By Prof. Deon Rossouw
Health and Ethics seem to be attracting the attention of business in 2020. These are the findings of a survey that was done amongst the chairpersons of the Social and Ethics Committees of 75 organisations who participated in the first ever Social and Ethics Committee Trend Survey of 2020.
The survey was launched by The Ethics Institute in collaboration with the Institute of Directors in South Africa. The purpose of this first edition of the survey was to establish a baseline against which trends related to Social and Ethics Committees could be tracked in years to come.
The survey focused on a variety of matters related to the composition, role, and effectiveness of Social and Ethics Committees in South Africa. One of the objectives of the survey was to identify which matters are receiving the most attention and time in meetings of Social Ethics Committees – as this would give an indication of the priorities of the committee.
The two aspects to which Social and Ethics Committees devote most time and attention, according to the survey, turned out to be employee health and safety and organisational ethics.
The finding about the prominence of employee health and safety came as a surprise, but when the timing of the survey – amidst the COVID-19 pandemic – is taken into consideration, the finding becomes less surprising. Given the risk that the pandemic poses for business continuity, as well as for workplace transmissions of the virus, the focus on employee health and safety makes perfect sense. It is not clear, however whether employee health and safety would have surfaced as a top priority for Social and Ethics Committees prior to the pandemic. And it would be interesting to see if it maintains this prominent position once the COVID-19 pandemic wanes.
The fact that organisational ethics was rated as equally as prominent as employee health and safety was unexpected and counter intuitive. The main reason for this being the fact that organisational ethics is not included in the statutory mandate and responsibilities of the Social and Ethics Committee.
Social and Ethics Committees became mandatory statutory board committees on the 1st of May 2012 due to the enactment of the Companies Act (2008) and Companies Regulations (2011). Although the word ethics appears in the name of the committee, the word ethics is never used in the description of the mandate and responsibilities of the committee. The statutory mandate of the committee only deals with the social responsibilities of companies as far as responsible corporate citizenship is concerned, covering various economic, social, and environmental aspects that the committee should monitor and report on. But organisational ethics is never mentioned either by name or even by implication. This omission was regarded as weird and unusual given the name of the committee, and it is expected that this omission will be corrected once the Companies Regulations are amended.
When the Fourth King Report on Corporate Governance for South Africa (King IV) was published in 2016, this omission of organisational ethics in the mandate of the Social and Ethics Committee was addressed. It was recommended in King IV that the mandate of the committee should be extended to also include oversight and reporting of organisational ethics.
It seems that this recommendation by King IV has been favorably received by Social and Ethics Committees, as it was found in the Social and Ethics Committee Trend Survey that organisational ethics is one of the two matters that are receiving the most time and attention at meetings of the committee. Further evidence that the King IV recommendations regarding the Social and Ethics Committee are being taken seriously, was the finding in the survey that organisations found the guidance regarding Social and Ethics Committees in King IV more useful than the guidance provided by the Companies Act and Regulations.
In contrast to the focus on employee safety and health, the focus on organisational ethics might not be a mere temporary flash in the pandemic pan. Why do I say so?
Well, the focus on organisational ethics started long before the COVID-pandemic. Already in 2012, when the statutory Social and Ethics Committee became mandatory for certain categories of companies, there was already a principle in the Third King Report of 2009 that recommended that boards should ensure that their organisational ethics is managed effectively. Leading companies took this as a cue to expand the mandate of the Social and Ethics Committee to also include the governance of organisational ethics. This expansion of the mandate of the committee then gained further momentum with the publication of King IV, and its explicit recommendation regarding the inclusion of organisational ethics in the mandate of the committee.
Furthermore, the pandemic is also contributing to a deepened focus on ethics amidst the pandemic. The pandemic raised a range of tough and nasty dilemmas that executives and professionals have to come to terms with: Who should be prioritised in the provision of personal protective equipment, ventilators, and soon also vaccines? If salary cuts or lay-offs become inevitable, who should be first in the firing-line?
The pandemic also exposed many organisations to corruption and unscrupulous deals related to essential services and goods in the fight against the virus. Some organisations opted for a survival ethic of “bread first, morals later” that also resulted in unethical conduct being condoned in the name of survival. As this unethical conduct was exposed in the media, companies become more aware of these COVID-19 related ethical dilemmas and ethics risks, which lead to an increased focus on ethics in organisations.
The question that remains now is whether this focus will be maintained post the pandemic? I am convinced that it will. And there are several reasons for this conviction.
Firstly, the new mode of remote working (or working from home) is likely to be more than just a pandemic-related phenomenon. It is likely to remain part of the future of work, even after the pandemic has waned. Remote working brings a wide range of ethical challenges for organisations. These relate to issues like abuse of company time, data, and other resources for personal gain while working remotely, the impact of remote surveillance on staff trust and morale, and the protection of personal privacy and intellectual property in a digital environment that is prone to cyberattacks and cyber abuse.
One of the biggest challenges faced by organisations in the remote working dispensation is the maintenance and cultivation of an ethical culture. It is well-known that proximity to the talk and walk of leaders, as well as informal conversations in the passage or at the coffee station, are important contributing factors in the cultivation of ethical culture. With remote working, both of these factors are severely diminished. New and innovative ways for enculturating staff in the ethical culture of the organisation needs to be experimented with in the years to come. Especially challenging in this regard, is the socialisation of newcomers in the ethical culture of the organisation.
Thus it is likely that organisational ethics will remain high on the corporate agenda even post the pandemic.
Prof Deon Rossouw is the CEO of The Ethics Institute and an Extraordinary Professor in Philosophy at Stellenbosch University.