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Will the real responsible corporate citizens please stand up…

BY: Advocate Annamarie Van Der Merwe, Chairperson of FluidRock Governance Group (Pty) Ltd.|31 March 2020
BLOG| Business leadership and strategy, Effective Directorship, Diversity

Stellenbosch Graduate Institute is proud to introduce partner author, Advocate Annamarie van der Merwe who is the Chairperson of FluidRock Governance Group (Pty) Ltd and Team Leader of the Advisory Division. Annamarie’s areas of specialty include Corporate Governance and the statutory environment in which boards of directors in the private and public sector operate. Her practical experience of over 24 year is often called on to provide guidance to directors and members of governing bodies. Here is what Annamarie has to say about responsible corporate citizens:

The King IV™ Report on Corporate Governance for South Africa, 2016[1] (King IV™), as did most of its predecessors, highlighted the need for responsible corporate citizens.  In King IV™, responsible corporate citizenship forms part of the exercise of ethical and effective leadership that results in the outcome of an ethical culture in an organisation.  In addition to being ethical and effective leaders, the members of the governing body of the organisation are expected to direct and monitor organisational ethics as well as ensuring that the organisation is and is seen to be a responsible corporate citizen

The term ‘responsible corporate citizen’ has often been misunderstood and or equated to the CSI (corporate social investment) programme of an organisation.  Although corporate social investment does form part of being a responsible corporate citizen, it is so much more! A quick glance at the relevant recommendations of King IV™ will reveal that being a responsible corporate citizen actually starts in your own backyard, in the workplace.  Looking after the dignity, development, equity opportunities, health and safety of your employees and also having a responsible remuneration philosophy and practice is a start. 

The circle then widens to include the economy and society.  As far as the economy is concerned, what is being done by your organisation to assist with economic transformation in our country and to prevent and detect fraud and corruption that has been a soul-destroying and devastating virus all by itself?  Is your organisation a responsible tax payer? Forget for a minute the arguments around how wisely our tax is being used, this is a separate debate.  The fact remains that as part of having an ethical culture and being a responsible corporate citizen, an organisation has to be a responsible tax payer.   

Society also has legitimate expectations of organisations, both in both the public and private sectors. 

Again, CSI projects is but a part of fulfilling our responsibilities to society as organisations.  There is public health and safety that warrants our utmost attention, consumer protection and protection of human rights, to name but a few.  The development of communities in which we operate and doing our part to assist the most vulnerable in society should form an important part of our initiatives as being a responsible corporate citizen

The fourth area that King IV™ highlights as part of being a responsible corporate citizen is the environment – responsibilities in respect of pollution and waste disposal, protection of biodiversity.  Do we really appreciate that there is no ‘Planet B’?  That we owe it to our children and their children to look after the resources we are borrowing from them today and that they will need in future to ensure their own livelihood?

Thus, being a responsible corporate citizen is about much more than writing out cheques to support soup kitchens or sponsor a sporting event for a nearby school.  It is about our people, our economy, our society and our environment.  In my many years as a corporate governance advisor and operating in various boardrooms in this country, I have often been dismayed at not only the window-dressing but also the limited understanding when it comes to being a responsible corporate citizen. 

Let me hasten to say that there are also those organisations and leadership that do in fact understand the art of ‘ethical capitalism’ to borrow a bit of the title of the book by Julian Richer (The Ethical Capitalist: How to make Business work better for Society, 2018). For these, I am eternally grateful! We have recently learned of a handful of individuals and organisations who have donated substantial amounts of money to various initiatives to address the impact of the coronavirus. In my personal experience, however, and forgive my cynicism forged over many years of walking the corporate corridors, there are an equal number, if not more, for whom ‘responsible corporate citizenship’ is nothing more than yet another corporate governance ‘hurdle’ potentially standing in the way of putting money in the pockets of shareholders.

We are now faced with a crisis of enormous proportions, the extent of which we have absolutely no idea of at this point in time.  It is crunch time for the world, for South Africa and for every citizen, individual and corporate.  It is now, in my respectful opinion, that we will see the true responsible corporate citizens and their leaders arise.  When competitors start working together for the greater good of society, when corporates do everything humanly possible to avoid job losses, when employers reach out a hand to employees where salaries are lost or reduced to soften the impact in whatever practical way possible. There is a myriad of ways in which an organisation can practically live out its commitment to being a responsible corporate citizen and it does not necessarily always mean a negative impact on financial resources.  With the right attitude and mindset, creative ways can be found to fulfill one’s responsibilities to your workforce, the economy, society and the environment.  Who knows what opportunities this can bring for the business!  It is just a matter of perspective! 

The million-dollar question therefore – is being a responsible corporate citizen just part of your public relations image to the outside world or will you “put your money where your mouth is”? It is time for the true leaders to stand up and show up!

[1] The King IV Report on Corporate Governance for South Africa 2016, Copyright and trademarks are owned by the Institute of Directors in South Africa and the IoDSA website link is :http://www.iodsa.co.za/?page=AboutKingIV

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