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Giving back to the society sure way to tap endless profits

GIVE

Humans should ultimately promote public interest even in their economic choices. FILE PHOTO | NMG

My recent road trip from Nairobi to Kisumu led me to conclude that our meandering roads, diverse cultures and the majesty of the Rift Valley did not disappoint.

However, I noted the number of companies aroun Nakuru, Awasi and Ahero and the sudden mushrooming of manufacturing industries and cement processing plants.

I was particularly struck by one company (name withheld). At the company’s perimeter wall were about three water taps providing clean water for the residents.

Most companies usually perform such corporate social responsibilities as their way of giving back, creating a relationship between corporate governance and Corporate Social Responsibility (CSR).

Adam Smith in Wealth of Nations states that “A society whose members pursue self-interest without a sense of justice will eventually collapse.

A society whose members pursue self-interest checked by their sense of justice alone will survive. And a society whose members pursue selfinterest, justice and the interests of others will flourish.”

Reciting these archaic words, while giving breath to the classic definition of what a society should be composed of, in those famous words of Adam Smith, made me realise that we have been getting it wrong all the time. Some companies pursue self-interest checked by what they perceive as justice from their own lenses.

Incorporating Adam Smith’s words and what corporate governance entails further made me realise the importance of inculcating corporate social responsibility in a company’s governance structure.

When you connect these two concepts, it outright shows that such a company operates beyond the strict definitions of capitalism and profiteering.

And while making profits is not a crime, the same should not clog the eyes of any organisation to the point of losing humanity.

If a butcher sells bad meat he will not have a constant stream of customers, taking a toll on his profits. Therefore, it is in the butcher’s interest to sell good meat at a price that the customers are willing to pay, so that both parties benefit.

Smith believed that humans should ultimately promote public interest even in their economic choices.

Any company forms part of the social fabric of that community, and if they set the standards of how the environment should be treated, for instance, people will start to follow suit.

Fiduciary duties of managers, directors (both executive and non-executive) towards the (non-controlling) stakeholders like the community at large should not abuse these delegated authorities but rather see to it that the company is positively impacting the community.

Corporate social responsibility simply means companies voluntarily committing themselves to acts of developments that go beyond common regulatory and conventional requirements.