CSR: Public policy, firms and development
Over the years, governments across the world have become increasingly proactive in promoting corporate social responsibility (CSR).
They do this, especially through public policies. This is, especially so because, recently, companies have seen increased government’s involvement in the business sector-partially, due to the global financial crisis-and this trend is expected to continue in the future.
Keeping this in mind, it is likely that government’s promotion of corporate responsibility and good governance will continue to grow in the coming years. With the implementation of these public policies, companies must now look at governments as key stakeholders of their operational structures and become more aware of the public sector’s efforts to promote CSR.
By engaging with governments, companies can increase the impact of their CSR’s strategy and improve the sustainability of their programs. Joining efforts across sectors can lead to more efficient solutions to social problems that are a concern to both companies and governments.
Analysts are of the view that, companies that proactively engage in public policy have a new opportunity to become leaders in the countries where they operate and to shape the future of how governments promote CSR. For these analysts; recognizing the implications for the business community and the potential for impact on labour practices, public policy and the promotion of CSR will lead to growth and development.
Speaking on this issue, an expert in the area of CSR, and a public commentator, Idowu Kabir told The Daily Times that; “both voluntary guidelines and binding policies publicly communicate the government’s position regarding CSR in a way that could potentially influence companies’ behavior. These statements can raise CSR awareness among the general public, who, in turn, could demand more socially responsible practices from the private sector.”
According to him, “When state-owned companies implement these policies, those actions can signal the government’s commitment to CSR; and serve as an example for the private sector. A clear benefit in the case of binding standards is the widespread implementation of CSR and the availability of step-by-step instructions for companies to incorporate responsible practices into their business practices.”
While reacting on the challenges of government policies and the Promotion of Corporate Social Responsibility he said; “some shortcomings of these policies include the lack of accompanying government action. In cases where guidelines are not enforceable, governments may simply post public statements without any complementary awareness campaigns or avenues for businesses to engage in such initiatives. Additionally, with voluntary guidelines, there is no guarantee of implementation and oversight. Consequently, if businesses are not compelled to enact new policies, the guidelines and principles fall short of effecting social change.”
“binding standards also have potential drawbacks. For example, in the long term, corporations may see the standards as imposing too many additional costs and choose to remove their operations from the country. Furthermore, mandatory standards are often unenforced due to lack of long-term government funding. As a result, both employees and the community frequently do not see the lasting benefits of the policies. Voluntary guidelines and binding standards are the most common forms of public policies found in the world.”
He also stressed that; “this phenomenon could be attributed to their relatively low cost compared to other types of policies, especially when voluntary or binding standards do not go beyond the publication of guidelines. In order for these policies to be most effective in changing corporate behaviour, however, they must be part of a larger public initiative that includes awareness, industry buy-in, implementation assistance, and-in the case of binding standards-enforcement.”
Findings by The Daily Times, revealed that, examples of binding standards, include the Swedish government’s reporting policy, which seeks to influence the private sector’s behaviour through its state- owned companies. As part of this law, in 2007, the government began to require that all state-owned companies report on social issues using the Global Reporting Initiative as a framework.
Another example of a binding contract is found in China, where the Communist Party enacted the Labor Contract Law in 2008, requiring companies to provide minimum protections to workers. Peru provides a good example of voluntary guidelines; in that country, the government and mining companies have established a joint community development fund to which firms contribute a portion of their pre-tax profit.
In China, the government has drafted CSR guidelines for both state-owned companies, as well as foreign-owned firms operating in the country. Both voluntary guidelines and binding policies publicly communicate the government’s position regarding CSR in a way that could potentially influence companies’ behavior. These statements can raise CSR awareness among the general public, who, in turn, could demand more socially responsible practices from the private sector.
In addition, when state-owned companies implement these policies, those actions can signal the government’s commitment to CSR; and serve as an example for the private sector. A clear benefit in the case of binding standards is the widespread implementation of CSR and the availability of step-by-step instructions for companies to incorporate responsible practices into their business practices.
Also speaking on this issue, a Legal practitioner and consultant, Kpemi Samuel disclosed that; “most of the governments researched engage in some type of activity that serves to promote CSR within the country’s private sector. However, some governments encourage corporate responsibility more explicitly than others; and therefore have made raising awareness of CSR one of their main focal points in national campaigns. Examples can be found in Brazil, Canada, and China.”
“While the efforts are led by different agencies in each country, they all seek to promote CSR as a means to increasing trade and competitiveness. For example, the Brazilian Service of Support for Micro and Small Enterprises (SEBRAE) seeks to encourage the growth of small and medium enterprises by encouraging the adoption of responsible business practices. In Canada, the two federal agencies that oversee the business sector, namely Industry Canada and Foreign Affairs and International Trade Canada, promote CSR both domestically and internationally to increase trade and foreign investment in the country.
Likewise, the Chinese Communist Party has adopted the Harmonious Society doctrine on the federal level to emphasize social equity and responsible business practices as important principles in the quest for long- term economic growth.” He noted.
Further, he stated that, countries like Nigeria, must ensure steps are taken to encourage CSR as a way for the country to retain its competitive advantage. The benefits of these awareness efforts are evident in several countries of the world. On one hand, these initiatives are relatively inexpensive compared to other types of efforts, such as the creation of binding standards. In the absence of large budgets, governments can leverage their endeavours and create public awareness by using existing infrastructure to communicate the advantages of CSR. Also, these promotional efforts often serve to encourage cross-sector collaboration.”
He pointed out that, civil society organizations, such as CSR associations frequently support the government’s efforts because the messages are consistent with their own objectives. However, government-led CSR promotion faces several challenges-the biggest of which is that the efforts to promote voluntary actions do not guarantee implementation.
L-R: Immediate past President, National Institute of Marketing of Nigeria (NIMN) Aera Ganiyu Koledoye, current President and Chairman of Council, Tony Agenmonmen, Chairman, Compliance Committee of NIMN Act, Debo Adebayo, and Registrar of the Institute, Sidney Ogodo during a press conference recently… in Lagos.
Stories by Godwin Anyebe
