Many of us, myself included, have been wondering what this Code of Ethics of Business that some of the blue chip business like Safaricom, KCB and lately NSE have signed. I had a chat with the United Nations Global Compact Network Kenya representative Phyllis Wakiaga who also doubles up as the KAM CEO on what it is all about.
1. What is the UN Global Compact Network and who originated the code of ethics?
The UN Global Compact is an initiative of the United Nations that was started to push for responsible and sustainable business. They basically set up a platform where businesses could adhere to the set out sustainable practices and it is based on 10 principles that are clustered into four that is environment, human rights, labour rights and corruption. It is the principle of anti-corruption that forms the basis of the Code of ethics for business that companies in Kenya sign on to.
The code sets standards of good business practices for companies when dealing with customers, suppliers, contractors, shareholders, the government among others. By signing onto the code an institution commits to treating its stakeholders with respect, to running its business with responsibility, to acting in compliance with all applicable laws and regulations and to be actively involved in corruption prevention.
The code was developed on behalf of the private sector by Kenya Private Sector Alliance (KEPSA), Global Compact Network Kenya and the Kenya Association of Manufacturers.
2. What is the role of the Network Representative for the UN Global Compact?
The role of the network representative is to coordinate the businesses that are signatories to the code of ethics and members of the Global Compact Network.
3. What is the effect of the code on the fight against private sector corruption?
The code rallies the business community to commit to responsible business conduct. As such companies are encouraged to commit to the code at the highest level of leadership and also to refrain from corruption and implement an ethics and anti-corruption management programme. This aids in the integration of ethics in the day to day running of the organization.
Companies are also expected to make annual public disclosures to their stakeholders on what they are doing to implement the code principles. The reports are made public and provide shareholders and stakeholders with information that allows them to make informed choices about the companies that they interact with.
Also some blue chip companies that have signed the code are now making it a condition to only do business with other companies that are signatories to the code. This decision is partly influenced by companies wanting to limit their exposure to 3rd party risks that might have implication on them.
4. How comes we have not seen any companies making public their fight against corruption?
This is covered in sustainability reports that are normally issued by companies like Safaricom. In the reports one can be able to see what these companies are doing in the fight against corruption as well as systems that have been put in place. Also in the first year after signing the code a company is not expected to make public their reports. The first year is all about committing to the code and inculcating it in the business. In the second year, it is when they are required to start communicating their progress. Also most of the companies have signed the code in the past one year and as such we should see more reporting in the second and third year.
5. What advise can you give companies when corruption fights back for example in the case of Safaricom?
My advice is that it is important to have the right systems and processes in place so as to reduce the vulnerability of a company being caught up in misconduct that is alleged or actual. It is also critical for companies to do risk assessment to check the vulnerability of a company and ensure there is capacity building for staff members so that they do not find themselves in situations that would breach the code of ethics.
6. Bob Collymore the Safaricom CEO during a YALI forum stated that it is actually legal for a private sector company to corrupt another private sector company in Kenya. What is the UN Global Compact Network doing to address this?
Private sector corruption is a reality in Kenya and to address this the business community has developed a Bribery Bill which will fight against private sector corruption. Corruption has normally been dealt with in the public sector and the business community thought it wise to also raise the stakes in the private sector. The bill is currently in Parliament for deliberation which I think is a big achievement in that the private sector has seen the need to participate in the fight against corruption and has gone to the extent of drafting a law.
7. How many companies have signed the code so far?
There are over 500 companies that have signed the code so far. Among the notable companies and organizations that have signed include; Safaricom and 300 companies in its supply chain, Kenya Commercial Bank, East Africa Breweries Ltd, Kapa Oil Refineries, Kenya Bankers Association and the Nairobi Securities Exchange. We are also seeing homegrown emerging medium sized companies such as Pathologist’s Lancet, Broadcom, Adrian Kenya also making a commitment.
The Kenyan code was also used as the benchmark for the development of the East Africa Community code of ethics.
8. Other than the Code of Ethics how else can corporations fight private sector corruption?
The code is simply a guide for how companies can institute good governance, transparency and honesty into their structures. What is required is inculcating ethical values into the members of staff within an organization. This however must be driven from the top so that the direction is clear on what the expectations are in regards to ethical behavior. There should also be incentives for positive behavior and deterrents for negative behavior.
9. What future initiatives does the UN Global Compact Network Kenya have?
We are currently supporting all signatories through trainings, mentorship and knowledge sharing to enable them embed the principles into their corporate DNA.
A business ethics and integrity program has been designed and is available to all code signatories. This equips them with the requisite knowledge, skills and tools for building their anti-corruption compliance programs. The two day training program is offered every quarter with the next one scheduled for July 27th to 28th 2016. Anyone interested in participating can contact us (kam.co.ke) so that we can include them in the training.
We are also currently looking to strengthen the code’s transgression handling mechanism to ensure we safeguard the spirit of the initiative.