Codes of Conduct for South African Companies Operating Abroad

Era of Corporate Social Responsibility (CSR) Corporate social responsibility paradigm recognised: Business needs to: Act in a way to meet expectations of society Earn their license to operate Commitment required to good corporate citizenship Capitalism lacks a human face

Codes of Conduct Two key influences in seeking to influence the conduct of business : Increased public concern with regards to sustainable development Hostility towards companies that are perceived as primarily profit motivated

Codes of Conduct What is a code of conduct ? Principles, values, standards, or rules of behaviour that guide the decisions, procedures and systems of an organization in a way that (a) contributes to the welfare of its key stakeholders, and (b) respects the rights of all constituents affected by its operations Voluntary not legally binding Promotes responsible business

Different names of Codes of Conduct Code of conduct Codes of ethical conduct Cannons of ethical conduct Ethical principles Code of business conduct Code of conduct and ethics Code of professional responsibility Global business citizenship

Theories affecting codes of conduct There are four broad categories: Utilitarian theories Duty theories Rights theories Virtue theories

What do Codes of Conduct do ? Provide direction to: Employees, management and board members Stakeholders as to what to expect Profession or industry as a whole to set benchmarks Sets out how to conduct business while respecting ethical principles Codes usually contain a combination of ethical descriptions and directions, and non-ethical descriptions and procedural directives

Common Approach in Codes of conduct Three levels: codes of business ethics – focus on social issues codes of conduct for employees - traditional issues related to conflict of interest codes of professional practice – what to do when faced with difficult choices?

Who establishes Codes of Conduct? Business Company Industry or sector Professional bodies Global business Government codes International organisations Everything from : bloggers, internet warriors, schools, universities, sports administrators, ecotourism lobby groups, law enforcement agencies, health alliances, military, etc.

Why are CSR and Codes of Conduct becoming so important? Globalisation and the associated growth in competition Increased size and influence of companies Retrenchment or repositioning of government and its roles War for talent - companies competing for expertise Growth of global civil society activism Increased importance of intangible assets Source: Boston College Centre for Corporate Community Relations, Making the Business Case: Determining the Value of Corporate Community Involvement, 2000

Do Codes of Conduct work? Debatable If YES Facilitate the flow of accurate reliable information between government and business (if properly managed) Secure improved performance Build credibility Establish trust IF NO Perpetuate crony capitalism Wishful thinking only

Challenges in codes of conduct between States and Business Honest analysis and disclosure Risk-return analysis. Accountability Future-casting

Implications for Bilateral Relations Codes can: Contribute to a better understanding of private sector across governments Inform a more efficient allocation of resources across economies Establish constant dialogue between private investors and public officials to assess where markets can be expected to work and where they are likely to fail and to offer or withdraw public support accordingly Codes must be considered in partnership with the jurisdictions where they apply – otherwise potentially seen as patronising and disrespectful of national regulations

Existing Codes of Conduct governing South African Companies ILO Conventions The UN Global Compact The Universal Declaration of Human Rights OECD Guidelines for Multinational Corporations The NEPAD Business Foundation (NBF) Covenants The Southern African Development Corporation (SADC) Social Charter Draft Code of Governance Principles for South Africa (King Code III)

Common Principles Compliance with local laws and regulations Anti-corruption practices Adherence to labour standards Local procurement of supplies Consumer health and safety Human rights protection Due diligence Support for national development priorities Effective CSR programmes

Initiative by SA Government – Guidelines for Business Focus on SA businesses operating on rest of African continent Context – South Africa as largest investor outside of oil and gas sector Recognises need for greater cooperation between SA government and private sector Voluntary – adopted by business organisations Covers corporate governance and CSR Aim to apply SA regulatory standards on rest of continent National contact points at SA embassies to monitor compliance

Alternatives approaches to managing State Business Relations Interest through the processes of capitalist development Part of a process of democratising governance through the widening or pluralisation of the institutional environment Through contribution to the deepening of civil society and democratic politics

….continued Alternatives approaches to managing State Business Relations Through the growing interest in public- private partnerships Through a framework within which to analyse the emergence of bourgeois social movements or social movements for African capitalism

Recommendations Simply – more interaction between government and business Include Parliament, organised labour and civil society more comprehensively Business to communicate more about approach to development – success stories NEDLAC Fridge study starting on SA companies on the continent – good start and long overdue

... continued Recommendations Consolidation of information on existing codes and compliance by SA companies Upscale skills of government officials to interact and better understand interests of private sector e.g. economic diplomacy training at DIRCO Support for strong organised business both locally and on rest of the continent

Other SAIIA Work of Interest Recent publications: Working for Development in Southern Africa: Bridging the Gap Between Government and Business by Tim Hughes State Visits as a Tool of Economic Diplomacy: Bandwagon or Business Sense? By Catherine Grant Support for SADC public-private dialogue process Mapping of African private sector organisations and recommendations on a platform for engagement to African Development Bank Case studies on doing business in SADC