After the Bell: The ANC missed the corporate ESG memo
The ANC simply does not understand the world of business and how it has dramatically changed in recent years. The party remains a fossilised relic of apartheid, engaged in an endless struggle against an exploitative model of capitalism that no longer exists.
The Employment Equity Amendment Act is a case in point. As my colleague Tim Cohen has written in a previous column, it “purports to enforce racial quotas on private companies and public institutions – without imposing racial quotas, which would be illegal”.
Signed into law by President Cyril Ramaphosa in April, the Act seeks to impose rigid racial and gender quotas on businesses that employ more than 50 people. It even drills down to a regional level to reflect local demographics.
“… for agriculture businesses in the Western Cape, 0.2% of senior management must be male Indians, while 27.6% of skilled employees must be female Africans and 14.8% coloured females,” Natale Labia recently noted in this publication.
Aside from creating a bureaucratic nightmare under a failing state that has little in the way of capacity, the measure underscores how utterly isolated the ANC has become in its thinking.
It has certainly missed the ESG memo from the corporate world.
To wit, ESGs – environmental, social and governance issues – have risen to the top of the corporate agenda in recent years. This includes big drives for diversity and inclusion, which helps to explain why ESG investing is a target of derision for the US far right and the Republican Party of Donald Trump.
“Diversity breeds innovation, and the companies that attract the most talented and diverse workforce will succeed in our rapidly changing world,” is what vehicle manufacturer Ford, a major foreign investor in South Africa, proclaims on its website.
JSE-listed Gold Fields says it “recognises that the diversity and talent of our people will ultimately determine our business’ success. Gold Fields is therefore committed to seeking out and retaining a diverse and talented workforce to ensure business growth and performance.”
These are just a couple of examples, but most major companies these days with a JSE, US, Canadian or European public listing will have a formal statement about diversity and inclusion.
Of course, it can be easy to be cynical about such corporate initiatives and they should be subjected to critical scrutiny. And they are being scrutinised, not least because many publicly listed companies set ESG targets and scorecards for themselves.
Bloomberg has a Gender Equality Index (GEI) and companies fall over themselves to get included on it.
“In 2023 we were included in the Bloomberg GEI, one of 484 companies globally and one of only eight in South Africa. Our inclusion is evidence of a high level of disclosure and overall performance across the framework’s five pillars,” says Sibanye-Stillwater, which last year established a Diversity Equity and Inclusion Council.
In 2019 – the last full year for which I could find data – 17% of top and senior managers in South Africa’s mining sector were women, according to the Minerals Council SA. Only about 10% of CEOs on South African Top 40 companies are women.
Among CEOs and CFOs, white men are still way overrepresented.
But the point is that South African companies are aware of this and are trying to fill positions traditionally held mostly by white men with women and Black South Africans. There are many potholes on the road to diversity, not the least of which is the failure of the state-run education system to produce a literate workforce. It is mostly poor Black children who are being left behind as apartheid’s dreadful educational legacy is compounded by the ANC’s failures to run a modern state.
Yet the ANC seems blissfully unaware of how business has embraced the notions of inclusion and diversity, and made ESGs central to how they operate. A lot of this is no doubt corporate whitewashing or greenwashing. But the fact of the matter is that diversity is a target that many companies are aiming for, and they are competing among themselves to attract staff to diversify the demographics of their workforce.
In short, market forces are one of the things driving this trend.
And despite their best efforts, many South African companies will not be able to meet the racial quotas that the Act will require of them and, as a result, could face fines of up to 10% of their turnover, or R2.7-million, whichever is greater.
The ANC is basically forcing business to “achieve” a goal it is already striving for while simultaneously throwing up fresh hurdles to the foreign investment the economy desperately needs. What company with its own ESG targets is going to invest in South Africa, where it will have to scramble to meet the ones set by the government?
The ANC sometimes behaves as if nothing has been transformed in this economy, yet many of the shortcomings in transformation – workplace demographics, ownership of land and other assets, enduring income disparities – are a consequence of its own policies and failures.
The corporate world of 2023 is a far cry from the one that the ANC was fighting against in 1983 – in many ways, it has been transformed beyond recognition and it is an ongoing process. The ANC’s inability to recognise this is testimony to its failure to really engage with and understand business. It remains stuck in a past struggle for liberation, a misplaced focus that undermines South Africa’s investment potential and economic future.
Good investing. DM