Corporate South Africa has been rocked by the events of the last few weeks, as the COVID-19 crisis has disrupted the plans, expectations and routines of millions of citizens.
However, despite the recent dramatic volatility of the stock market, listed companies and their shareholders remain some of the most powerful economic actors in our society. The claims of responsible corporate citizenship that big business regularly makes will now be tested here, in the most unequal country on earth, as they are across the globe.
In South Africa, pre-existing extreme inequality in wealth, income, access to healthcare and education, and even water and basic sanitation, will mean that COVID-19 will disproportionately impact poor and under-resourced communities. This crisis has the very real potential to exacerbate these inequalities even further.
While acknowledging the considerable economic uncertainty facing large swathes of the economy, many of the biggest South African companies – and the institutional investors that own shares in them on behalf of ordinary people – have the financial resources, political influence and resilience to weather economic storms.
The success of these companies is founded on the contributions of their staff, and the business of their customers. As shaken and disrupted as they may be, corporate leaders still have a choice: will they hunker down and focus solely on protecting profits and executive pay? Or will they also deploy their resources to act in the long-term interests of our society, by doing what they can to protect those most vulnerable to this sudden socio-economic shock?
There are many ways to be a kind corporate citizen during this crisis. The most proactive companies are already making sure that, where possible, they:
- Pay for medical tests for those who have been exposed.
- Pay suppliers on time, or early, especially small businesses.
- Provide paid sick leave for regular employees, and sick pay for temporary or insecure workers.
- Support contract workers – cleaners, caterers, maintenance staff, security staff etc. – to ensure that they are not abandoned and unable to earn a living when most staff are working from home and office buildings are empty.
- Stagger working hours to reduce contact and support employees who now have to care for children at home.
- Implement reduced hours rather than redundancies.
Just Share is tracking initiatives by South African businesses that show real commitment to the well-being of staff, customers and our broader society. This is not about self-serving, opportunistic ways to make money in a crisis, but generous, responsible, proactive steps that often do not have any immediate financial benefit for the companies involved. Some of our favourite examples so far:
- AB InBev is “using technology from our non-alcohol brewing process to create disinfectants from the surplus alcohol” to manufacture “over 1 million bottles of hand sanitizer to donate to hospitals and frontline workers around the world”. In Africa, SA Breweries is donating alcohol to help in the manufacture of hand sanitizer, and “SAB’s extensive fleet and route network of our breweries will be used to deliver the finished product to the most remote parts of the country”.
- Makro has given pregnant staff the option of paid special leave to “reduce the risk of infection to themselves and their unborn children during this crisis”.
- Responding to suggestions from customers, since 18 March Pick ‘n Pay has been opening all supermarkets an hour earlier every Wednesday exclusively for customers over the age of 65.
- SweepSouth, which employs thousands of home cleaners, is setting up a partnership to generate a pool of funds to “reduce the financial burden that the pandemic will most certainly bring about for some of the economically most vulnerable members of our society (due to self-isolation or positive test results)”. The company has asked clients who cancel their bookings due to self-isolation to consider contributing to this fund.
Together with other shareholder activists, Just Share will also track the actions of South Africa’s asset managers during this time. Will they actively and publicly encourage responsible corporate behaviour and stakeholder capitalism?
This crisis will create new kinds of social and governance risks. Responsible investors should be prepared to challenge companies that refuse to pay sick pay and benefits, or which call for deregulation which is unrelated to managing the crisis (like delaying carbon taxes and climate change regulation), or take any action that looks like exploitation of the crisis for short term gain.
The manner in which listed companies manage their annual general meetings to ensure that shareholder participation is not compromised is something to watch, and voting on remuneration packages and share buybacks should also be carefully considered in light of these dramatically changed circumstances.
How big business and institutional investors behave during this time will have a profound impact on their reputations and credibility when we emerge on the other side of the pandemic. The leaders will be remembered, and rewarded by clients, customers and investors.
Just Share would love to hear your views on what responsible corporate citizens should be doing, and examples you’ve come across of great initiatives by corporates and institutional investors. Email us at [email protected] or get in touch via Twitter @JustShareSA or Facebook @JustShareSA using #CorporateKindness