Codes of Conduct for South Codes of Conduct for South African Companies African Companies Operating AbroadOperating Abroad

Email : catherine.grant@saiia.org.za

Era of Corporate Social Era of Corporate Social Responsibility (CSR)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 ConductCodes 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 ConductCodes 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 bindingPromotes responsible business

Different names of Codes of Different names of Codes of Conduct Conduct Code of conductCodes of ethical conductCannons of ethical conductEthical principlesCode of business conductCode of conduct and ethicsCode of professional responsibilityGlobal business citizenship

Theories affecting codes of Theories affecting codes of conductconductThere are four broad categories:

Utilitarian theoriesDuty theoriesRights theoriesVirtue theories

What do Codes of Conduct What do Codes of Conduct do ?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 Common Approach in Codes of conductCodes 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 Who establishes Codes of Conduct?Conduct?Business

Company Industry or sector Professional bodies Global business

Government codesInternational organisationsEverything from : bloggers, internet

warriors, schools, universities, sports administrators, ecotourism lobby groups, law enforcement agencies, health alliances, military, etc.

Why are CSR and Codes of Why are CSR and Codes of Conduct becoming so Conduct becoming so important? 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

expertiseGrowth 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?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 Challenges in codes of conduct between States and conduct between States and Business Business

Honest analysis and disclosureRisk-return analysis.AccountabilityFuture-casting

Implications for Bilateral Implications for Bilateral RelationsRelations

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 Existing Codes of Conduct governing South African governing South African CompaniesCompaniesILO ConventionsThe UN Global CompactThe Universal Declaration of Human

RightsOECD Guidelines for Multinational

CorporationsThe NEPAD Business Foundation

(NBF) CovenantsThe Southern African Development

Corporation (SADC) Social CharterDraft Code of Governance Principles

for South Africa- 2009 (King Code III)

Common PrinciplesCommon PrinciplesCompliance with local laws and

regulationsAnti-corruption practicesAdherence to labour standardsLocal procurement of suppliesConsumer health and safetyHuman rights protectionDue diligenceSupport for national development

prioritiesEffective CSR programmes

Initiative by SA Government Initiative by SA Government – Guidelines for Business– Guidelines for BusinessFocus on SA businesses operating on rest

of African continentContext – South Africa as largest investor

outside of oil and gas sectorRecognises need for greater cooperation

between SA government and private sector

Voluntary – adopted by business organisations

Covers corporate governance and CSRAim to apply SA regulatory standards on

rest of continentNational contact points at SA embassies

to monitor compliance

Alternatives approaches to Alternatives approaches to managing State Business managing State Business RelationsRelationsInterest through the processes of

capitalist developmentPart 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 .continued Alternatives approaches to Alternatives approaches to managing State Business managing State Business Relations 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’

RecommendationsRecommendationsSimply – more interaction between

government and businessInclude 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... continuedRecommendationsRecommendationsConsolidation 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 Other SAIIA Work of InterestInterestRecent 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