Why good corporate governance is the cornerstone of any business

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By Rudi Badenhorst

Good corporate governance is the cornerstone of any business. It incorporates priorities and objectives, practices and policies that management sets out by aligning them with those of the Board and the shareholders the company represents.

Well-managed and well-governed businesses are the engine of our economy, thus good corporate governance must be more than just a catch phrase or a fad. It’s an imperative – especially when it comes to multinational companies.

Management relies on shareholders and other stakeholders, such as government, traditional leaders, civil society and the community to help it make formal decisions and to manage the company.

However, it must be borne in mind that whenever one speaks about good corporate governance, you have to understand that organisations have duties and responsibilities towards their shareholders and other stakeholders and hence they must be governed in accordance with the law, while keeping in mind the interests of the stakeholders and shareholders.

Shareholder recognition
To ensure its continued ability to maintain competitiveness and remain profitable, a company needs to make sure that shareholders can participate at general meetings and have their voices heard.

It is also good corporate governance for management to recognise the interests all stakeholders. In particular, focusing on building open and transparent relationships with non-shareholder stakeholders, which can help a company establish a positive relationship with its host community.

In the mining sector where extraction is practised both industrially and in an artisanal way, it is vital that a company always act with integrity in its relationships with stakeholders to fulfil promises and obligations to both shareholders and non-shareholders.

Being a multinational corporation, First Quantum Minerals is committed to making positive steps towards sustainable development through economically viable investments, technically appropriate operations, environmentally sound practices and socially responsible actions.

Our Code of Conduct sets out or approach to this, providing guidelines for everyone from directors and senior managers to workforce and contractors.

Our global code aligns with local laws and international best practice. It is clear, for example, that under no circumstances should a payment or gift be made or offered to a public official with a view to obtaining business, benefit or outcome.

First Quantum has a commitment not to engage in or tolerate fraud or bribery in any form. Employees, directors, officers, and contractors must always ensure that company assets are used only for legitimate business purposes and that all contracts for goods and services are made at a rate that reflects reasonable market conditions.

By following this code, we ensure a balance of expectations that defines our path to sustainability. We do this by pursuing future goals while managing present realities.

Ethical behaviour
The company should always make sure that it does not favour higher profits at the expense of the livelihoods of people affected by is operations; but it must also ensure that it operates within applicable laws and regulations, and to the highest ethical and moral standards.

Management must make sure that it puts in place a sustainability strategy, which should encompass a code of conduct, corporate ethics as well as a sound environment policy that will guide the board in making decisions and the management in implementing those decisions.

And if it is a company in the extractive sector, it is of the utmost importance that part of a company’s corporate social responsibility, it drives the growth of local communities, and at the same time fosters conservation, while providing support to local businesses, encouraging them to be self-sufficiency.

First Quantum continues to implement sound corporate governance practices such as implementing distinct and separate environmental, health and safety, human resources, community development and security systems, which share synergies where synergies exist.

Working with the local traditional leadership, government and civil society organisations, the company has prevented and reduce health-related impacts by managing environmental risks at source, for example.

Business transparency
Transparency, especially in the mining sector should be one of the key elements of good corporate governance, and this is possible through the company’s human resource department developing and implementing fair and equitable practices towards its employees.

It is important for a company to build trust with the stakeholders and interest groups through ongoing dialogue and information sharing with government and civil society, as well as holding regular meetings with community representatives.

There is need for management to ensure that its staff – both local and foreign – respect local customs and cultural diversity during all communications and consultations.

FQM has put in place a sound sustainability strategy, which compels it to provide information on situations and activities where communities may be negatively affected.

The company has also aligned its community initiatives with every one of the United Nation’s Sustainable Development Goals (SDGs) in a move that puts it at the forefront of best practice in private sector social investment locally and globally.

Through our Trident Foundation, we have stepped our campaign to end poverty, fight inequality, and tackle climate change, while ensuring that no one is left behind in the communities where it operates.

Rudi Badenhorst is Director of Operations at First Quantum Minerals

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Start: 2019-07-01 End: 2019-07-31