Mr. Speaker,

According to the corporate governance principles issued by Organisation for Economic Cooperation and Development (OECD), good Corporate Social Responsibility (CSR) is highly associated with good corporate governance; which indicates that organizations are measured by their concern towards society among other outputs. Since public and private organizations form a significant part of the economic structure of every nation, their activities both good and bad have a bearing on the sustainability of the economy.

While Ghana has seen some CSR activities emanating from a spread of industries, it appears that the impact is not felt as significantly as we would want. For a long time, pointing out the disparity in this expectation has not been clear in literature as it is now. It is true that CSR was espoused in the early days as being voluntary. It has, therefore, carried with it, a sense of ‘going the extra mile’ in the business-society relationship. While this still holds relevance, I find that much emphasis has not been placed on the ‘responsibility’ in Corporate Social Responsibility. As the renowned College Basketball head coach Patricia Summit expressed “Responsibility equals accountability, equals ownership…”, CSR will be incomplete if we turn down the invitation to invoke accountability of the corporate bodies for their CSR.

When we talk about CSR in Ghana, as is evident in Mavis Amo-Mensah’s literature review on CSR in Contemporary Ghana, (published in the International Journal of Business and Management Review), there is a dominance of foreign Multi-National Companies (MNCs) on matters of CSR in Ghana. She also adds that the motivation of these MNCs to actively engage in CSR can perhaps be attributed to their need to gain legitimacy in the Ghanaian business industry. For what better way is there to establish the legitimacy of a brand in Ghana than to show concern for the needs of a given society? Unfortunately, the aspect of CSR that looks at what the company does for the communities has been overly focused on, while paying little attention to how the company carries out its activities in a socially responsible manner.

For the past few years, I have been vested in the need for the state to play a more central role in driving the CSR of corporate bodies here in Ghana for a few reasons:

Firstly, while CSR has been defined according to the European Commission of 2001, in terms of a voluntary action by corporate bodies to integrate social and environmental concerns in their business operations, the context of environmental issues in our world today demands a more committed approach from all actors to ensure the sustainability of our economies, business operations, and our planet.

Secondly, since the general understanding of CSR leans towards philanthropic or charitable activities it is difficult to see the need in regulating corporate activities in relation to their societies. In other parts of the world like the European Union, the adoption of OECD Guidelines for Multinational Enterprises seeks to change this narrative.

Thirdly, since the communication of CSR activities is lacking in our Ghanaian communities, the State can sufficiently make up for this shortfall through CSR awards, CSR movements, CSR foundations, CSR stakeholder conferences and other schemes by think tanks.

Mr Speaker,

Corporate Social Responsibility (CSR) legislation is generally relevant for several reasons:

• Standardization and Accountability: CSR legislation provides a standardized framework that defines what is expected from companies in terms of social responsibility. This ensures that all companies, irrespective of their size or sector, are held accountable for their relative impact on society and the environment.
• Protection of Stakeholders: With CSR legislation, the rights and interests of stakeholders such as employees, consumers, local communities, and the environment are protected. This is particularly relevant in sectors where operations can have significant social or environmental impacts.
• Promotion of Sustainable Business Practices: CSR laws promote sustainable business practices. They encourage companies to consider the long-term implications of their actions and to balance profit-making with societal and environmental considerations.
• Transparency and Trust: CSR regulations based on how they are crafted require companies to share useful information about their social and environmental practices. This transparency can help build trust with consumers, investors, and the broader public.
• Competitive Advantage: By requiring all businesses to adhere to certain CSR standards, the legislation can help to level the playing field on assessing organizations CSR contributions. This can prevent companies from gaining a competitive advantage by neglecting their social responsibilities.
• Supporting National and Global Goals: CSR legislation can align corporate activities with national development goals or global initiatives such as the United Nations' Sustainable Development Goals (SDGs). This can facilitate collective action towards addressing major societal and environmental challenges.

Mr Speaker,

Undoubtedly, legislation on CSR will have significant implications for a country like Ghana where the major industries such as mining, oil & gas have substantial impacts on local communities and the environment.

CSR legislation protects communities and the environment: Legislation can ensure that companies conduct their operations responsibly, minimizing harm to local communities and the environment. In Ghana, where sectors such as mining and petroleum can have significant environmental impacts, legislation can help prevent degradation and protect biodiversity.

Sets Clear Expectations: A legal framework establishes clear guidelines and expectations for corporate behaviour. Companies know not only what, but how they are expected to contribute to society beyond their primary business activities.

Promotes Sustainable Development: CSR legislation can encourage companies to invest in sustainable practices, contributing to national goals in areas like education, health, and environmental conservation. This aligns with Ghana's commitment to the United Nations' Sustainable Development Goals.

Encourages Economic Equality: CSR can help address regional disparities in economic development. Companies, particularly those extracting natural resources, can be required to invest in local communities, improving infrastructure, education, and healthcare facilities. This direction can only come from legislation.

However, Mr Speaker,

Legislating CSR can have several effects: Compliance Costs; where companies might incur additional costs to comply with CSR legislation. While these costs can lead to long-term benefits, they might be viewed as burdensome by some companies, particularly small and medium-sized enterprises which form a great proportion of corporate entities in the country.

Enforcement Challenges: The government would need to adequately monitor and enforce compliance, which could require significant resources.

Potential for Unintended Consequences: If not well designed, CSR legislation could lead to unintended consequences. For example, companies might focus only on compliance rather than genuinely engaging with the spirit of CSR.

Overall, while CSR legislation holds significant potential benefits for Ghana, careful thought and consultation would be needed to design an effective framework that maximizes the benefits while mitigating potential drawbacks.

Mr. Speaker,

With the legislation of CSR, we stand in a better position to help corporations in protecting the environment, with initiatives aimed at reducing their environmental footprint, product safety, and quality. This way, we safeguard against the exploitation of our natural resources. Whether it is the sourcing of raw materials or siting of manufacturing facilities and office buildings, factors can be fused into the CSR law which will ensure that business corporations fund projects to restore or protect biodiversity.  A commendable instance is the recycling project that Voltic Natural Mineral Water has put in place to mitigate the effects of rubber and plastics pollution on the ocean and land.

Mr. Speaker,

The point in its entirety is that Ghana stands a better chance at a better future in a more secure economy when we legislate Corporate Social Responsibility now.

I am grateful for the space granted.

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This speech was delivered by the Majority Chief Whip and Nsawam-Adoagyiri MP on the floor of Parliament on June 29, 2023.