Directors’ duties and the race to incorporate corporate social responsibility into company activities in South Africa
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Date
2024
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Publisher
University of the Western Cape
Abstract
The principle of good corporate governance denotes that a company’s board of directors should not only look after the interests of shareholders but also of other stakeholders when managing the company. The obligation of taking care of stakeholder interests can be enforced through Corporate Social Responsibility (CSR). For this to happen, the board of directors would have to incorporate CSR into company activities. In South African law, the duties of the board of directors as the drivers of the company do not explicitly include taking care of stakeholder interests but require directors to act in the best interests of the company. This leaves the implementation and inclusion of CSR into company activities at the discretion of the board of directors, based on the prevailing interpretation of the ‘best interest of the company’. The lack of guidance in the scope of directors’ duties to look after the interests of stakeholders may weaken a company’s corporate social responsiveness. This study seeks to investigate whether the duties of directors should be amended and couched in a manner that explicitly includes looking after the interests of stakeholders. In achieving the forgoing aim, it will study and analyse the directors’ duties as envisaged in the Companies Act 71 of 2008 (the Act) to determine whether directors have the mandate to incorporate CSR into company activities. It will further investigate whether the duties of directors under the Act are adequate to promote the inclusion of CSR in board strategy and company activities
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Keywords
Corporate Social Responsibility, Stakeholder Interests, Corporate Governance, Duties of Directors, Board of Directors