Ethical Leadership and Corporate Citizenship: Principle 1.1: The board should provide effective leadership based on an ethical foundation (1.1.3)

What follows are some personal insights into the provision of the code set out in the King III report on corporate governance; how it affects business and how it transforms business not only into lighthouses of virtue, while maintaining the purpose of business; but it also stirs business into becoming model corporate citizens which are able to conduct their business in an effective, responsible and in a sustainable way.

Principle 1.1 of the Code : The board should provide effective leadership based on an ethical foundation:

Item 3:

"Responsible leaders reflect on the role of business in society. They consider both the short-term and long-term impact of their personal and institutional decisions on the economy, society and the environment."

It is interesting that the Code's constant emphasis on "responsible leaders"; in today's challenging times, leadership is not enough, leaders need to be responsible.
What does it mean to be responsible?

The Oxford Dictionary defines "responsible" as:

1. liable to be called to account (to a person or thing);
2. morally accountable for ones actions; capable of rational conduct;
3. ...

It should be noted that responsibility, not power is emphasised, accountability not boundless scope for action, stewardship not dictatorship or oligarchy of the board. When one moves away from stewardship mindset to the mindset that decisions made by the "dictator" or "oligarchy" the way of thinking is ultimately flawed because the context has been radically changed; as will be the perception of what is constitutes a "good" decision and what possible consequences will follow.

The call for "responsible leaders" to  "reflect on the role of business in society" likewise a wonderful point. It is often not enough for people to know what to do, they should be constantly reminded, sometimes they should be expressly told that this is what good stewards do, they reflect on the consequences for the broader community. Reflection is more than just thinking, reflection which indicates a deeper meditation or thinking upon an issue. In this case, taking into consideration the greater impact of the action or decision. This once again reiterates the stewardship role of leaders, even more so when one refers to "responsible leaders".

To this laudable call to reflection is added not limiting considerations to the short term but also to the long term; forecasting, which although near impossible calls to mind the need for making sure that leaders are skilled in so far as possible to ensure that at very least educated guesses are avoided.

It also catches ones eye the choice of including "personal" to "institutional decision" when one looks at the interpretation of the item as a whole.

Without taking the matter too far, it does appear that the authors of this item, do not just want skilled and experienced leaders of the highest ethics and virtue leading business; their personal lives must likewise meet this strict rule; truly great stewards who lead not because of greed or twisted egotistical views of the apparent power that they wield through their position; rather great men whose greatness is not theirs because of their position but rather a product of their selfless, wise and reasoned leadership; which makes them not just leaders of industry but also pillars of the community.

Why Doing the Ethical Thing Isn’t Automatic - NYTimes.com

Why Doing the Ethical Thing Isn’t Automatic - NYTimes.com

This article written in the New York Times, shows just how fragile our ethics really are. It shows that we are more likely to judge others while doing the same ourselves and that often gradual erosion of morals or standards are a sure fire way of eventually breaking all the rules. In South Africa, many of us will nod knowingly, when we see ho corruption, which would have been exposed, now is quietly tolerated.

In the light of the code set out in the King III it may be worthwhile to set one's ethically deviation indicator to 0% tolerance when it comes to deviation, because it becomes apparent from the research in this article that we highly overate our moral compasses and that even sub-consciously we even change North, so as to maintain our own image of our moral superiority, while clearly having breached moral rules.

Even here is sunny Port Elizabeth, South Africa businesses of all sizes struggle on a daily basis with the compliance, risk and management issues posed by this this insidious creep of darkness.

There are many ways to deal with and counter this plague, but it needs us all to face our "dark sides" and to embrace the fact that we are not all perfect and that given that realisation; let us all commit our selves to a dedicated and committed ongoing battle against the erosion of our institutional morals, by setting higher standards and putting policies, procedures and people in place to actively seek and eliminate any signs of its occurrence or things that facilitate its spread. This is a war without end and we need to follow the fighting spirit of the words of Sir Winston Churchill when he stated in hi "We Shall Fight on the Beaches" speech delivered in 1940, to the House of Commons, Westminster on 4 June 1940.

We shall fight corruption and unethical behaviour in our country, in boardrooms, across IT systems and paper trails, we shall fight it as business, companies, departments, projects teams, employees, directors and most importantly as citizens. We shall fight it in our businesses, we shall fight it in our society and we shall fight it in our very homes; most of all we shall fight in our very own hearts and minds - we can never surrender.

Ethical Leadership and Corporate Citizenship: Principle 1.1: The board should provide effective leadership based on an ethical foundation (1.1.2)

What follows are some personal insights into the provision of the code set out in the King III report on corporate governance; how it affects business and how it transforms business not only into lighthouses of virtue, while maintaining the purpose of business; but it also stirs business into becoming model corporate citizens which are able to conduct their business in an effective, responsible and in a sustainable way.

Principle 1.1 of the Code : The board should provide effective leadership based on an ethical foundation:

Item 2:

"Responsible leaders build sustainable businesses by having regard to the company‘s economic, social and environmental impact on the community in which it operates. They do this through effective strategy and operations."

 This is indeed a profound statement, which possibly has been ignored especially in the US, namely that "Responsible leaders build sustainable businesses". Business as usual, was to secure the greatest gains, which in many cases has proven catastrophic. Business practises need to be sustainable, so short sighted approaches cannot be allowed to take precedence even if it makes sense on the bottom line. Quarters move along and the short term profits, soon like the seasons move onto winter, which if no sustainability was worked into the business could prove to be the businesses last; which will go down the tubes dragging communities with it. The consequent suffering will be what is remembered, not the short term gain. So indeed, these words: "Responsible leaders build sustainable businesses" are indeed profound beyond measure.
But even such great wisdom needs a context, it needs to be expanded to truly create no uncertainty as to its ambit of application.
Businesses of any size, are corporate citizens, hence as citizens of an increasing enlightened and educated country and the world; businesses need to be responsible as to how their choices impact the their employees, their families, the economically connected (such as other businesses dependent on the custom of the aforementioned), those in term connected to their client businesses and of course the tax revenue generated in the process, which is substantial. Seen in this context every business is an enabler of a better society. Seen in this context, business, not the civil service, needs to be encouraged. But given the benefits of business on the community, the need to ensure that businesses are stable and sustainable should be of paramount success.
Given the fact that one cannot ignore the fact that businesses have an impact and a part to play socially and environmentally; further highlights the fact that the businesses activities need to pass muster when seen in relation to these aspects.
Does this mean that businesses must become charities? Some might say so, but that is unsustainable in the long term. Businesses, by being good businesses, which are sustainable naturally uplift the community in which they operate and through their tax revenues allow government to carry out their required duties with regard to those in need.
This part of the code is brilliant in its simplicity -  which gives the key to how businesses are to do perform their awesome task - that is through effective strategy and and operations.
It is not lost on me that much this has been propounded for centuries in various forms in business literature, but it is refreshing to see the synthesis which has been highlighted here, that being good at what a business does is not wrong, but it needs to done the right way and with the correct guiding principles.
This one can see a corporate version of Ubunthu; but with the added business view - in other words businesses have to recognise the fact that they need to be competitive internationally, not just locally.
As a closing comment is that at last maybe business, can be seen as being part of the community, not apart; that the community can see the contribution business makes and appreciate its inputs and maybe, just maybe if business fully embraces this new way of seeing itself - maybe business will take its rightful place in society.