AN EVALUATION OF ENVIRONMENTAL ISSUES AND CORPORATE SOCIAL RESPONSIBILITY IN NIGERIA

ABSTRACT

This project focuses on environmental degradation and the need for corporate organization to fulfill their social responsibilities. Using the system theory, the interdependence among the environment, organization and sustainable development was examined. The system theory was modified t emphasize the need for corporate firms to forsee potential environmental consequences of a given activity, process or product from the planning stage with a view to ensuring the implementation of adequate and timely response strategies. Some prevalent environmental problems in Nigeria were also examined. Environmental audit was discussed to enable organizations assess the impact of their activities on the environment.

CHAPTER ONE

INTRODUCTION

As a result of the quest of industrialization and sustainable development in Nigeria and the attendant improvement in the quality of life of the populace has taken its toll on the environment (Aina, 1998).

There is widespread interest in the way in which companies conduct themselves, including the environmental and social impact of their activities. Companies and those who govern their affairs do not operate in a value-free zone and their activities are and should be open to evaluation and criticism. CAMAC’s report on the social responsibility of corporations, is aimed at providing a pathway through the mass of material and opinions on the subject as well as respond to questions raised in the terms of reference from the government.

While largely focused on the conduct of business corporations, the report notes that issues of social responsibility also arise for other entities, including public sector, non-profit and unincorporated bodies. Companies operate in a shifting market place of legal requirements, consumer preferences, employee views, investor sentiments, community attitude and other pressures where social and environmental issues arises in relation to a companies business, they need to be managed, as do other issues that may infringe on business success or failure.

According to COMAC’s (Richard St. John), …….. Companies should be judged on the way they conduct themselves in the context of pursuing their business aims and their overall economic and other contribution and impacts. This includes the way they deal with environmental or social issues that relate to their business. They should not be expected to direct their efforts to social ends regardless of the relevance of those ends to their own business. Therefore the report suggests that a company will be socially responsible if it operates in an open and accountable manner, uses its resources for productive ends, complies with relevant regulatory requirement and acknowledges and takes responsibility for the consequences of its action.

The effect of different industrial sector activity on the environment vary enormously but its an incontrorotible statement that damage is being done to the environment world-wide.

Environmental concerns rarely terms an integral part of development plans, particularly in Third World Countries like Nigeria. The realization that sustainable development can only be achieved through an interdependence between economic growth and environmental quality has compelled some governments to now regard the environment as a valued and an integral part of economic growth. Subsequently, environmental problems are now at the forefront of international and domestic as well as local government’s agenda.

However, environmental policies are rarely enforced in some Third World Countries. The inability of government to implement a stringent environmental regulations is compounded by the fact that the goal of most corporate organizations are purely economic. The attention is devoted to their social responsibilities.

The environment is being endangered because economic policy stresses increase in production, but neglects to account for the depletionof natural resources and damage to the environment. The continued damage to the tangible natural environment and health of the exploitation of crude oil and natural gas.

These activities have led to numerous spillages, gas flaring, pollution, flooding, coastal erosion, earth tremors, etc. all of which constitute a threat to the people survival. The result has been a rapid decline in the quality of life of the people, many of them forced out of their traditional occupation of farming, fishing and the production of palm oil and kernels. There is need for organizations and government to reorganize “defensive expenditure” to protect or restore the environment and “user cost” for the depletion and the degradation of natural resources as part of their production cost.

Companies should be committed to minimizing the impact of its operations on the environment and they should have programs updated annually that will help bring about measurable development.

• STATEMENT OF PROBLEM

The first attempt of this work will be to discuss the interdependence among the environment, organization and sustainable development, nature of some environmental degradation in Nigeria, corporate social responsibility, environmental audit and corporate environmental management strategies.

The problems that this study intends to address are as follows:

• What are legal or standards available with regards to accounting for the use of resources from the environment.
• What programs are in place to reverse the degradation that has occurred and how they are funded.
• To examine environmental issue as it relates to companies or firms and corporate users as it relates to the environment.
• What are the effects of companies on the host environment.

• THE OBJECTIVES OF THE STUDY

The increase in agitation for more compensation and participation in companies operation by host communities is as a result of neglect of developmental program for the communities in their area of operations.

The objective of this study, is simply to find out the effects of companies operations on their host communities or environment, the extent to which they account for the resources they are exploring from the environment and the programs they have in place to tackle the environmental and socio-economic problems of the region of their operations for development that is environmentally sustainable.

The objectives of this research is to;

• To ascertain the policies put in place by organizations for the development of the environment.
• Examine the extent to which firms or organizations are aware of these policies and the effect of these policies on corporate performance.
• To measure the social responsibility of corporate bodies.

• RESEARCH HYPOTHESIS

Hypothesis I

Ho:   There are no fully funded programmes put in place to reverse the degradation that has occurred in the country (environment).

H₁: There are fully funded programmes put in place to reverse the degradation that has occurred in the country (environment).

Hypothesis II

Ho:   There are no legal implications or standards available with regards to accounting for the use of resources from the environment.

H₁: There are legal implications or standards available with regards to accounting for the use of resources from the environment.

Hypothesis III

Ho:   The host communities do not know their right as regards to companies operating in the environment.

H₁: The host communities know their right as regards to companies operating in the environment.

• SCOPE OF THE STUDY

The area of focus of this study will be restricted to the Nigerian Petroleum Development Company (NPDC) limited and its area of operations. The study will focus on the effect of companies operations on the environment, the depletion and degradation of natural resources ad the responsibilities of companies in restoring the environment from the side effects of its operations and the provision of developmental projects for the host communities and the society at large.

• SIGNIFICANCE OF THE STUDY

The three trends related to globalization are during the rise of “Corporate Social Responsibility”, the rising protest movement against economic globalization, the “war on terrorism” that began on September 11 and recent corporate scandals.

The issue of corporate social responsibility is a complex one for any industry, and environmental accounting is a new concept in accounting. This companies have failed to recognize the effects of production and consumption activities on the environment as part of their cost of production. As a result of this form of accounting for the use of resources, the conventional accounting method has led to companies preventing misleading financial statements.

The recent development of community clashes with companies operating in their host communities is as a result of the non recognition of their negative side effects of their operations on the environment and the need for sustainable development of the host community and the society at large. Industrialist believe that a systematic integration of corporate social responsibility into their business practices can make a positive impact on their economic, social, environmental performance.

There is need for adequate procedure for evaluation and recognition of environment effects in the determination of the company cost of operations. This study will thereore provide some enlightenment to companies of the need to have a proper procedure for evaluation and recognition of environment effects for sustainable development of the environment and for sustainable performance of the company.

• LIMITATION OF THE STUDY

The study will be focused on the various methods of organizations use in accounting for the use of natural resources, the side effects of their operations on the environment and the plans they have for the future operation of inhabitant of the communities and the society at large.

Also, there is now a growing interest on environmental issues, but organization researchers and scholars rarely discuss environmental issues and corporate social responsibility. Issues of discuss have always been ethics, organizational structures and processes, the impact of the environment on organization, etc. Thus, there is a death of literature on the impact of corporate activities on the environment and more so there is also the problem of corporate secrecy in the area of releasing information relating to real companies financial statements as recorded in the books.

Due to the constraints, this study will be limited to the Nigerian Development Company Limited engaged in the exploration and drilling of crude oil.

• DEFINITION OF TERMS

• Environment: Environment is defined in Oxford Dictionary as surroundings surrounding objects or a condition, region, circumstances, influences. According to Ikporukpo (2001), environment is the totality of human surroundings, hence human environment is derived from physical environment. Human environment is regarded as human construct created by man in their struggle for survival and resistance on earth crust at times called the inhabited environment.
• Development: Oguntunde defined development as “a measure of the ability of an individual or a society to utilize its resources in the production of goods and services (wealth), which are needed for modern living”.
• Sustainability: Oguntunde defined sustainability as the production of this wealth continuously both now and in the future.
• Sustainable Development: McCarthy (1992) defines sustainable development as development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.
• Social Responsibility: Osaze (1998) defines social responsibility as the obligation of decision makers to take action which projects and improve the welfare of the society as whole along with their own interest. Drucker (1974) defines social responsibility as “what business should do or might do to tackle and solve problems of society”.
• Income: Adams (1999) sees the notion of income as “the amount that a person can consume in a year and still be as well as the beginning” an approach to accounting measurement that much later became known as “capital maintenance”. Harrison (1989) defined income as what you can consume in the period and be as well as of at the end as at the beginning – this equivalent to saying that new capital consumed during the year so that the capital stock at the end is as great at the start.
• CAMAC: Corporations and Markets Advisory Committee.
• Pollution: Blades (1989) defines pollution as “the disposal of wastes in ways that harm people or reduce the enjoyment of their surroundings”. He also sees pollution as causes of damages, such as sickness, and premature death, stunted growth of crops, disappearance of wildlife or corrosion of metals and masonry.
• Pollution Abatement: Blades (1989) defined pollution abatement as the activities, like scrubbing smoke or colony waste water which are undertaken because of recent anti-population legislations.
• Oil Mining Lease (OML): SAS 14 defined OML as a license granted to a company under the Petroleum Act 1969 for the purpose of mining petroleum or any assignment of such lease. This usually has a term between twenty (20) and thirty years (30yrs).

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