The Proof is in the Impact

Shocking as it may sound, a good number of organisations – particularly in Nigeria – are yet to adopt Corporate Social Responsibility (CSR) – better still, sustainability – as a practice, let alone absorb it into their operations. But what more can be expected when, until quite recently, CSR was seen as ‘giving back’, or what some people like to call corporate philanthropy? In the past, it was alright to organise a charity sale at the end of the year, and in the spirit of festivity, donate the proceeds to the poor. It is, therefore, not surprising that most organisations chose to opt out of the social responsibility game as all it would do was increase their cost – not only would they incur expenses on planning whatever event, the beneficiaries would most likely walk away with good cash in their pockets, leaving the benefactors with simply a ‘do-good’ feeling. Safe to say the average profit-oriented business man happily passed on that.

As time passed, it appeared that corporations started to notice how changes in the physical and social environment started to affect them as much as their economic environment. This caused more organisations to sit up to the reality that their large contributions to the economy had put them on a pedestal that began to demand social responsibility. They noticed that non-business issues like political unrest, poverty of the citizens and exhaustion of natural resources had a huge effect on their operations. This brought about the concept of corporate social responsibility as defined by the Business for Social Responsibility as, “achieving commercial success in ways that honour ethical values and respect people, communities and the natural environment.”

In line with globally acceptable standards, the paradigm therefore must shift from creating value – barely really – to creating impact in Nigeria. The intention of sustainability should no longer be to salvage the consciences of top level managers who have more money than they know what to spend it on, but to adopt policies that will contribute to the welfare of key stakeholders to an organisation. Contention may immediately arise as organisations start to worry about what such a huge investment in social responsibility will do to their bottom-line considering increased costs, but the crux of sustainable development is the direct impact on the business’ bottom-line and long-term benefits that will bring in returns on your shareholders’ – who are key stakeholders – investments.

Although various researchers have come up with various results as to the direct relationship between sustainability and financial performance, there is ample proof that sustainability creates long-term value that will directly and indirectly contribute to the profitability of any organisation.

Enhanced brand and image reputation

Because the society is demanding for responsible business practices, it will almost naturally gravitate to an organisation who is adopting such measures. This will consequently lead to increased customer base, greater access to capital, and a wider reach of partners.

Less risk of negativity

The more integrated an organisation’s sustainability approach is, the more favourable ratings/valuation such an organisation will receive from securities analysts simply because such an organisation is less likely to experience problems such as defective products in the market, accusations of child-labour, or come under scrutiny for corruption and be forced to pay a heavy fine.

Increased efficiency in handling business

There are many activities in the sustainability strategy that reduce the cost of operations. For instance, the use of recycled paper not only has positive impacts on the environment, it also reduces the seemingly petty expenses of the organisation. Members of the organisation are, therefore, forced to reconsider their operations to maximise such an advantage.

Increased employee attraction and retention

A sustainable organisation will always be an attractive one, particularly because it breeds a strong bond of trust between the organisation and the employees. This leads to less turnover, recruitment and training costs.

Increased productivity and reduced error rates

To find the balance between product viability and social acceptance to create the much-needed impact, organisations will be forced to get creative in their thinking and more strategic in their approach to create products that perform optimally. This therefore generates cash flows that cover associated costs.

However, these benefits can only be reaped when the sustainability principles are:

  • Part of the corporation’s values;
  • Integrated into strategic planning;
  • Strictly adhered to by management and staff;
  • Perfectly aligned with the corporation’s specific corporate objectives and core competencies.

Although the attendant impacts are difficult to quantify and therefore measure – especially in the short-term, logical reasoning suggests that there are numerous positive impacts to be reaped from conducting business responsibly. High-impact products will always generate revenue simply because they work better and simultaneously improve the society.