2. • BACKGROUND
• IMPLEMENTATION
• SECRETARIES ROLE IN FACILITATING AN EFFECTIVE COMMITTEE
PRACTICALITIES FOR IMPLEMENTING AN EFFECTIVE SOCIAL & ETHICS
COMMITTEE
3. • Requirements under the Companies Act
• King III
• Recommendations from influential bodies
Institute of Directors (IOD)
Ethics Institute
Ernst & Young
BACKGROUND
4. • Applies to Companies with PIS ≥ 500 in any 2 of the previous 5 years
• Calculated ito Reg 26(2)
• Effective from May 2011, on the anniversary of incorporation (May 2012)
REQUIREMENTS UNDER THE COMPANIES ACT, REGULATION 43
5. (a) Monitor the Company’s activities, having regard to relevant legislation and codes, relating to:
Social and economic development
Good corporate citizenship
Environment, health and public safety
Consumer relationships
Labour and employment
(b) Draw matters to the attention of the board
(c) Report through one of its members to the shareholders in AGM
REGULATION 43(5)
6. The Company has a responsibility to all stakeholders
• Considers legitimate interests of stakeholders when deciding in the best interest of the company;
• Principle 1.2:
Ensure company is a responsible corporate citizen
Ethical relationship between company and society / environment / economy
Collaborate with stakeholders to promote ethics
Develop and implement measurable corporate citizenship policies
• Principle 1.3:
• Ensure company ethics are managed effectively
KING III REQUIREMENTS
7. THE IOD on Running an Effective Social and Ethics Committee
• Legislation determines that the company appoints the Committee
• Board appoints the first members
Involve nominations committee selecting members with the best mix of skills and talent;
Board appoints the Committee & Members
AGM ratifies the Committee as a permanent statutory committee and committee of the board
• Members:
not less than 3 Directors or prescribed officers
at least one non-executive
CONSIDERATION :
are ADDITIONAL members required to be PO/ Directors
RECOMMENDATIONS FROM INFLUENCIAL BODIES
8. Considerations Raised by The Ethics Institute
• Managing duplication
May incorporate other committees ie transformation / ethics
Synergies and synchronisation between committees
Links between committees impacts meeting schedules
• Terms of Reference to facilitate appointment of additional members / ex-officio members
• Board delegations of other responsibilities (Direct / control / oversight)
• Minutes may play a crucial role to illustrate the company’s performance
Recommends minutes included in board papers
• Create a rolling agenda spread out through the year
More RECOMMENDATIONS FROM INFLUENCIAL BODIES
9. Considerations Raised at the Ernst & Young Trialogue Sustainability Forum
• Business finds it easier to deal with numbers, thus boards don’t effectively focus on sustainability
• Social capital needs to be identified and linked to economic value to give it more meaning
• It may appear the committee removes responsibility from the board
Line function, providing over-sight obo board
Committee has responsibility, board has accountability
Note that liabilities for Committee Members, Sections 76 and 77 of the Act applies
• Committee should link ethics, environmental & social issues to business strategies.
• Management should report and be excused, allowing committee to reflect independently;
more RECOMMENDATIONS FROM INFLUENCIAL BODIES
10. • Drafting the Terms of Reference
• Shaping the Agenda
• Reporting Framework
IMPLEMENTATION
11. • Constituted by board – ratified in AGM
• Role - monitor (may include: direct / oversight / advisory)
• Membership – First members appointed ito the Act
Termination of membership
Additional members & standing invitees
• Secretary – implications if not Secretary of the Company
• Meeting frequency and quorum – fit for company requirements
• Responsibilities / scope in line with the Act (may include Ethics, transformation, policies and other)
• Reporting : Guidelines for reports received, frequency and manner of reporting to Board, AGM and other
committees
• Authorities – to receive information, investigate activities, access to records and independent experts
DRAFTING THE TERMS OF REFERENCE
12. • Informed by the scope in ToR
• Consider application to the business affairs per division / operation
• Table of other committees with similar scope
• Apply risk matrix to determine frequency of deliberation per agenda item
• Consider reports flowing in / out
• Consider existing reporting timelines
• Develop a meeting plan that allows meaningful debate and aligns
SHAPING THE AGENDA
13. EXAMPLE ANNUAL ROLLING AGENDA
A. ITEMS FOR QUARTERLY CONSIDERATION Q1 Q3 Q4 MANDATE
1. Environment, Health and Safety review per Operation x x x Review
2. Sustainability Committee Feedback (or) Sustainability strategy & policy review x x x Review
3. Minerals Policy, Mining Charter and Legislative Compliance x x x Review
4. Internal audit report - by exception x x x Review
B. ITEMS FOR ANNUAL CONSIDERATION
1. Approve / review health, safety, environmental and climate change policies x Review
2. Receive Business Integrity Report
Ethical Conduct & Business Practices
Competition Law Compliance
Whistleblowing policy and report
Fraud prevention and investigations
United Nations Global Compact Principles (10);
OECD recommendations regarding corruption;
x Review
3.
Receive report under anti-money laundering (AML/CFT) policy x Review
4.
Review Good Corporate Citizenship
Policies on equality / discrimination / corruption
Sponsorship, Donations, Charitable Giving's
Community Development Initiatives
x Review
5. Receive Report on Labour and Employment
Compliance with EE Act
Protocol on decent work and working conditions
Employment relationships and educational development
Compliance with B-BBEE Act
Social & Labour Plan commitments
x Review
6. Report on Consumer Relationships
Advertising practices
Public Relations
Compliance with Consumer Protection Laws
x Review
7. Review Annual Report to board and AGM x Review
14. • Standard template for reports from divisions and operations
• Align reports with information provided to other committees
• Deliberate on an exceptions basis on matters to escalate to the board
• Key focus (High risk) areas inform the annual report
• Annual report considered by committee and provided to board and AGM
REPORTING FRAMEWORK
15. • Terms of reference
Facilitates meaningful deliberation
Results in meaningful reporting
• Agenda:
fit for purpose
logical flow of information
• Minutes:
Highlight deliberations, key risk areas and focused mitigating actions
Key issues to be raised at the board and added to board agenda
Meaningful evidence trail in response to social, economic or ethics incidents
SECRETARIES ROLE IN FACILITATING AN EFFECTIVE COMMITTEE
16. • Provided some background, including recommendations by influential bodies
• Proposed an approach to effective implementation
• Considered the role Secretaries play in facilitating the Committee
CLOSING
