CORPORATE SOCIAL RESPONSIBLITY, ETHICS &

SUSTAINABILITY

AUDITORS ROUND TABLE3rd Annual Audit, Risk & Governance Africa Conference

22nd July – 25th July 2008, La Palm Royal Beach HotelAccra - Ghana

WALTONIO PERCIVAL-DEIGH

WHY CSR?It is a now part of a wider expansion of interest and activity:

Has continued to be a highly topical and debated subject Has increasingly provided the focus for exploration of broad philosophical questions

about the roles and responsibilities of government and other stakeholders A high level of cynicism by consumers concerning the degree to which businesses

manage their responsibilities to society. A greater demand for transparency, accountability and public reporting, and as we

have seen, increasing legislative demands for corporate responsibility. Corporate scandals – led to increased focus on business operations.

Enron and Worldcom (multi-million accounting fraud) Gap (Sweat shops in China) BP (Alaska)

Has provided the context for debate about more particular questions from employee volunteering, to health concerns about mobile phones, world trade rules, poverty eradication and AIDs.

Provides a more holistic view of businesses and their activities Helps stimulate better policies, decision-making and business practices based on a

broader understanding of business impacts beyond the financial.

Does this mean that CSR risks being about everything and nothing?

CSR is about something!It creates an opportunity for Africa.A Nigerian catholic cleric, Father Hassan Kukah, .... ‘almost all indices of human growth show that in Africa the quality of life is in a serious decline. Over 40 years ago after independence, Africa and Africans still cut a sorry sight in the world stage. With the ruling elite in the grip of a gargantuan appetite, corruption gnaws at the resources of State with a precision of a combined harvester chewing up both human and natural resources’.

DEFINITION OF CSRCorporate Social Responsibility (CSR, also called Corporate Responsibility, Corporate Citizenship, and Responsible Business) is a concept whereby organisations consider the interests of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment.

This obligation is seen to extend beyond the statutory obligation to comply with legislation and sees organisations voluntarily taking further steps to improve the quality of life for employees and their families as well as for the local community and society at large.

From Wikipedia, the free encyclopedia

This definition integrates the three dimensions: Economic, Social & Environmental aspects/responsibilities, which usually called the ‘Triple Bottom Line’.

ETHICS A major branch of philosophy, encompassing

right conduct and good life.It is broader than analysing ‘right’ or ‘wrong’It encompasses morality, justice, virtue, equality,

freedom, moral responsibility, integrity, fairness, trust, etc.

SUSTAINABLITY

A concept that is generally regarded as having emerged from the environmental perspective.

Sustainable development is that which meets the needs of the present without compromising the ability of future generations to meet their own needs.

CSR DIMENSIONSECONOMIC: integrity, Corporate Governance, Economic development of the community, transparency, prevention of bribery and corruption, payments to national and local authorities, use of local suppliers, hiring local labour and similar.

SOCIAL: Human Rights, labour rights, training and developing local labour, contributing expertise to community programs and similar.

ENVIRONMENTAL: Precautionary approaches to prevent or minimise adverse impacts, support for initiatives promoting greater environmental responsibility, developing and diffusing environmentally friendly technologies and similar.

CSR DEVELOPMENT

Becoming adopted by more and more companies as business case becomes clearer:

CSR is critically linked to sustainable business growth and long term success.

CSR recognises that in order to be successful over the long term, a business must actively manage and add value to all its stakeholder relationships, not just to the bottom line.

CSR involves measuring the impact of the business on all its stakeholders to maximise the company's positive impact and minimise the negative impact.

CSR is about good businesses behaviour over and above the legal requirements, adopted voluntarily because businesses deem it to be in their long-term interest.

CSR is not an optional `add-on' to the core business activity; it is an expression of the core value system and philosophy of the business

CSR has moved from a position of ethics based ‘corporate giving' to one of core corporate strategy.

DRIVERS OF CSR Ethical consumerism

Globalisation and market forces

Social awareness and education

Ethics training

Improved brand value

Government laws and regulation

Crises and consequences

CSR – WESTERN Vs AFRICAN PERSPECTIVE

RankingWESTERN AFRICAN

1 Be a good citizen Adopt voluntary codes of governance and ethics

2 Be ethical Ensure good relations with government officials

3 Obey the law Set aside funds for corporate social / community projects

4 Be profitable Provide investment, create jobs and pay taxes & be profitable

CSR STAKEHOLDERSGovernment - Adherence to legislations, Information Disclosure, & Environment Protection

Employees - Safety, Health & Environment

Customers - Quality control & Customer satisfaction

Shareholders - Proactive communication & Information disclosure

Suppliers - market information exchange (valued business partners)

ROLE OF GOVERNMENTSCSR is about companies acting voluntarily to raise performance beyond minimum legal standards.

Governments should:Set the standards and right policy environmentEnact intelligent legislation and fiscal measures where

appropriateReview of company law to secure greater accountabilityInterventions should be carefully considered, well

designed and targeted to provide the required stimulation of companies beyond the minimum level

Will the incorporation of a ‘Corporate Responsibility Index’ in Annual Financial Statements considered as beneficial?

European Governments(UK case study)

A recent UK Government report (www.csr.gov.uk) listed CSR priorities as follows:

Raise the profile and highlight the importance of social and environmental responsibility

Make responsible behaviour a consideration of core business Assist the involvement of small and medium sized enterprises Promote transparency in CSR reporting and awareness in the

marketplace Promote good practice in CSR internally as well as in UK The UK govt believes that CSR is relevant to all companies; large &

small, operating in both national & global markets, based in developing & developed countries.

What roles currently do African Governments play in facilitating the promotion of CSR?

African Governments?

The Chairman, NCA, Ghana,... during recent award of GSM licence to Glo Mobile, Nigeria, said:

‘Consider all stakeholders in the industry, including the government, fellow operators, the regulator and the general public in all your endeavours’.

CSR AUDIT FRAMEWORKTo demonstrate good business citizenship, firms can report in accordance with a number of CSR reporting standards including:

AccountAbility’s AA100 standardGlobal Reporting Initiative’s Sustainability Reporting

GuidelinesVerite’s Monitoring Guidelines Social Accountability International’s SA8000 standardGreen Globe Certification / StandardThe ISO 14000 environmental management standardThe FTSE Group – FTSE4GOOD IndexThe United Nations Global Compact – Communication on

Progress (COP) Report

Will local African companies appreciate & use these standards?

CSR AUDIT STAGESDefinition of the depth & scope of the audit

assignment

Launching the assignment

Interviews

The analysis

Delivery

Does Your Company “Walk-the-Talk?”

CSR & ENVIRONMENTAL AUDITS Environmental audits are useful tools for reporting on the

environmental impact of business activity. It provides accurate information to management about the

environmental impact of its policies and how responsible business decisions can be made in line with its CSR vision

Environmental audits can assess and improve efficiency in waste management, carbon emission reduction, reducing water and energy costs

Leads to reduction in environmental fines, ensure compliance with legislation & reduce costs

Positive communication on environmental audits & how CSR policies are dealing with issues raised, provides positive public relations for a business &

Improve its contribution to sustainable development and wider corporate responsibility.

How effective are Environmental Impacts Assessments in Africa?

CSR: A WEAPON AGAINST FRAUD & CORRUPTION?

Enhances relationships with the local authorities &local communities

Improves relationship with contractors, suppliers and competitors

Reduces Bribery, corruption and extortionFacilitates guidelines on gifts and

entertainmentA quick help to resolve conflicts of interests

CSR & RISK MANAGEMENT New realities have changed the nature of risk & risk management New realities include: Networked operations, Global value chains,

empowered stakeholders, the dynamic tension among sectors New form of social risk cannot be mitigated through traditional means Current business environment requires innovation by companies to

sense and understand this risk Risk Management systems must include new tools and network-based

models of information sharing. CSR is good veritable tool useful for this purpose; it serves as a counter

measure for ‘Social Risk’ CSR provides the framework & principles for stakeholder engagement CSR supplies a wealth of intelligence on emerging & current social

issues/ groups to support corporate risk agenda

The linkage of CSR to core business processes can improve a company’s approach to risk management by improving strategic intelligence and knowledge of social issues/ groups. This allows a company to not only design better risk for current issues but also help anticipate those coming down the pike.

CSR: KEY ISSUES FOR FUTURE DEBATE

Can the spread of stock exchanges across Africa contribute to a more home-grown CSR agenda for the continent?

Can Africa’s civil society build the capacity to drive a local agenda by maintaining a demand for corporate disclosure at a national level?

What can be done to prevent corporate firms from operating to two standards? One for the developed world and one for the developing world?

Is shareholder and legislative pressure the best way to ensure that corporates operate in a transparent manner?

ReferencesKytle, Beth & John Gerard Ruggie. 2005. “corporate

Social Responsibility: A Model for MultinationalsAsa Helg 59013, Master Thesis, Vid Goteborgs University,

“Corporate Social Responsibility from a Nigerian Perspective

www.csr.gov.uk “Corporate Social Responsibility” Kenneth M Amaeshi, Bongo C Adi, Chris Ogbechie &

Olufemi O Amao, Np/ 39-2006 ICCSR Research Paper Series – ISSN 1479-5124, “Corporate Social Responsibitility (CSR) Nigeria: Western mimicry or indigenous practices?

THANK YOUFor further information:percydeigh@gmail.com

CASE STUDIES