that not only the regulatory agency probably is inefficient but also the companies that are being regulated. We are presently working out an intervention programme for one of such organisations in the maritime sector, hoping that the change of administration will facilitate the process.
As you can see, there was need to sensitise the corporate community operating in the region, policy makers who are completely at a loss most times on these serious fundamental human rights issues and global best practices in CSR and the public on their rights. To achieve this, I initiated the international conferences on Business and Human Rights in Africa, which is just the start of a sustained sensitisation programme aimed at making Africa a better place to live and work. In the words of the late Nelson Mandela, “education is the most powerful weapon you can use to change the world.”
Link between human rights and CSR
There are three different schools of thought on this matter – those who believe that CSR and Human Rights Due Diligence (HRDD) are two separate processes within an organisation, others who consider HRDD as an integral part of CSR and the last group that believes that HRDD is a higher level business risk assessment process.
I need to clarify a few things here. The fact of the matter is that CSR has evolved over the years to include national and international human rights norms. The meaning and value of CSR differs in various contexts, depending on local factors including culture, environmental conditions and the legal framework but the basics remain the same anywhere in the world. In the past, CSR was only understood to mean philanthropy where an organisation, irrespective of how it makes its profit, would give some back to the social as I earlier explained. This is what most organisations still practice in Africa including the emerging markets like Nigeria, South Africa and Kenya – this is very unfortunate.
CSR resolving issues between host communities and organisations
There is a difference between conducting a site CSR audit and conducting a business impact assessment for an organisation. The site audit checks the H & S issues, employment policies, waste disposal systems, etc. while the business impact assessment actually checks the real impact an organisation’s business activities have on the community and other stakeholders. They include the process of acquiring the land being used for a factory, farm and other businesses; employment opportunities for the host community; how the waste being disposed affect the health of the local community; what are actual and potential effects of gas being flared to the population in terms of health issues and economic loss; does the excess use of the road by suppliers affect or deteriorate the quality of that road or pose other risks in the community?
Just before this interview, I participated in a webinar titled, “Leading Corporate Approaches to Human Rights Risk Management – A Discussion on the Role of Partnerships and Collaborations” where Mike McDonald, Chairman of Supply Chain Sustainability, Intel; Yann Wyss, Human Rights Manager, Nestle, and Dariam McBrain, Global Director of Sustainability at Thai Union, spoke about their approach to human rights issues beyond basic CSR. Each of these corporations emphasised the need to work with host communities, suppliers, CSR/HRs consultants, the civil society, governments and other key stakeholders to address business and human rights issues everywhere they do business. An example is Nestle’s engagement with FLA (civil society group) in Ivory Coast to combat child labour. Only through such collaborative work would organisations be able to resolve any issues with host communities. Therefore, effective CSR strategy, which includes audits and impact assessments is a key to sustainable business.
Organisations and CSR budget in the present economic circumstances
It is even more important now that most African economies are struggling to apply a strategic CSR policy in a business. Research has shown that typical small companies can improve their profits by at least 66 per cent within five years by embracing smart sustainability strategies. For large companies, that potential profit improvement is 38 per cent. It looks like embracing sustainability opportunities is a no-brainer. As explained earlier, CSR has become not only the “right thing to do” but also the “competitive” thing to do. The business world is awakening to an undeniable reality: our global economy, society and environment are inextricably aligned. The world of today is a CSR. One cannot possibly avoid this topic whenever referring to business news: CEOs proclamations of being socially responsible, pursuing sustainable development, behaving ethically, etc. are coming under an umbrella of a globally agreed term – CSR.
Companies sourcing their raw materials from Africa like other continents are required to meet international regulations and initiatives to remain in business and often times increase their market share. African businesses need to apply CSR strategies to be able to export their products overseas, attract foreign direct investment (FDI), capture opportunities and avoid risks thereby creating alternative sources of foreign revenue for the region especially a country like Nigeria that is dependent on only one source of foreign revenue. Applying CSR in the agricultural and maritime sector would immediately boost foreign earnings and create jobs.
However, a company has to change how it does things – it has to innovate to reap the sustainability benefits, and the status quo needs a wake-up call hence the reason we titled the second international conference – “Effective CSR as a Viable Option for Sustainable National Development”.
As sustainability champions, we need to gently help point out those threats up front and quantify their potential impact, to ensure the business case is compelling. In summary though, effective CSR strategy will help an organisation avoid potential risks, reduce production costs, increase employee productivity and substantially improve bottom-line.
How can govt ensure that corporate organisations make full disclosure on CSR activities?
Company activities, you mean? In a country like South Africa, CSR uniquely receives particular attention from a legislative point of view under Section 72(4) of the Companies Act. Regulation 43 also requires that all listed public companies, every state-owned company and any other company that has in any two of the previous five years scored above 500 points in terms of Regulation 26(2), must appoint a social and ethics committee. So a lot has been done in this direction in South Africa and that’s why we find it a lot easier to work with organisations there.
In a country like Nigeria, the only way is to ensure compliance of existing legislations and introduce others in line with global best practices such as in South Africa, which will provide for things like the annual CSR assessments. Through such assessments, like I said earlier, organisations will be able to find out what risks their activities may pose to their stakeholders. The government will then ensure that they act to mitigate against such risks. Companies on the other hand will save costs on litigation, absenteeism, labour issues, sanctions, etc. thereby improving productivity and being able to compete in the global marketplace.
Also, all regulatory agencies such as the Nigerian Stock Exchange, the Nigerian Maritime Administration and Safety Agency, the Nigerian Airports Authority, among others, should require their members and suppliers to meet global best practices on CSR considering the time it takes in this part of the world to amend the legislations and the politics involved. I, however, have my reservation on the proposed CSR Bill especially with regards to non-inclusion of the United Nations Guiding Principles on Business and Human Rights as one of the reference points for the proposed CSR Commission. Anyway, according to the Executive Secretary of the Nigerian Human Rights Commission, Prof. Bem Angwe, the NRHC is presently developing a national action plan on business and human rights which I think should complement the bill, hoping that process is expedited.
How 2nd International Conference will change Nigeria’s business culture
The second international conference has been designed to study and deal with the unprecedented impacts of sustainability on national growth, societal welfare and the environment. It will facilitate the elaboration of various frameworks with the goal of developing evolutionary sustainability practices. We are presently working on modalities for a sustained partnership with University of Lagos and have a number of individual interests from institutions and organisations from around the world.
It will be a leading platform for business leaders, sustainability experts and human rights advocates to discuss the relationship between sustainability and economic development; a place to identify solutions that integrate sustainability principles into good governance and core business, a networking opportunity to build relationships with key partners, a means to gain reputational benefits from being involved.
The conference will therefore place strong emphasis on national laws, regulatory powers, company policies and business strategies that will provide a viable option for sustainable development. The two-day Sustainability Workshop will showcase the innovative approaches being implemented by leading organisations and feature thought leaders and research on a diverse range of issues facing governments and businesses in Africa. We want to bring together representatives in academia and practice professionals from various parts of the globe to share their experiences, challenges and ideas on the matter.