THE EFFECT OF CORPORATE SOCIAL RESPONSIBILITY REPORTING ON FINANCIAL PERFORMANCE OF NIGERIAN BANKING SECTOR IN SELECTED COMMERCIAL BANKS

CHAPTER ONE

INTRODUCTION

1. Background of the study

Globally, organizations are concerned with value re-investment to the society in appreciation of the contributions of the society to their growth, sustenance and survival. Hence attention is further directed to the potential consumers as well as non consumers of corporate offers as marketing concept philosophies are integrated into societal marketing concept as means of achieving desired level of social responsibility. Given this as the thrust of operations, corporate attention is increasingly being given to issues like equal employment opportunity, thus it is easier for corporation to be re-oriented to corporate social responsibility philosophies. But in the developing economies represented by Nigeria; consumers are unwilling to sacrifice convenience and pay potentially higher prices to protect the environment as they lack knowledge to make informed decisions dealing with their purchase, use and disposition of product; pollution control; energy and natural resources conservation and consumers’ and workers’ protection –Preston and Post (1975). Businesses thus operate on the philosophy of maximization of positive effects of their activities on the society as the negative impacts of these activities are minimized-Farrell and Fraedrich (2007). This is the thrust of corporate social responsibility as considered an obligation among businesses in the advanced societies of the globe. At an earlier point in history, societal expectations from business organizations did not go beyond efficient resource allocation and its maximization. But today, it has changed and modern business must think beyond profit maximization toward being at least socially responsible to its society. Corporate social responsibility (CSR) is a fast growing concept in banking industry with little attention paid to its linguistic. CSR is common in the literature but not in the practice. Despite the need for business to be morally conducted, one of the primary reasons in CSR is whether organisations pursue it for economic reasons or because of the advantages involve.

Unfortunately, there has been few or no empirical test conducted in support of the advantages and disadvantages involve in CSR. This makes CSR practice sustainable to the popular accusation of being a profitable public relations and marketing strategies (Adegboyega and Taiwo, 2011). Today’s heightened interest in the role of business in society has been promoted by increased sensitivity to the awareness of environmental and ethical issues. It means our society has become increasingly concerned that greater influence and progress by firms has not been accompanied by equal eort and desire in addressing important social issues including problems of poverty, drug abuse, crime, improper treatment of workers, faulty production output and environmental damage or pollution by the industries as it has overtime been reported in the media. It is therefore very essential for all to realize that public outcry for increased social responsibility will not disappear if business organizations fail to respond to the challenges these had posed for the society (Amaechi, 2009). In modern business world, corporate social responsibility has been emphasized by stakeholders as a driving tool for success to be accomplished. It has become an increasing evident and crucial component of overall performance of business organizations generally. Conscious of this concept, ordinary citizen, potential investors, pressure groups, politicians, insurance companies and a wide range of other stakeholders are increasingly demanding organizations to account for the social, natural environment and economic impacts that they have on every community in which they operate (Nwachukwu, 2006). CSR has today become imperative, due to the goodwill it generates and the belief that the overall health of both the corporate entities and the environment where they operate are mutually dependent.