The Case for Top-down Corporate Social Responsibility (CSR) in the developing world
A standard and universally accepted definition of Corporate Social Responsibility (CSR) has been elusive for years. All the definitions put forward so far by different authors agree that CSR is all about sustainability. CSR is simply put as a practice where a corporate entity practices capitalism unusual, sustainably and with a conscience, for the benefit of the organisation, its stakeholders and the world at large. It entails carrying out normal business operations and at the same time ensuring sustainability of both the business and the environment in which the operations are being carried out. The Centre for Ethical Business Cultures in 2010 defined CSR as "the integration of business operations and values whereby the interests of all stakeholders including customers, employees, investors, the community and the environment are reflected in the company’s policies and actions." This definition shows CSR as an all accommodating strategic move and calls for top management involvement if an organisation’s CSR programmes are to be in tandem with the organisation’s strategic direction.
It has been observed that most organisations in developing countries practice "cosmetic CSR" in spite of the fact that research has shown that there are tremendous rewards for observing CSR. CSR brings so much more to an organisation’s value table and it is known to create extra economic and environmental and social value beyond an organisation’s legal and ethical mandate. Among CSR benefits are, but not limited to the following:
•Social licence to operate
• Good reputation for a company and its
• Contribute immensely to sustainable
development and capacity building in
• Positively affects customer satisfaction and
loyalty (who would not want to be associated
with a good thing?)
• Increased motivation and productivity of
employees especially if they are involved in
the formulation, implementation and review of
Argument for CSR Board Oversight
CSR has been evolving and has become quite involving for all organisational members, management and employees combined. In as much as the talk about the strategic importance of CSR has become louder in organisations, both in the developing and developed world, the practice is still lagging behind the talk. Some organisations regrettably still regard CSR as an unwelcome distraction from achieving the real reason for being in business, which is generating the maximum possible profits, irrespective of how much damage to the environment or to the climate their operations are responsible for. No one can fault this line of thinking no matter how selfish it might sound, even the great Friedman in the 1970s famously declared that the "business of business is business," in unequivocal support of rent seeking and profit maximisation behaviour by corporate entities.
Board of directors’ involvement or at the very least its oversight of CSR programmes is non-existent in a lot of organisations in the developing countries. Altschuller (2011) writing in the special feature of the IR Magazine pointed out that "studies have found board oversight of social and environmental practices is lacking." The world is seized with climate change and its effects and, therefore, strategic hands and stewardship must be on the CSR deck if planet earth is going to survive the climate change onslaught. The Board should be at the forefront, taking a stand against unsustainable behaviour within the organisation and championing corporate citizenship which is likely to snowball into good behaviour throughout the organisation and ultimately embedded CSR culture.
Each organisation has to ensure that sustainability goals and targets are embedded in the organisational targets. It is therefore crucial that organisational vision, mission and values statements have a strong bias towards sustainability. These are very important documents for every organisation. Vision, mission and values statements communicate within and without the organisation what the business stands for and its future direction. They are strategic documents and by simply looking at them one should be able to visualise the organisation’s mind-set towards CSR. It is not a secret that such important documents are found hanging on important places on organisations walls through the blessing of the board members and that the board members authorise the use of every word on these statements. Technically, the board is the author and the brain child of vision, mission and values statements and should, therefore take responsibility of the wording of these statements.
Every organisation should preach the gospel of sustainability and clearly highlight what and how the organisation is going to contribute towards the realisation of sustainable development goals (SDGs). However, preaching alone without religiously practicing sustainable business operations is not enough. SDGs are long term targets and long term targets are naturally strategic. As a result, the task towards meeting long term goals can never be left to middle level management or low level employees. This does not mean employees should not be involved, they are a very important part of the CSR equation to be left out. However, their involvement should mostly be on a day to day implementation of sustainability targets. The board is expected to play CSR leadership and stewardship roles.
It is rare to come across an organisation in most developing countries with a department exclusively running CSR for the company. A department with its head only responsible for CSR. The most observed scenario is where CSR is run under a section within a department such as under the marketing department or public relations, which only serves to communicate that the organisation is taking a myopic CSR view of treating it as a mere public relations tool. However, if an organisation is to come up with meaningful and result oriented sustainability targets and follow them through, it is crucial for CSR to claim a seat in the Board Rooms and not just a token seat, but a strategic one too. The Board Member responsible for CSR will assume a very important duty of convincing other Board Members about the strategic importance of CSR to the organisation and ensure they see beyond the profit maximisation call of duty as the sole reason for the organisation’s existence
The Board of Directors, therefore, should assume the following important CSR roles:
• Providing a CSR strategic direction for the
• Ensuring the CSR framework is in line with
the strategic policies of the organisation
• Authorising CSR programmes, budgets, CSR
collaboration partnerships and sustainability
reports before they are published
• General CSR oversight directly or through a
CSR Committee reporting directly to the Board
• Monitor and review the company’s CSR progress
Therefore, as CSR and prosocial corporate behaviour becomes more strong and still growing, the board must ensure that the business is working proactively and aggressively for social betterment and at the same time cut-out reactive CSR and disjointed philanthropic behaviour. Ultimately, the goal is to ensure the organisation becomes a symbol of all that is good about sustainability in the eyes of all the stakeholders. The organisation should always be ahead of societal expectations through carrying out voluntary CSR initiatives.