Experts advocate improved investment in CSR initiatives, even as 92% agree it may not be linked to company profit
The Issue
The world, and many businesses with it, is slowly rising out of a crisis. A year ago, experts, leaders and economists could not have imagined the devastation that would follow as COVID-19 became a global pandemic. Like other global events with such a massive impact, the coronavirus has changed how we see the world, how organisations think and implement strategies, including how communities choose to conduct their lives. Regardless of the tragedy of lost lives and scarred communities, the economic and social changes caused by a pandemic will constitute a cultural legacy that will live long in our memories and those of future generations.
In the past decade, brands and organisations have been forced to make operational adjustments whenever necessary – reactions toward the global financial crisis, SARS, the Ebola crisis, recession, and the COVID-19 are prime examples. This highlight that human responses to such shocks tend toward critical reverse prediction. In the past year, we have witnessed further convergence of the physical, digital, and biological worlds, and new technologies and platforms have increasingly enabled citizens to engage one another and their governments. Citizens are now driven to voice their opinions, coordinate their efforts, and even circumvent public authorities’ supervision.
In both developed and emerging markets, Corporate and Social Responsibility has become an essential element for firms, with experts and scholars emphasising that CSR strategies enhance competitiveness and corporate reputation. They also involve practices and principles that firms follow to strengthen and create relationships with stakeholders and the environment. CSR has become a critical element for global businesses due to increased environmental and ethical issues.
While it was widely held in previous decades that companies should only focus on their bottom lines, a 2015 Nielsen survey revealed that 66% of online consumers said they would pay more for products or services from socially and environmentally responsible companies. That same survey also found that consumer goods brands with a commitment to sustainability outperform those that do not.
The Question
The COVID-19 pandemic caught the world by surprise, causing fatal illness and economic hardship for brands, organisations and consumers globally. It resulted in widespread socioeconomic disruption, halted supply chains, global trade, and changed the ways businesses and organisations access finances and other associated “normal” business activities. Moreover, the public and businesses’ ability to cope has rested primarily on palliatives, new government policies and initiatives, which might still not work as intended.
Furthermore, the pandemic has led to an upswing in businesses and enterprises pulling together and offering support to SMEs and communities as part of their corporate social responsibility (CSR) initiatives, which could be vital to kickstart local economies. With billions affected financially and mentally, the crisis has also made more consumers aware and educated on social issues, and they have begun demanding businesses institute policies that benefit all of society rather than just the business’ bottom line.
Against this backdrop, we engaged CSR experts in our national focus group on how Nigerian companies choose to be socially responsible to their communities and stakeholders in a post-COVID world and how CSR strategies have always affected their bottom-lines.
In economics, companies are also advised to invest in more than one bottom-line. Apart from profit, the triple-bottom-line also demands a focus on people and the planet. It is like a cycle – companies have to be managed in a way that not only makes money but which also improves people’s lives and the planet. That way, customers can confirm that a company is invested in them and reward the company. You can describe it as ‘you have to spend money to make money.
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What The Streets Are Saying
The experts confirmed that their companies invest in their Corporate Social Responsibility initiatives, although with differences in intensity. All the experts agree that in a post-COVID world, CSR initiatives have become more important for Nigerian businesses.
Some responses include “A lot of groups or individuals require support to get out of the impact of the COVID-19 in the last one year”; Empathy under challenging times, expressed by an organisation via CSR would definitely attract a positive outcome in all key spheres – branding, revenue, goodwill, and more”; “People needs empowerment to overcome the challenges of unemployment and to meet their daily needs, re-position and strategically help them to have fulfilment in life”; “A lot of people require assistance, some businesses are not as it used to be, in our little way we give to the community and be a blessing to others”.
On whether CSR truly affects their organisations’ bottom-line and has been proven to improve profit, 92% say no, while 8% are uncertain that it does.
“Because CSR is not a single factor that drives profit – or better yet, clear numbers are yet to prove it – it might be difficult to link it to income generation directly or boosting profit,” says a CSR expert in the group. “In economics, companies are also advised to invest in more than one bottom-line. Apart from profit, the triple-bottom-line also demands a focus on people and the planet. It is like a cycle – companies have to be managed in a way that not only makes money but which also improves people’s lives and the planet. That way, customers can confirm that a company is invested in them and reward the company. You can describe it as ‘you have to spend money to make money”.
“If a company focuses on finances only and does not invest in its social capital, that company cannot see the whole picture, so it cannot account for the full cost of doing business”, he added.
In response to the pandemic, global corporations reiterated their commitments to stakeholder interests as a means of creating and preserving shareholder value. For example, Doug McMillon, President and Chief Executive Officer of Walmart and Chairman of Business Roundtable, stated that “During a time of tremendous challenge, Business Roundtable CEOs have shown what it means to live the principles we announced almost a year ago. Concurrent health, economic and racial crises have made clear how various systems are connected — and that multi-stakeholder capitalism is the answer to addressing our challenges holistically”.
“Over the years, trust has become an essential factor in brand-consumer engagement”, said another expert. “Consumers want to understand, and maybe even like, the organisations from which they buy. Apart from product design and innovation, CSR initiatives have become a quick win for organisations. They want to do business with a company they can trust. As we all saw during the pandemic and the #EndSARS crisis, businesses are now interwoven with social and environmental issues. For those that want to remain competitive in today’s marketplace, they have to invest in corporate social responsibility and ignore whether it reduces net profit that might be displayed in the annual reports”.
“Maybe we should redefine Corporate Social Responsibility, especially for African countries”, an expert stated. “Rather than the investment that involves constant infusion of cash donations, we should make a business case for returns that can be measured through improved entrepreneurship, job creation and other measurable factors that are important to the African consumer. It also calls for issue identification, community engagement, and radar-focused investments to provide long-term impact for brands and the communities involved. Due to the pandemic, including an expanding Gen-Z segment, the consumer-mindset is changing, and the new revolution will fundamentally change the way businesses operate”.
Insights on What The Streets Are Saying are drawn from data collected through in-depth interviews and surveys with our 500-member consumer panel spread across the country, including 100 culture insiders, who are all leading thinkers and doers across media and marketing.
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