The Companies Act require certain employers to form a social and ethics committee, standardised by King III, corporate governance and ISO 26000.
The Companies Amendment Act, 3 of 2011, in section 72(4), extends the scope, and adds six sub-sections on social and ethics committees. When the Companies Regulations were gazetted in 2011, even more substantial guidance was given in Section 43, writes Rudy Maritz, Verification Standards Committee director of the newly formed National Institute of Compliance Consulting (NIOCCSA).
Since May 2012, social and ethics committees have become a reality in state-owned, listed, and ‘public interest’ companies in South Africa.
In the first draft of the Companies Act of five years ago, there was a single sentence on a new board committee that might be required; “The minister may by regulation prescribe that a company or a category of companies must have a social and ethics committee, if it is desirable in the public interest, having regard to (a) its annual turnover; (b) the size of its workforce; or (c) the nature and extent of its activities.”
Suppliers and contractors have to support compliance
Requirements developed by and imposed by these committees will inevitably filter down to other companies, who do not fall in the required category. Evidence of this has already been seen in vending and screening of service providers and suppliers of multi-national, state-owned and para-statal enterprises, in particular to the application of anti-corruption, money-laundering, terrorism and organised crime laws.
Secondary requirements will soon follow, where all companies will be required to provide evidence that their service providers and suppliers have been properly vetted as part of the total value and supply chain of the larger corporate.
Compliance Officers to manage corporate governance
Compliance Officers soon will find themselves overwhelmed with an array of requirements based on the Companies Act, King III report on corporate governance, and ISO 26000, and management professionals need to align themselves to assist companies in meeting these requirements.
In terms of corporate governance, there are four pillars on which business are built; marketplace, workplace, society, and natural environment. No business can function outside these spheres of interaction.
An Organisational Compliance Practitioner needs to understand these aspects of business and be able to assist and advise a company and its directors on their social responsibilities in these areas, and how to develop a management system to ensure compliance to the spectrum of applicable rules.
ISO 26000 standardises social responsibility
The new ISO 26000 Guidance on Social Responsibility is a key corporate governance management tool. Corporate responsibility is defined as “The commitment of an organisation to incorporate social and environmental considerations in its decision-making, and be accountable for the impacts of its decisions and activities on society and the environment.”
Compliance requirements for each of the four aspects are:
a. BBBEE promotion through procurement
b. Economic development
c. Prevention of Corruption, CMT Laws
a. Employment Equity
b. Quality Work-life
c. Employee Health and Safety
d. Employee Education and development
3. Social Environment
a. Community Development
b. Donations and Sponsorships
c. Public Health and Safety
d. Consumer Protection
e. Consumer Relations (Buyer loyalty)
4. Natural Environment
a. Environmental Impact
b. Investment and support of Renewable Energy
c. Carbon Footprint
d. Aesthetics in design (Built Environment).
The National Institute for Organisational Compliance Consultants (NIOCCSA) is developing an Occupational Curriculum Standard for the profession and will present this to SAQA’s QCTO by the end of 2013.
Health and safety practice aligned to corporate governance
There are two professions closely aligned to compliance consulting; advanced HSE practice, and human resources generalists. Additional training via CPD over a five year period would qualify these professionals as Organisational Compliance Practitioners.
Interested parties are invited to submit proposals and suggestions on the proposed Occupational Curriculum, and practitioners are invited to participate in the development of this emerging profession.
• Sources; Ethics South Africa; Social and Ethics Committee Handbook. ISO 26000.
• Rudy Maritz is the NIOCCSA Verification Standards Committee director.
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