The unrelenting economic recession in the country has been impacting all facets of activities of companies. The worse hit is their implementation of Corporate Social Responsibility, CSR. OLAJIDE FABAMISE writes.
The shrinking of the economy and businesses has compelled many firms to scale down every aspects of their activities as they face financial and operational challenges daily. Corporate Social Responsibility, CSR is usually associated with the term, 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, and who can offer to the customer something not offered anywhere else. Before the economic recession began in Nigeria, CSR was seen as an increasingly relevant source of competitive advantage.
But, with the coming of the economic crisis, analysts became curious about what would happen with the concept of CSR. 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 a financial burden, but others are of the view that CSR should continue to strengthen and become a benefit to business in times of crisis, make companies more competitive in an increasingly hostile business environment.
It is also worthy of note that the recession has exposed the importance of 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. In 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.
Investigation by our correspondent shows that the current recession and its impact directly affected the perception of CSR in companies. There had been a significant decrease in spending on socially responsible activities. Subsequently, there has been a review of specific activities and projects. Indeed, 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. For example, the Promassidor Quill Award for Excellence in Journalism, and MTN Project Fame, were rested in this year. Finding 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, 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.).
Speaking to our correspondent in Lagos, a public relations expert, Kayode Akinpelu said; “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 focus on projects that are in line with their business activities, to enhance their competitiveness in unstable time of economic recession.
He said, “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 said that 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. Our correspondent reports that a survey 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 survey also shows that companies follow a strategy of differentiation based on CSR 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 findings, focusing on environmental issues allows companies 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.
Speaking to our correspondent, Mr. Tunde Kilani, a brand analyst expert, 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.”
Speaking on the way forward, he pointed out 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 abreast of 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 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,” he said.
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; build 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.”
According to him “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.”