codes of conduct for south african companies operating abroad email : catherine.grant@saiia.org.za
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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
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