**3. Methodology**

#### **3.1 Design**

The study used a mixed-method design which comprised qualitative and quantitative analysis. The dataset comprised financial data from annual reports and statements of income of selected quoted manufacturing firms in Nigeria. These were complemented by 17-TBL-adoption metrics—a construct that was developed and used to track the performance of these selected firms along with the TBL parameters (see Appendix 2).

#### **3.2 Sample and sampling technique**

Nine manufacturing firms were selected for the study. The purposive sampling technique was used in the selection of the manufacturing firms for the study. The primary criterion for the selection of firms is that such firms must be quoted in the Nigerian Stock Exchange (NSE) and must have been rendering annual returns consistently to the Securities & Exchange Commission (SEC) for the period covered by the study. Efforts were also made to ensure sectoral dispersion in the selection of the sampled firms.

#### **3.3 Analytical technique**

Apart from the financial data which was gleaned from the annual reports and statement of accounts of the selected manufacturing firms, a TBL-adoption matrix was constructed to track each firm's commitment and achievement in the area of social and environmental sustainability. As observed earlier, the TBL framework rests on three tripods or 3Ps (profit, people, and planet). These 3Ps constitute the

triple bottom lines. Each bottom line has a unique focus. For instance, the first P (1P), *people*, represents economic value creation (profit), the second P (2P), *social*, represents people/society, and the third P (3P), *planet*, represents the environment.

The first P, the economic value creation was proxied by profit after taxation (PAT). This has a numerical value and can be accessed from the annual reports and statements of accounts of the selected firms. The second P, people (social), was proxied by expenditure on corporate social responsibility (CSR). This too has a numerical value and can be gleaned from the annual reports and statement of accounts of the selected firms. The third P, the planet was proxied by a principal composite index derived from a 17-TBL-adoption matrix—a construct developed to track policy enunciation and commitment to environmental sustainability.

It was important to check how each of the firms was progressing toward being totally compliant in the context of social and environmental sustainability. To check this, a TBL-compliant matrix was constructed based on some qualitative parameters. The first construct,*TBL1* was derived using the principal component index (PCI). The PCI was necessary to reduce the dimension of the dataset and extract the main characteristics from it. This method is useful to obtain an index that measures the different phases in the TBL-adoption process. Five major processes were identified in the sustainability process namely—commitment to disaster and humanitarian reliefs, commitment to reduction in carbon emission, commitment to improved energy efficiency and use, commitment to use of renewable materials that will ensure efficient technologies, and reduced emissions from all production processes. Each of these processes was allocated a numerical value between 0 and 2. Zero denoting starting period progressing to 2 depending on the degree of commitment to each of the parameters. From this, we generate a matrix of three indicators for each firm and apply the principal component analysis. We identified 17 major progressions toward being TBL-compliant.

The second sustainability index,*TBL2*, involves a systematic assignment of a numerical value to each of the progressions in the 17-TBL-compliant ladder. This numerical assignment was based on a prima fascia evaluation of each firm's commitment to sustainability through policy enunciation or actual performance along with the TBL-compliant matrix.

This approach at assessing quantitatively and qualitatively corporate governance performance proxied by a firm's commitment to sustainability in Nigeria is robust than earlier attempts which focus largely on the financial dimension of a firm's activities.

#### **4. Result and discussions**

#### **4.1 Data from selected manufacturing firms in Nigeria**

The annual reports and statement of accounts of selected manufacturing firms (namely, Berger Paints Nigeria Plc, Beta Glass Nigeria Plc, Honeywell Flour Nigeria Plc, Lafarge Nigeria Plc, May & Baker Nigeria Plc, Unilever Nigeria Plc, Cadbury Nigeria Plc, Guinness Nigeria Plc, and Nestle Nigeria Plc) were examined to assess each firm's financial performance and commitments to social and environmental sustainability.

Three indicators were used for this assessment in line with the triple-bottom-line (TBL) framework. The first indicator was profit after tax (PAT) which stands proxy for a firm's financial performance representing the first P in the three legs of the triad (profit). The second indicator is expenditure on corporate social responsibility (CSR) which stands proxy for firm actual commitment to social sustainability,

#### *COVID-19 and Corporate Governance Performance: Beyond the Financial Metrics DOI: http://dx.doi.org/10.5772/intechopen.101281*

representing the second P in the three legs of the triad (social). The third indicator was a composite score based on the principal component index from a construct the 17-sustainability matrix developed to track each firm's commitment and policy enunciation to environmental sustainability, representing the third P in the three legs of the triad (environmental). These complete the triple-bottom framework (3Ps—people, planet and profit).

**Table 1** is aggregate data on the financial performance of the selected firms for the period 2014–2018 while the individual firm's performance is shown in the appendix. **Table 2** shows the performance of the firms on the TBL-adoption matrix.

In terms of financial performance, **Table 1** shows that all the selected manufacturing firms performed remarkably well within the period under review. Except for May & Baker Nigeria Plc and to some extent, Berger Paints Nigeria Plc, the rest of the firms recorded profit after tax (PAT) in excess of the industry average of N2billion for the period under review. Therefore, in terms of economic value creation and the first bottom line, profit, we can conclude that all the selected manufacturing firms performed remarkably well for the period 2014–2018.

At a comparatively level, Nestle Nigeria Plc recorded the highest profit after tax (PAT) of approximately N131billion within the 5-year period under review. They were followed by Lafarge Nigeria Plc that recorded a profit after tax of approximately N38billion within the same period. Unilever Nigeria Plc and Guinness Nigeria Plc came in third and fourth position with a profit after tax of approximately N25billion and N24billion, respectively. Berger Paints Nigeria Plc and May & Baker came at the rear with a profit after tax of approximately N1billion and N783million, respectively.

In terms of performance on social sustainability, proxied by expenditure on corporate social responsibility (CSR), Lafarge Nigeria Plc tops the list. The company spent approximately N3billion or 8% of its profit after tax on CSR within the period under review. They were followed by Unilever which committed approximately N326million or 1.3% of profit after tax on corporate social responsibility. As a percentage of profit after tax, May & Baker came third with a commitment of


*Source: Author's computation from the Annual Reports and Statement of Accounts of selected Manufacturing Firms in Nigeria (2014–2018).*

#### **Table 1.**

*Aggregate financial and TBL performance of selected manufacturing firms in Nigeria (2014–2018).*


*Source: Computed from the analysis of the firm's annual reports (various years).*

*\**Percentage score <sup>¼</sup> Total score attained Total attainable � 100*.Total attainable = Maximum score for a year* � *Number of years = (2* � *17)= 34= 34(5)= 170.*

#### **Table 2.**

*Relative Scores of the selected manufacturing firms on the TBL-adoption matrix.*

approximately 1.4% of their profit after tax on expenditure on corporate social responsibility.

On the aggregate, the nine selected firms committed the sum of approximately N4billion or 1.6% of their profit after tax of approximately N249billion on corporate social responsibility for the 5-year period under review. Moreover, apart from Lafarge Nigeria Plc, Unilever Nigeria Plc, and May & Baker Nigeria Plc, none of the firms committed up to 1% of their profit after tax on corporate social responsibility. This is considered a dismal performance from the prism of social sustainability.

As it can be seen in **Table 2**, in terms of commitment to environmental sustainability, proxied by policy enunciation and concrete avowal to these policies, none of the firms, except Unilever Nigeria Plc, score up to 60% on aggregate in the 17-TBL matrix.<sup>1</sup> **Table 2** shows the level of progress recorded by each of the firms in the 17- TBL adoption process. Although, most of the firms do not score above 60% in the adoption matrix, most made remarkable progress on a year-on-year basis on the TBL-adoption process<sup>2</sup> . Unilever has been very consistent in its commitments to environmental sustainability as can be seen by its strong showing in all the performance parameters all through the period under review. Lafarge, Cadbury, Guinness, and Nestle have also been consistent in their commitment to environmental sustainability. These companies, among others, consistently carry out environmental sustainability audits to assess the impact of their operations on the environment, and Lafarge in particular has taken steps to reduce emission and waste arising from their operations.

An important feature to note is that all the multinational corporations have shown more commitment to environmental sustainability than the local corporations. However, in the aggregate, there is still much to be done by the firms to be fully compliant in line with the TBL framework.

<sup>1</sup> The 17-TBL-adoption matrix was created based on key components of environmental and sustainability issues that companies as good corporate citizens should be concerned about in their operations.

<sup>2</sup> Brief review of policy enunciation and commitment to environmental sustainability by each of the selected firms is shown in the appendix.
