Perceptions of the impact of board members’ individual perspectives on the social and environmental performance of companies.
Date
2014-11
Authors
Stacey, J.
Stacey, A.
Journal Title
Journal ISSN
Volume Title
Publisher
The Southern African Institute of Mining and Metallurgy.
Abstract
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.
Description
Keywords
Decision-making, Sustainable outcomes, Courageous leadership, Personal values, Sustainable development priorities, Self-awareness, Shareholders, Environmental management
Citation
Stacey, J.L. and Stacey, A.G. 2014. 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 114(11), pp. 957-968.