corporate social responsibility - by director ina meiring

CORPORATE SOCIAL RESPONSIBILITY

INA MEIRING

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> Global focus

> No “one-size fits all” approach

> No company operates in isolation: “No man/company is an island”

> “Business and organizations do not operate in a vacuum. Their relationship to the society and environment in which they operate is a critical factor in their ability to continue to operate effectively. It is also increasingly being used as a measure of their overall performance.” (ISO 26000) (International Organisation for Standardisation).

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> EU Green Paper for Corporate Social Responsibility:

> A European approach to corporate social responsibility forms part of the broader context of various international initiatives, such as the United Nations Global Compact (2000), the International Labour Organisation's (ILO) Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (1997-2000), or the Organisation for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises (2000).

> “Being socially responsible means not only fulfilling the applicable legal obligations, but also going beyond compliance and investing "more" into human capital, the environment and relations with stakeholders. The experience with investment in environmentally responsible technologies and business practices suggests that in going beyond legal compliance companies can increase competitiveness and it can have a direct impact on productivity.”

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> Australia: CSR Standard (AS 8003- 2003): the objective of this standard is to provide essential elements for establishing, implementing and managing an effective CSR programme within an entity and provides guidance on using these elements.

> ISO 26000:2010: provides guidance rather than requirements, so it cannot be certified to unlike some other well-known ISO standards. Instead, it helps clarify what social responsibility is, helps businesses and organizations translate principles into effective actions and shares best practices relating to social responsibility, globally. It is aimed at all types of organizations regardless of their activity, size or location.

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TRIPLE-BOTTOM LINE APPROACH

> The phrase “the triple bottom line”: John Elkington, the founder of a British consultancy called SustainAbility (1994)

> Companies should prepare three different (and quite separate) bottom lines.

> Profit: the “bottom line” of the profit and loss account.

> People: social responsibility

> Planet: environmental responsibility.

> It aims to measure the financial, social and environmental performance of the corporation over a period of time.

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KEY ASPECTS OF KING REPORT

> Good governance is about effective leadership

> Leadership is characterized by ethical values and based on moral duties that find expression in the concept of Ubuntu.

> Responsible leaders direct company strategy and operations with a view to achieving economic, socal and environmental performance.

> Sustainability: primary moral and economic imperative of the 21st century (meeting the needs of the present without compromising the ability of future generations to meet their own needs)

> Nature, society and business are interconnected.

> Corporate citizenship: a company should operate in a sustainable manner

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CASE LAW

> Stilfontein Minister of Water Affairs and Forestry v Stilfontein Gold Mining Co Ltd 2006(5) SA 333(W) AT 352:

> “The King Committee, correctly, in my view, stressed that one of the characteristics of good corporate governance is social responsibility. The Committee stated as follows:

> 'A well-managed company will be aware of, and respond to, social issues, placing a high priority on ethical standards. A good corporate citizen is increasingly seen as one that is non-discriminatory, non-exploitative, and responsible with regard to environmental and human rights issues. A company is likely to experience indirect economic benefits, such as improved productivity and corporate reputation, by taking those factors into consideration.’”

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CASE LAW

> Standard Bank of South Africa Ltd v Dlamini 2013(1) SA 219 (KZD) (at p 237)

> “…. the Bank, like most large corporations that invest in corporate social responsibility projects, had to be aware of the purposes of the CPA which was already in the public domain. The purposes of the CPA are:

> '. . . to promote and advance the social and economic welfare of consumers in South Africa by —.

> (c) promoting fair business practices;

> (d) protecting consumers from —

> (i) unconscionable, unfair, unreasonable, unjust or otherwise improper trade practices; and (ii) deceptive, misleading, unfair or fraudulent conduct; … “

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CSR: COMPANIES ACT 71 OF 2008

> Section 7(d):The purposes of the Companies Act include to reaffirm the concept of the company as a means of achieving economic and social benefits.

> Section 76(3)(b): A director of a company, must exercise the powers and perform the functions of director in the best interests of the company.

> Inclusive approach: directors must consider the legitimate interests of the various stakeholders

> Section 218(2): Any person who contravenes any provision of this Act is liable to any other person for any loss or damage suffered by that person as a result of that contravention.

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SOCIAL AND ETHICS COMMITTEE

> Regulation 43: state-owned companies, listed public companies and any other company that has, in any two of the previous five years, scored above 500 points (public interest score)

> Regulation 26(2): every company must calculate its 'public interest score' at the end of each financial year, calculated as with reference to, amongst others, numbers of employees, third party liability, turnover, known individuals with beneficial interest in issued securities .

> A company's social and ethics committee must comprise not less than three directors or prescribed officers of the company, at least one of whom must be a director who is not involved in the day-to-day management of the company's business, and must not have been so involved within the previous three financial years.

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FUNCTIONS OF THE SOCIAL AND ETHICS COMMITTEE

> To monitor the company's activities, having regard to any relevant legislation, other legal requirements or prevailing codes of best practice, with regard to matters relating to-

> (i) social and economic development, including the company's standing in terms of the goals and purposes of-

> (aa) the 10 principles set out in the United Nations Global Compact Principles; and

> (bb) the OECD recommendations regarding corruption;

> (cc) the Employment Equity Act; and

> (dd) the Broad-Based Black Economic Empowerment Act;

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> (ii) good corporate citizenship, including the company's-

> (aa) promotion of equality, prevention of unfair discrimination, and reduction of corruption;

> (bb) contribution to development of the communities in which its activities are predominantly conducted or within which its products or services are predominantly marketed; and

> (cc) record of sponsorship, donations and charitable giving;

> (iii) the environment, health and public safety, including the impact of the company's activities and of its products or services;

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> (iv) consumer relationships, including the company's advertising, public relations and compliance with consumer protection laws; and

> (v) labour and employment, including-

> (aa) the company's standing in terms of the International Labour Organization Protocol on decent work and working conditions; and

> (bb) the company's employment relationships, and its contribution toward the educational development of its employees;

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> (b) to draw matters within its mandate to the attention of the Board as occasion requires; and

> (c) to report, through one of its members, to the shareholders at the company's annual general meeting on the matters within its mandate.

> Appointed by the board or by the shareholders?

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JSE LISTING REQUIREMENTS AND SRI INDEX

> Listed companies: duty to report on social, health, environmental and ethical performance, the efficiency of risk management and internal control, and to disclose the degree of compliance with the King Report

> Social Responsibility Investment Index (SRI Index): May 2004

> 2014: The entire FTSE/JSE All Share index forms part of the automatic universe for the review, and the most recent publically available information will be assessed automatically.

> The broad criteria are based on a holistic triple bottom line sustainability approach and are structured along three pillars, namely environment, society and governance & related sustainability concerns.

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SRI INDEX

> 2013 SRI Index Best Performers:

> Anglo American Platinum

> Illovo Sugar

> Netcare Limited

> Standard Bank

> Steinhoff International

> Vodacom Group

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CODE FOR RESPONSIBLE INVESTING IN SA (“CRISA”)

> The Institute of Directors in Southern Africa (supported by the FSB and the JSE)

> CRISA gives guidance on how the institutional investor should execute investment analysis and investment activities and exercise rights so as to promote sound governance.

> CRISA applies to:

> Institutional investors as asset owners, for example, pension funds and insurance companies

> Service providers of institutional investors, for example, asset and fund managers and consultants

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CRISA

> There are five key principles:> An institutional investor should incorporate sustainability considerations, including environmental, social and governance, into its investment analysis and investment activities. > An institutional investor should demonstrate its acceptance of ownership responsibilities in its investment arrangements and investment activities; consider a collaborative approach to promote acceptance and implementation of the principles of CRISA and other codes and standards applicable to institutional investors; recognise the circumstances and relationships that hold a potential for conflicts of interest and should proactively manage these when they occur; be transparent about the content of their policies, how the policies are implemented and how CRISA is applied to enable stakeholders to make informed assessments.

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HEALTHCARE: CSR

> Benefits:

> the long-term prosperity of companies;

> the opportunity to demonstrate the human face of business as well as an important link to the communities.

> enhance reputation by taking into account the interests of stakeholders — not only patients, but also investors, employees, suppliers, communities, regulators, special interest groups and society as a whole;

> competitive advantage – improve patient loyalty;

> improve access to capital (attracting investors), enhance brand image, increase sales, develop employees, improve risk management and reduce costs.

THANK YOU

Legal notice: Nothing in this presentation should be construed as formal legal advice from any lawyer or this firm. Readers are advised to consult professional legal advisors for guidance on legislation which may affect their businesses.

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corporate social responsibility - by director ina meiring

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