Contemporary Issues in the Global Business Environment Report

NAME: MUSTAPHA ALAO

INSTITUTION: BOURNEMOUTH UNIVERSITY

FACULTY: FACULTY OF MANAGEMENT

COURSE: MASTER OF BUSINESS ADMINISTRATION

UNIT: CONTEMPORARY ISSUES IN THE GLOBAL BUSINESS ENVIRONMENT (CIGBE)

TOPIC: CHALLENGES GLOBAL ORANISATIONS FACE IN THE IMPLEMENTATION OF CORORATE SOCIAL RESPONSIBILITY

UNIT TUTORS: JOHN TOTH, LUCY LU, SUKANYA AYATAKSHI, DERMOT McCARTHY

DATE: 11 NOVEMBER 2016

Executive Summary

This report identifies and critically analyses some key challenges that Shell Nigeria and Coca-Cola India face in implementing corporate social responsibility. Issues such as lack of well organised non-governmental organisations and the micro & macro environmental factors that pose as challenges to effective CSR are analysed. Possible reasons for the challenges are also discussed and points are complimented by theories relating to CSR. Recommendations and suggestions to achieve more effective social responsibility are stated towards the end of the report with backed up by frameworks from experts.

Introduction

Corporate social responsibility is generally interpreted as responsible business practices that organisations and firms use to reduce their negative impact on society and enhance their positive impacts. When entrepreneurs start companies, they cause what economists refer to as externalities. One of the ways these companies manage and balance these externalities is through corporate social responsibility. For example, a company that runs in country with no stable power supply might use diesel generators to generate electricity. This is a negative impact on the environment because these generators emit greenhouse gasses that have detrimental effects on the ozone layer. ‘...Corporate social responsibility therefore comes in as a voluntary way for companies to reduce their negative impacts’ (Amaeshi, 2013)

Although it is seen as philanthropy in some parts of the world, corporate social responsibility today is mostly seen as something that should be embedded into the philosophies of a business organisation. Companies even ‘started incorporating their CSR projects in their annual reports’ (Maan, 2014). The basis of the definition of modern corporate social responsibility is represented in Carroll’s Pyramid of Social Responsibility. Carroll states, ‘the social responsibility of a business encompasses the economic, legal, ethical and discretionary (philanthropic) expectations that society has of organisations at a given point in time’ (Carroll, 1979). Corporate social responsibility is key in addressing the triple bottom line of ‘people planet and profit’ (Elkington, 1998).

Basically, ‘the prime purpose of including CSR in corporate business is to make the corporate business activities as well as the corporate culture both sustainable in three ways: economic, social and environmental’ (Singh, 2012), although many companies still take corporate social responsibility as a ‘peripheral issue for their business and customer satisfaction more important for them’ (Berad, 2011).

While global organisations try to implement corporate social responsibility in today’s complex and fast changing stakeholder environments, they are faced with a lot of issues and challenges. Such as which may include a ‘non-availability of well organised non-governmental organizations, lack of community participation in CSR activities’ (Berad, 2011) and so on. A challenge could simply be that the company is unable to generate ‘free cash flow’ which will ultimately discourage additional investment because ‘without a strong business sector, there will not be the resources to meet the societal and environmental challenges’ (Howell, 2014). This report will critically analyse some key challenges faced by Shell Nigeria and Coca-Cola India (CCI) in implementing their corporate social responsibility initiatives.

Shell Nigeria have faced many challenges over the years in implementing their corporate social responsibility strategies, but the main barriers for the company to implement their CSR effectively are Nigeria’s problems of corruption and theft even at a government level. Also, the company’s failure to the involve beneficiaries of the corporate social responsibility they seek to implement (Frynas, 2005). This could partly be due to the lack of awareness in the communities that Shell Nigeria is operating in. Bad image is also acting as a barrier for Shell Nigeria to effectively implement CSR as the company was implicated in the government military actions resulting in the killing of non-violent community, human rights activists and environmental activists such as Ken Saro Wiwa in 1995.

Shell Nigeria’s problems only increase with the sabotage of facility and oil theft that occurs in the Niger Delta region, which leaves rivers and land in the area polluted. Business and human rights researcher for Amnesty International, Mark Dummett said, ‘by inadequately cleaning up the pollution from its pipelines and wells, Shell is leaving thousands of women, men and children exposed to contaminated land, water and air, in some cases for years or even decades’ (Dummett, 2015). Although this is largely blamed on the Nigerian government’s failure to contain the Niger Delta oil thefts, it is a major barrier to Shell Nigeria in implementing their corporate social responsibility.

The irresponsibility of the Nigerian government extends as Amnesty International also reports the failure of the Nigerian government to regulate the oil industry. ‘It’s watchdog, the National Oil Spill Detection and Response Agency (NOSDRA) is under-resourced and continues to certify areas as clean that are visibly polluted with crude oil.’ (Amnesty International, 2015). This report goes into a more in depth analysis of these challenges that Shell Nigeria face in implementing their CSR strategies.

Coca-Cola India share similar corporate social responsibility implementation challenges with Shell Nigeria because of the similarities in the environments in which the companies operate. Coca-Cola India received a lot of criticism and came under a lot of scrutiny by non-governmental organisations and environmental activists for various allegations pertaining to the company’s pollution of the environment. This therefore pressured Coca-Cola India into implementing some CSR strategies like placing a ‘ban on purchasing refrigeration equipment containing CFC’ (Hills and Welford, 2005) within the company. The challenges that Coca-Cola India faced in implementing these corporate social responsibility strategies include the lack of community participation in the implementation of CSR activities. (Berad, 2011) This is largely attributed to the little or no awareness about CSR within the communities such as Kaladera (Rana, 2016). The Non-availability of efficient non-governmental organisations in areas like these rural areas where Coca-Cola India plants are based has become a challenge for the company to effectively implement corporate social responsibility. The NGOs present in these remote areas of India cannot identify the real needs of the communities to help the companies in the area ensure an effective implementation of CSR. ‘This also builds the case for investing in local communities by way of building their capacities to undertake development projects at local levels’ (Berad, 2011). This report also goes into a more in depth analysis of these challenges that Coca-Cola India face in implementing their CSR strategies.