Codes of Conduct for South
African Companies Operating
Abroad
Email : catherine.grant@saiia.org.za
Era of Corporate Social
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 Conduct
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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 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’
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Voluntary not legally binding
Promotes responsible business
Different names of Codes of
Conduct
Code of conduct
 Codes of ethical conduct
 Cannons of ethical conduct
 Ethical principles
 Code of business conduct
 Code of conduct and ethics
 Code of professional responsibility
 Global business citizenship

Theories affecting codes of conduct
There are four broad categories:
Utilitarian theories
 Duty theories
 Rights theories
 Virtue theories

What do Codes of Conduct 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
Codes 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
Conduct?
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Business
 Company
 Industry or sector
 Professional bodies
 Global business
Government codes
International organisations
Everything from : bloggers, internet warriors,
schools, universities, sports administrators,
ecotourism lobby groups, law enforcement agencies,
health alliances, military, etc.
Why are CSR and Codes of
Conduct becoming so important?
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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 expertise
Growth 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?
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
conduct between States and
Business
Honest analysis and disclosure
 Risk-return analysis.
 Accountability
 Future-casting

Implications for Bilateral
Relations

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
governing South African Companies
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ILO Conventions
The UN Global Compact
The Universal Declaration of Human Rights
OECD Guidelines for Multinational
Corporations
The NEPAD Business Foundation (NBF)
Covenants
The Southern African Development
Corporation (SADC) Social Charter
Draft Code of Governance Principles for
South Africa- 2009 (King Code III)
Common Principles
Compliance with local laws and regulations
 Anti-corruption practices
 Adherence to labour standards
 Local procurement of supplies
 Consumer health and safety
 Human rights protection
 Due diligence
 Support for national development priorities
 Effective CSR programmes
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Initiative by SA Government –
Guidelines for Business
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Focus on SA businesses operating on rest of
African continent
Context – South Africa as largest investor outside
of oil and gas sector
Recognises need for greater cooperation
between SA government and private sector
Voluntary – adopted by business organisations
Covers corporate governance and CSR
Aim to apply SA regulatory standards on rest of
continent
National contact points at SA embassies to
monitor compliance
Alternatives approaches to
managing State Business
Relations
Interest through the processes of
capitalist development
 Part 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
Alternatives approaches to
managing State Business Relations

Through the growing interest in publicprivate partnerships

Through a framework within which to
analyse the emergence of ‘bourgeois
social movements’ or ‘ social movements
for African capitalism’
Recommendations
Simply – more interaction between
government and business
 Include 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
Recommendations
Consolidation 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 Interest

Recent 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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