Corporate Social Responsibility in economic recession
Corporate social responsibility (CSR) is usually associated with the term of competitive advantage. Companies compete among themselves to attract more customers to have the highest sales and maximize profits. The winner is the one who can offer cheaper goods; provide interesting and quality service, who can offer to the customer something not offered
anywhere else. Before economic the recession in Nigeria, CSR was seen as an increasingly relevant source of competitive advantage. But when the economic crisis came to hit the Nigerian economy, analysts became curious about what would happen with the concept of Corporate Social Responsibility.
It was quite apparent that the crisis would affect CSR, but no one knew how. Some have argued that the companies should dismiss CSR, considering it as an economic burden, but others are of the view that CSR should continue to strengthen and become a benefit to business in times of crisis, making companies more competitive in an increasingly hostile business environment.
Daily Times checks shows that, the current recession and its impact directly affect the perception of CSR in companies. The crisis, which continuously developed in the recession, hit surveyed companies especially financially. The sphere of CSR experienced a significant decrease of all spending on socially responsible activities.
Subsequently there has been a review of specific activities and projects. Projects of marginal interest were rejected and CSR ceased to represent only the allocation of funds and donation. Quite as expected the most affected area was the social, and the least affected was environmental area.
The report also shows that companies are trying to solve their problems in accordance with the principles of social responsibility and they found that CSR does not mean only costs, which in time of recession decrease earnings downward, but it is something to rely on in times of crisis. Companies began to seek the benefits of CSR, not only in terms of a reputation, but also financially. These options are found in the social, economic and environmental spheres. In the environmental area, the plan was to streamline the running of projects and the search for savings, especially in energy (more efficient heating and heat recovery systems, power off electrical devices, etc.).
Reacting to this issue, a brand management consultant, Bernard Okhakume said that the recession has demonstrated the importance of corporate CSR and depth of its actual implementation. Before recession, companies were still learning what CSR is and they did not use fully the potential of CSR as a competitive advantage. During the recession, however, specific activities and projects were reviewed. Projects of marginal interest were dismissed and CSR ceased to represent only the allocation of funds for charitable purposes. CSR has become more targeted.
According to him, there must a shift from reactive to proactive CSR. Companies must begin to understand CSR more conceptually and strategically. All companies must as a matter of deliberate policy drop from the support of smaller projects and strongly focused on projects that are in line with their business activities, to enhance their competitiveness in unstable time of economic recession. In the future, all companies would consider CSR more strategically and targeting their projects better. They must support especially those projects which have proved to be effective. Rather than new projects that would like to enrich the current dimension of CSR.
In the social area, he continued, they must return benefits for employees and again support social or cultural events, which were very limited due to the recession. Companies should also place great emphasis on developing the relationship with stakeholders and getting feedback. In accordance with the current trend, companies should also focus more on volunteering, which is very beneficial and does not require too much financial support.
In another development, a survey carried out by Daily Times reveals that in future, CSR should not only underline business strategy and contribute to the reputation of the company, but also increase its value and competitiveness. The report also show that companies follow a strategy of differentiation based on CSR, in particular because it creates protection against actions of competitors, since customers are more loyal to the brand and less sensitive to price changes, an extremely important fact, especially in time of recession. A high standard of implementation of CSR was found in all companies.
The focus of the companies on all areas of social responsibility is more comprehensive in the environmental area. In the field of environment, they place a particular emphasis on international standards. High requirements for this area stem largely from the need to obey the law and directives.
According to the findings, Focusing on environmental issues is also given by allowing the well to set measurable targets, such as measuring carbon footprints and the like. This is demonstrated by the fact that companies monitor the value of their key indicators. The popularity of environmental projects also lies in the fact that often they bring a reduction in costs due to energy savings. Caring for the environment stands very high in values of companies.
Also speaking, a brand and marketing analyst, Samuel Ajayi disclosed that, “in the future, it is possible to expect that CSR in the environmental field will be even more present. Social area is represented by the care of staff and community projects. All companies place great emphasis on safety.”
According to him, brands owned by European investors also emphasize the gender issues. As expected, this area is not entirely addressed by company of Japanese ownership, due to the cultural stereotypes of Asian countries. Cooperation with the non-profit sector seems to be efficient, and is carried out mainly through community projects as well as volunteering. Donations are still carried out, but in line with current trends, its role is smaller in relation with community projects. In the economic sphere, the companies share common characteristics. Given the requirement of transparency and openness they produce annual CSR reports, and they have established codes of ethics and defined responsibilities in CSR.
Speaking on the way forward, an Economist, OluwafemiFagbemi, told Daily Times that, in a period like this, a considerable strengthening of communication with stakeholders and the larger social communication with employees, departments and offices is very important to keep them abrace with the very new development. According to him, all companies must begin to shift from the support of smaller projects to be focused strongly on projects that are consistent with the object of business. Stakeholders should begin to be seen as a major business partners in the process. CSR must begin to be understood as a corporate strategy, local impact must begin to be understood as a global impact, the problematic situation or process must also begin to be communicated more, and to promote projects linked to business activities with a positive impact on society.
Above all, he said, “companies should start to realize that increasing relations and communication with stakeholders to develop a genuine trust based relationship, rather than creating an artificial image of generous company, builds a real competitive advantage. The companies have not experienced the shift to business growth and financial gains for companies that are open to new opportunities of CSR”
“Companies have similar goals in regards to conservation of natural, renewable resources, and protection of the physical environment; since both companies consume enormous amounts of natural resources and have the need to soften their image within the communities that they conduct business. Managements must adapt to business changes that are driven by legislative and governmental actions that may be self-serving and issues driven without a true long-range strategic focus, any CSR-based initiative does not guarantee secure and profitable outcomes; hence, there will always be an element of risk involved in such ventures.” He noted
In conclusion, corporate social responsibility (CSR) has become such an important concept that in some situations, it is soon to be required by law that publicly listed companies disclose ethical, social and environmental risks in its annual report. An example of CSR is the growing implementation green buildings, which are not only environmentally friendly, but also using the environment to benefit the company’s corporate reputation through the use of the resource-based view business strategy.
