Perceptions of the impact of board members' individual perspectives on the social and environmental performance of companies
Journal of the Southern African Institute of Mining and Metallurgy
Centre for Sustainability in Mining and Industry, University of the Witwatersrand, Johannesburg, South Africa; University of the Witwatersrand, Johannesburg, South Africa
Large mining companies generally follow the distributed ownership corporate model, with a board of directors responsible for decisions that affect both shareholder value and stakeholders of the company. The board is simultaneously responsible for setting the culture and values of the corporation, which drive performance and priorities. Companies listed on the Johannesburg Securities Exchange (JSE) commit to sustainable development in various ways, either by virtue of implementing the King Code of Governance 2009 (King III) and/or through their own public reporting on social and environmental matters. Many mining companies make public statements regarding their support for environmental stewardship, ethical behaviour, and fair treatment of communities. It is a local, regional, and indeed, global phenomenon that companies fail to deliver on these statements. Research was carried out through the Institute of Directors of Southern Africa in 2007, and followed up in 2012, regarding directors' understanding of sustainable development issues, the relative priorities, what is needed for 'radical change' to effect sustainable development, and what enables or constrains the latter. Pertinent findings of both surveys are presented in this paper, and it is suggested that 'on-the-ground' performance may be indicative of the nature of leadership and decisions in the topmost ranks of the company. The results indicated that environmental concerns fall consistently below social issues. Financial capital ranked most important, and while environmental issues are recognized as being of strategic concern for the long-term, they ranked as being the lowest importance of all 'Five Capitals' (Financial, Manufactured, Social, Human, and Natural). Social capital ranked second lowest, with black economic empowerment being the only high-priority social issue. There is also evidence that certain companies within the mining sector fail to recognize their absolute dependence on natural resources. Much is made in academic and popular literature of the need for a new type of leadership for the radical shift to sustainable development: at company level this implies therefore a new type of director. The research found that only 14 per cent of directors felt that board decisions are consistent with their personal values; while intentions are strong to behave ethically and serve sustainable development, actions to give effect to these intentions lag significantly. Respondents indicated that the top impediments to courageous leadership for sustainable development related to personal issues of maintaining the image of being a director, fear of appearing weak, fear of being a lone voice, and bowing to board-colleague peer pressure. © The Southern African Institute of Mining and Metallurgy, 2014.
Decision making; Environmental management; Planning; Shareholders; Social aspects; Black economic empowerments; Courageous leadership; Environmental concerns; Environmental stewardship; Personal values; Self awareness; Social and environmental; Sustainable outcomes; Sustainable development