Advancing towards a more effective stakeholder engagement by multinational companies in Nigeria

• Jurisdiction: South Africa
• Citation: (2019) 6(1) Journal of Comparative Law in Africa 55
• Published date: 16 August 2019
• Author: Aina, K.
• Date: 16 August 2019
• Pages: 55-84

55

ADVANCING TOWARDS A MORE EFFECTIVE

STAKEHOLDER ENGAGEMENT BY

MULTINATIONAL COMPANIES IN NIGERIA*

Kunle Aina**

Abstract

Stakeholder engagement and reporting on non-financial issues enable the company

to demonstrate that it understands the concerns of society and explain how it

is addressing them. Social and environmental policies are currently incoherent,

haphazard and without regulation in Nigeria. This paper examines stakeholder

engagement as an offshoot of sustainable governance which is a concept whereby

companies integrate social and environmental concerns in their business operations

and their interactions with their stakeholders on a voluntary basis. The ongoing

social upheavals in the Niger Delta Region of Nigeria are an attestation of failure

of effective stakeholders’ engagement by the multinational companies (MNCs),

This paper examines the concept of stakeholder engagement as a solution to these

conflicts, its importance to sustainable corporate governance and the global practice

and standards. This paper further appraises the adequacy of the current laws,

regulations, policies and practice for regulating stakeholder engagement by MNCs

in Nigeria. A mandatory legal, more effective disclosure regime and regulations of

stakeholder engagement is advocated.

Keywords: corporate social responsibility, sustainable governance,

sustainable reporting, multinational companies

Résumé

L’engagement avec les parties prenantes et la production de rapports sur des

questions non financières permettent à une entreprise de démontrer qu’elle comprend

les préoccupations de la société dans laquelle elle opère et explique comment elle

y répond. Cet article examine l’engagement avec les parties prenantes en tant

qu’émanation de la Gouvernance Durable, un concept selon lequel les entrepr ises

intègrent les préoccupations sociales et environnementales dans leurs opérations

commerciales et leurs interactions avec leurs parties prenantes sur une base

volontaire. Les bouleversements sociaux en cours dans la région du Delta du Niger

au Nigéria témoignent de l’échec de l’engagement effectif avec les parties prenantes

par les sociétés multinationales. Cet artic le examine le concept de l’engagement avec

parties prenantes comme solution à ces conflits, son importance pour la durabilité

* This work was produced while the author was a research fellow in 2017 at the Centre for

Comparative Law in Africa (CCLA) under the Olu Akinkugbe Business Law in Africa Fellowship

administered by the CCLA, Faculty of Law, University of Cape Town. The author gratefully

acknowledges the Olu Akinkugbe Fellowship and the Centre for Comparative Law in Afr ica.

** LLB (Lagos), LLM (Lagos), PhD (Ibadan), Reader in Law, Faculty of Law, University of

Ibadan.

(2019) 6(1) Journal of Comparative Law in Africa 55

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56 JOURNAL OF COMPARATIVE LAW IN AFRICA VOL 6, NO 1, 2019

de la gouvernance d’entreprise et la pratique et les normes mondiales. En outre,

cet évalue la pertinence des lois, réglementations, politiques et pratiques en vigueur

pour réglementer l’engagement des sociétés multinationales au Nigeria. Un régime

juridique obligatoire et plus efficace en matière de divulgation et une réglementation

de la participation des parties prenantes sont préconisés.

Mots-clés: responsabilité sociale des entreprises, gouvernance durable,

reporting durable, sociétés multinationales.

Introduction

There is a global acceptance and consensus on the Brutdland Report

for the World Commission on the Environment and Development’s,1

definition of sustainable development as ‘development that meets the

needs of the present without compromising the ability of the future

generations to meet their own needs’.2 Sustainability has emerged as a

concern for the economic, social and environmental issues as it relates to

the way and manner companies are managed and controlled.3 Generally,

sustainability or sustainable corporate governance is an aspect of

corporate social responsibility (CSR) concerned with the management of

companies in a sustainable way that ensures that the company continues

in the long term without using the resources at its disposal in such a

way as to destroy the company and or generally make it impossible to

continue the business.4 CSR is, therefore, an exercise of social concern

and responsibility by companies beyond merely managing the company

strictly for profit maximisation. It is gradually transforming the traditional

‘profit-driven corporations’ to stakeholder value-oriented entities.5 We

must admit that the ability to make substantial profit for its incorporators

and ability to equally be instrument of oppression and destruction is

1 Repor t of the World Commission on Environment and Development: Our Common Future.

The Commission set up by the United Nations General Assembly was chaired by Gro Herlem

Brundtland and submitted on 20 March 1987. Available at http//www.un-documents.net/our.

common-future.pdf. Accessed on 30 October 2017.

2 Ibid. Chap 2. Page 41.

3 Adrian Cadbury Committee Repor t titled, ‘Financial Aspects of Cor porate Governance’. The

committee was set up in May 1991 by the Financial Reporting Council United Kingdom (FRC),

the London Stock Exchange and the Accounting Profession. The aim of the Committee was to

investigate the British corporate governance system and to suggest improvements to restore investors’

confidence in the market. The report was released in December 1992 and its recommendations on

the Code of Best practice was accepted and applied to the UK listing Rules and company reporting

from 30 June 1993. Available at http://www.ecgi.org/codes/documents/cadbury.pdf . Accessed on

30 October 2017 .

4 McBar net, D ‘Corporate Social Responsibility beyond law, through law, for law’ (2009)

University of Edinburgh School of Law working paper 3, at 18.

5 Bergum, A 'Corporate Social Responsibility: Reflecting Australian legal approaches to human

rights' (2015) 36(9) Company Lawyer 297–287.

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