January 2013 \ Views \ 11
www.GatewayToAfrica.com
GTA: You’re saying the things they need to worry about are who the sub-contractors are, and what CSR and labour codes they have, from their own corporate governance point of view. CT: I think when company’s talk about CSR, what they tend to do is limit that to thinking, I give money to charity so I’m ok. I’m talking about much more corporate governance and sustainability. It means being ethical and transparent. So broadly speaking for a company that’s really understanding what its own key environmental and social principles are and how they apply these principles wherever they’re working. We are starting to see a trickle of litigation against company’s CSR policies. So what you say and do as a company is becoming increasingly important. Saying one thing in your CSR policy, and doing something different, might lead to litigation
GTA: But surely it’s a huge problem for low-paid African civil servants to challenge these Western companies bringing the forex into the country. It must be very difficult? CT: That’s why it goes right back to companies also understanding the environment where they operate or seek to expand their business. Some developments will happen on the back of host government agreements. Companies have got to look carefully at what those agreements are…what they stipulate in terms of environmental or labour standards as an example. Some of the host government agreements might actually have lower environmental or labour standards.
GTA: So you’re asking people to change their dealings with Africa and do something different, that’s going to cost them lots of money, so why should they do it? I mean no-one’s going to find out presumably? CT: I think that globally there is a change and it will be interesting to see how that plays out in Africa. I think we’ve gone from a stance where business can set up
operations in a place, turn a profit, publish an annual account and be ok, but none of that takes into account a moral licence to operate. And I think that’s where things have shifted, and that will be the challenge, as Africa gets more educated. People become more aware of who they are and what rights they have. What they expect is a growing requirement for transparency. That is the reason why companies may have to change the way they cooperate. Society is shifting. And it might take another 100 years to play out your argument Or it might not. It might take 25 years.
GTA: What about the impact of the US and EU anti-bribery and anti-corruption legislation which can sting you if you’ve got an office in America or the EU? CT: The bribery legislation might be an instigator for better practices in lots of different areas, particularly where companies are starting to be sued in areas where have not been challenged before. They’re going to have to start looking at the way they implement their policies, who they employ and what they do. They must undertake their due diligence before they go into a jurisdiction. And that I think is possibly what will be the big game changer in the end.
GTA: But again the African countries seem fairly powerless… what happens if there is waste created – will that just push the price up for the African people. Who’s going to pay for these higher costs of regulation? CT: This might be changing. Something from the EU side of things that’s very interesting and to do with environmental compliance is the control of the transfrontier shipment of waste. The legislation is starting to bite, particularly for companies that are illegally shipping electrical equipment, to Nigeria and other African and non OECD countries. (see recent case of R v EZEEMO and Others). The UK Environment Agency has successfully prosecuted a criminal ring in the UK for the part they played in attempting to export broken electronics from the UK. From an African point of view the
“Very often business will subcontract and won’t check who they are subcontracting to. That’s the key issue.” challenges are making use of developed countries waste but in a way that is beneficial to them and that there are enough structures in place to ensure that they’re not used as a dumping ground and again this goes to enforcement and resources and education. The cost of ensuring compliance in this case is falling to the developed countries. And I think the reality is you are dealing today with a different kind of regulator. What I mean by this is that there is an increasing awareness by civil society that business should operate ethically and sustainably. Regulators enforce the law if they have the resource, civil society can equally damage a company’s reputation. If you think of all the fracking, the gas, the oil, the pollution of all the rivers and that side of things, for the communities affected, it’s actually about surviving in the environment they are trying to breathe in! Someone is going to have to find money to actually ensure that proper infrastructure is put in place, because in the long-term, that’s the only sustainable way of creating opportunities that last.
GTA: But a lot of these companies just want a quick buck? CT: That’s why I say, I think it does come back to companies being ethical, understanding the principles of ‘ a licence to operate’ and the impact of governments in the host countries and tackling corruption. A quick buck might not be that ‘quick’ anymore if you look at how increasingly shareprices are being affected by stakeholder’s perceptions of companies. An interesting story is one of Mittal Steel. Before Mittal Steel started operating in Liberia, they spent a huge amount of time planning and working with the community. I understand the investment paid off. That’s another example of how environmental and human rights issues can’t be, separated because you are dealing with local communities and the local communities’ needs. You know what people want? They want to work. They want to feel proud of what they do. They want to be in an environment that they enjoy.