Thursday, February 3, 2011

CSR in South Africa (Guest Blog)

Guest Blog by Mervyn E. King

In the broadest sense, CSR refers to the role of business in society. It entails how business is governed and how it contributes to a just and sustainable society.

In South Africa, the concept and rationale of CSR are strongly informed by the King Code on Corporate Governance. Now in its third edition, the King Report was the first report on corporate governance that embraced the concepts of stakeholder engagement, ethics and environmental management and actively encouraged an inclusive approach to these issues.

Through the King Report, confidence is placed in the entrenchment of African values into corporate governance, of which ubuntu (African humanism) is the most evident. The notion of ubuntu resonates with the reciprocal nature of CSR in South Africa, making it a dominant culture driver of CSR.

Priority issues include:
  • HIV and AIDS - South African is currently at the epicenter of the AIDS pandemic and the disease is affecting all aspects of South African society. Prevalence rates have increased from 0.7% among 15 – 49 year olds in 1990 to 18% at the end of 2007.
  • Skills development and job creation - South Africa's unemployment rate is around 24% and unemployment remains the country’s greatest economic challenge. Job creation and skills are consequently a major national development objective to address poverty and develop the economy.
  • Energy - Energy issues are high on the political agenda ever since the January 2008 energy crisis and subsequent blackouts, during which more than 20% of South Africa’s electricity-generating capacity was out of commission. Plans to address the power supply crisis are summarised in a policy document issued by the Department of Minerals and Energy.
Among the most interesting trends is that the latest version of the King Code (King III) strongly argues in favour of external assurance of sustainability reports becoming a mandatory requirement.

National legislation significantly informs the nature of CSR as the government has legislated several social issues in management and in the workplace since the democratic dispensation in 1994. Nonetheless, implementation and enforcement are challenging, even to the extent that compliance in some instances is treated as “an issue of business voluntarism”.

The following case studies illustrate different approaches to CSR in South Africa:
  • Pick ‘n Pay - CSR practices are perceived as informal, unsystematic or even “whimsical”, as they are directed by the paternalistic “whim of the company chief executive or chair”.
  • AngloGold Ashanti - CSR is based on systematic decision-making guided by institutional policies. Operationally, CSR is approached as a professional area that requires good management. The mining company, AngloGold Ashanti, epitomises this type of CSR which, although not new, is significantly influenced by mandatory guidelines such as the Mining Charter and other codes aimed at standardisation and accountability.
  • BHP Billiton (SA) - This company aims at integrating CSR into all business strategies and processes. BHP Billiton (SA) is emerging as a leader and innovator in institutionalising CSR.
A review of the 17 accredited MBA programmes in SA revealed that CSR is minimally integrated into core course curricula (Hamann et al 2006).


Based on extracts from the chapter on South African by Mervyn E. King (Chairman of the King Committee on Corporate Governance in South Africa and of the Global Reporting Initiative) and Derick de Jongh (Director of the Centre for Responsible Leadership, University of Pretoria), in The World Guide to CSR (Greenleaf, 2010).