A Little Kindness Goes a Long Way. (View from the City)

By Siddiqi, Moin | African Business, November 2002 | Go to article overview

A Little Kindness Goes a Long Way. (View from the City)


Siddiqi, Moin, African Business


The ruthless, man-eat-man attitude of some multinationals could prove their downfall. International shareholders are now demanding that corporations demonstrate that their activities benefit the societies in which they operate.

In today's fast-changing world, true multinational corporations (MNCs) should have dual objectives. Firstly, improving shareholder value through greater efficiencies thereby providing higher returns on capital and assets; and secondly, pursuing the goal of 'corporate social responsibility' (CSR) i.e. embracing the economic, environmental and social aspects of business.

Those MNCs successfully able to integrate the twin goals of profitability with CSR would command more respect from shareholder investors, as well as stakeholders such as customers, employees and local communities. Companies with a genuine concern for the wider society, it is believed, are in better position to improve their long-term competitive advantage over rivals as a more caring attitude can result in higher profits. As the Nigerian President, Olusegun Obasanjo, neatly puts it: "There is a need to balance quick returns with the social imperative of improving quality of life."

Two recent surveys have found evidence of increasing demand for a good corporate 'socio-code' and creating a caring society. An Environics International survey of 1,000 people in 25 countries revealed a near consensus that companies should deploy their expertise and high technology to tackle socio-economic problems. Another survey, of executives at the global accountancy firm PriceWaterhouseCooper, revealed that 70% believed that CSR was a key to their company's profitability.

The European Commission in Brussels has also noted: "CSR creates value for society by contributing to a more sustainable development." Essentially, CSR improves public image, encourages better recruitment and promotes sales to growing environmentally conscious consumers.

PUBLIC RELATIONS

The international oil companies, (IOCs) operating in west Africa, where the potential for untapped oil and gas reserves are immense, all make claims to operate ethically. In November 1995, Royal Dutch/Shell was at the centre of local and world-wide criticism following the execution of Ogoni environmental activist, Ken Saro-Wiwa by the notoriously corrupt and brutal regime of the late military dictator Sani Abacha.

In recent years, however, Shell Petroleum Development Company of Nigeria (which produces about 40% of the country's total oil output) is making determined efforts to become a good 'corporate citizen' by investing in socially responsible projects and leading the search for alternative sources of clean energy. The company employs about 10,000 indigenous people, of which 40% are full-time staff.

Ron van den Berg, the managing director of Shell said: "We remain focused on our social responsibility toward host communities with an increase in our community investments budget from $52m in 1999 to $60m in 2000." Since 1998, Shell has diversified its aid-programme to include healthcare, education, water-supply and micro-lending schemes for small viable businesses and farmers. Last year, the company repaired 54 steel pumps in the Niger River Delta (the heart of Nigeria's oil wealth) and funded scholarships to 13,000 high school and 1,900 college students. Further example of social investment is a nature park on Bonny Island, where some rare and endangered species like hippopotamuses can swim in peace.

Nigeria Liquefied Natural Gas (NLNG), the joint venture between the Nigerian National Petroleum Corporation and oil majors (Shell, TotalFinaElf and Agip) is developing the park. NLNG has substantial expansion plans for its $3.8bn plant in Bonny Island. There are of course continuing problems of large-scale pollution in the Niger Delta. The responsibility for the cleanup operations rests with both the Ministry of Environment and the IOCs who make handsome profits thanks to lower production costs.

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