UN Habitat in Kenya: Antoine King, Programme Support Division

UN-Habitat is headquartered in Nairobi. In this interview with CSR International CEO Wayne Visser, the Director of the Programme Support Division of UN-Habitat Antoine King talks about the importance of understanding CSR in his work with cities.

Video Blog - Healthcare in East Africa: Maryjka Beckmann, AAR Holdings

Maryjka Beckmann is Executive Director of AAR Holdings Ltd, which has pioneered healthcare services in East Africa. In this interview with CSR International CEO Wayne Visser, she talks about the role of generic drugs and how the company uses CSR can tackle health issues.

Video Blog - Business ethics in Kenya: Ken Njiru, Uungwana Resource Institute

Ken Njiru is Executive Director of Uungwana Resource Institute and one of the leading proponents of business ethics in Kenya. In this interview with CSR International CEO Wayne Visser, Njiru explains how they are working on rebranding unethical behaviour as "primitive" or "backward" in the public and business consciousness.

Reflections on CSR in Kenya and China in Africa

By Wayne Visser

Last week, I was hosted by Ufadhili Trust to deliver a 2 day workshop on CSR in Nairobi, Kenya. As I was last in Kenya 20 years ago when I attended an AIESEC African Leadership Development Seminar, it was wonderful to return and compare my impressions.

The biggest changes have been political. In 1990, Daniel Arap Moi was still president (from 1978 to 2002) and ruled a one-party state with an iron hand. My impression back then was of relative stability, but no great sense of prosperity or advancement. I recall that the hotel we stayed at on the coast in Mombasa had a water-cut and the security guard carried a bow and arrow. Also, it took 9 hours to drive the 440 km of pot-hole ridden road between Nairobi and Mombasa.

Today, Kenya has a multi-party democracy under President Mwai Kibaki, although the disputed 2007 general election (and post-election violence) has led to a coalition government in which Raila Odinga shares power as Prime Minister. Apart from changes in politics, the economy is stronger (despite unemployment estimated at 40%) and the roads are noticeably improved.

In fact, the roads sparked one of the first lively debates in the workshop. Why? Because they are built by Chinese contractors. The "Chinese in Africa" topic is a real hot potato, and fascinating from a CSR perspective. The Chinese are bringing massive business investment to Africa (especially in infrastructure), but at what cost? They are accused of low labour, ethical and environmental standards, as well as taking away local employment.

I don't fully buy the "evil China" story (and I fear a new xenophobia is taking hold around the world), for a number of reasons. First, I would far rather see investment in infrastructure than development aid going to Africa. Second, the Chinese government is starting to show concern about its tarnished reputation abroad, so I expect pressure and standards to rise in the coming decade. And third, the Chinese are not all about low costs and poor standards. They have an incredible work ethic and high productivity level, which I believe introduces healthy competition and challenges attitudes of entitlement in countries like Kenya.

The other theme that emerged strongly in the workshop was corruption, although there was less "fight" in this debate. I almost sensed a feeling of resignation among most of the participants. How do you fight a disease that - like cancer - is so endemic in government, business and society at all levels?

One refreshing voice in this debate was Ken Njiru, Executive Director of Uungwana Resource Institute and one of the leading proponents of business ethics in Kenya. He believes that corruption needs to be branded in the public and business consciousness as "ushenzi", which means "barbaric", “primitive” or “backward”. This is contrasted with "uungwana", which means "civilised" or "advanced" or "righteous". (See my video interview with Ken)

As far as general CSR goes, Kenya is still mostly stuck in the PR/philanthropy mode. However, there are inspiring examples of CSR 2.0 practice, such as Vodafone/Safaricom's M-PESA scheme, which allows the unbanked to transfer money by mobile phone text. Similarly, Equity Bank, which has successfully targeted the poorest sectors of society and now, with 4.1 million accounts, makes up over 52% of all bank accounts in Kenya.

I look forward to watching how Kenya can continue to develop and inspire, both within Africa and the world, as it takes its CSR agenda forward. Thank you to Director Mumo Kivuitu and everyone at Ufadhili. (See my video interview with Mumo), Keep up the great work!

Video blog: CSR in Kenya: Mumo Kivuitu, Ufadhili Trust

Ufadhili Trust is the leading promoter of CSR in Kenya. In this short interview with CSR International CEO Wayne Visser, Ufadhili Director, Mumo Kivuitu talks about some best practice case studies M-Pesa and Equity Bank

CSR & Corporate Governance - Part 3

By Wayne Visser

The second lever of change for integrating CSR through corporate governance is the role of non-executive directors (NEDs).

There is no explicit CSR-related role for NEDs in the corporate governance codes – only an emphasis on their role in questioning the strategy, performance and controls for risk management. So once again, CSR would have to be inferred. There are a few hooks, however:

The Tyson Report on Board Diversity suggests that non commercial NEDs (i.e. from NGOs, academia or civil society) have important contributions to make, including their understanding of social, political and environmental issues.

There is a recommendation in the 2009 Walker Review of Corporate Governance of the UK Banking Industry that boards should provide expertise to NEDs to receive increased support, training and access to external experts in areas of risk. The implication is that NEDs would have an enhanced ability to challenge boards.

The Walker Review also recommended that an increased amount of time and attention should be paid to risk governance and independence of risk management functions, implying a more critical role for NEDs.

Mervyn King believes NEDs most important role is to ask “intellectually naive questions”, which tease out corporate responses to strategic issues such as sustainability. However, they should not become siloed, i.e. the only place on the board where sustainability is considered or where accountability lies.

NEDs have a tricky balancing act, as they have to be a team play, yet also retain some distance/independence from the executive board members. King believes the current trend in the US to stack the board almost exclusively with NEDs is a mistake and will backfire; it is the combination of executive directors and NEDs that gives the board strength.

At the end of the day, integrating CSR and corporate governance requires strong and socially aware leadership. However, it also requires an enabling environment. In a report I worked on for Cambridge University on what makes a ‘sustainable economy’, many of the gaps identified were governance gaps – issues like short-termism, divided purpose, inappropriate incentives and misleading measures.

I am also struck how many measures in the Accountability’s Responsible Competitiveness Index relate directly to corporate governance – indicators like efficacy of boards, ethical behaviour, wage equality, strength of audit and accounting standards and transparency of transactions.

So it is clear to me that, not only is corporate governance a key vehicle for communicating and embedding CSR, but it is also part of building a responsible, sustainable and competitive economy. CSR, as part of corporate governance, needs to become – to borrow a phrase from Mervyn King – the plugged in ‘rhythm’ of organisations and economies in the dawning age of responsibility.

Downloads

Sustainable Economy Dialogue report

CSR & Corporate Governance - Part 2

Given the narrow, financial focus of many international corporate governance codes, how can corporate governance be used as a strategy for embedding CSR?

In fact, the basic principles of corporate governance all have CSR/sustainability implications. In a report I worked on when I was running KPMG’s Sustainability Services in South Africa, we identified 6 ‘Director’s Sustainability Imperatives’ and 12 areas for action. These covered the areas of: board accountability, values/strategy, risk management, management systems, performance monitoring/reporting and stakeholder interaction.

Of these, one of most effective levers for change in CSR is the explicit or implicit requirement for reporting in most corporate governance codes.

The UK’s abandoned 2005 Operating and Financial Review (OFR) legislation would have provided a basis for sustainability reporting. Instead, companies are now only required to conduct a Business Review, in terms of the much more limited disclosure requirements of the 2003 EU Accounts Modernisation Directive, which (much like the Turnbull Review) focuses on the major risks facing the company. The Association for Certified Chartered Accountants, among others, remain critical of this approach, saying that the Business Review “will not bring about any material improvements to corporate reporting.”

In the case of the King Code, direct reference is made to the GRI’s Sustainability Reporting Guidelines, and all listed companies need to comply. In chapter 9, the Code states: “Reporting should be integrated across all areas of performance, reflecting the choices made in the strategic decisions adopted by the board, and should include reporting in the triple context of economic, social and environmental issues. The board should be able to report forward-looking information that will enable stakeholders to make a more informed assessment of the economic value of the company as opposed to its book value.”

Even in the absence of such compelling reporting requirements, most corporate governance codes embrace the principles of ‘material disclosure’ and ‘comply or explain’. These requirements can be used to challenge companies. Have they reported on the most material social, environmental and ethical issues for the company? How do these translate into risks, liabilities and impacts? If they are not reporting these, can they explain why?

... the role of non-executive directors in Part 3 ....