Describe about the Corporate Governance for Global Scenario with Emphasizing.
Paladin Energy Ltd. is an Australia based energy production company. The company was founded in 1993. From the inception, the company has experienced significant growth in its profit count. The focus of the company’s production is uranium. It is an Australian Securities Exchange (ASX) listed company with the revenue of almost $11.2 Million USD in 2007 (Paladinenergy.com.au 2016). The company is now operating with its two mines in Africa- “the Langer Heinrich mine (LHM), in Namibia, and the Kayelekera mine (KM), in Malawi” (Paladinenergy.com.au 2016). In addition, the company has also its deposits in Western Australia.
Paladin Energy Ltd. is a registered corporation. It has a board of directors with a chairperson, CEO and other board members. According to the company website, it is Operating within the global scenario with emphasizing on the safety of the workers and the sustainability of environment. Moreover, the company also claims of responding to the outlook and hope of the “communities in which it operates” (Paladinenergy.com.au 2016).
However, the company has faced a huge range of criticism regarding its human rights policy and the execution of the corporate social responsibilities. In the year 2004, a number of cases of deaths and injuries in the mines of Paladin Energy Ltd. have been recorded. Moreover, cases of radiation have also been registered against this particular company. All these have resulted to decreased fame for the company and total revenue slow down for them.
As an ASX listed company, Paladin Energy Ltd. has to maintain a number of guidelines and recommendations provided by the association. These guidelines are regarding the effective compliance to the corporate social responsibilities of the companies. However, the company has failed in certain issues in its operation.
The basis of this review report has been selected as “the corporate social responsibility.” In modern business world, the corporate social responsibility is burning issue. The importance of this topic lies within its definition. As opined by Marano and Kostova (2016) the corporate social responsibility is the voluntary steps of an organization to ensure compliance with minimum legal requirements to address both its own corporate interests and those of the wider society. In the course of operation of a company, it uses the social and environmental resources. Hence, it is important for the organizations to be responsible to them. As mentioned by Devinney et al. (2013) the dimensions of the corporate social responsibility of a company comprises the whole sphere of the economic, legal, ethical and last but not the least the discretionary responsibilities of a company. Hence, it can be said that the upholding the human rights and the environmental consciousness is a responsibility of an organization.
On the other hand, from the viewpoint of corporate sustainability, maintaining the workers’ rights and welfare, compliance of the legal boundaries of the host country and the environmental issues, the CRS activities are substantial for a company’s growth. As discussed by Hecht (2012) by ensuring the employee security and environmental safeguards the companies make themselves valid for the future market. Moreover, the organizations, which are fundamentally dependent of the labor force and environmental resources, it is important for them to restore the resources.
Here, in the following report a review will be done on the corporate social responsibility and the failure of Paladin Energy Ltd. in executing it. The company has a well-stated guideline almost every CSR issues. These are according to the ASX guidelines and recommendations. However, in reality the organization has failed to attain them. A review on the corporate social responsibility guidelines and its execution will throw a light to the company’s commitment to the society.
In addition to this, the companies need to maintain a well-structured board of directors and management committee. ASX suggests that by maintaining an “accountable committee” for the responsibilities of the board, the companies need to ensure the effective compliance to the global guidelines of corporate responsibility.
The ASX recommendations on corporate social responsibility:
As this report is dedicated to review the corporate social responsibilities towards the labours and environment, the relevant principles, regulations and recommendations of the ASX will be discussed.
According to the “Principle 3: Act ethically and responsibly”, the companies, which are listed with the ASX, need to respect the human rights of its employees. Moreover, the listed companies are directed to create a safe and non-discriminatory workplace for the employees (Asx.com.au 2016).
In addition to this, as mentioned by Conway (2012) the ASX suggests the companies to “not knowingly participate in any illegal or unethical activity.” As mentioned by the association, “Acting ethically and responsibly will enhance a listed entity’s brand and reputation and assist in building long-term value for its investors” (Asx.com.au 2016).
Moreover, as mentioned by Anderson and Lama (2015) the association also suggests to act in the best interest of the society. ASX’s “Principle 3: Act ethically and responsibly” largely suggests the companies to act in a manner so that both the interests of the employees and the society can be uphold. To maintain this recommendation the ASX suggests to describe the organizations’ operation processes for preventing these issues. The ASX hugely concentrates on creating a audit committee for reviewing all the regulatory issues.
In addition to this, the ASX talks about acting “honestly and with high standards of personal integrity” for the directors. According to the association, it helps the companies to work ethically and responsibly. Here, the association suggests, “comply with the laws and regulations that apply to the entity and its operations” (Asx.com.au 2016). This helps the companies to rely to the governmental regulations of the countries they are operating it. Hence, it can be said that the association suggests the listed companies to work in a manner that provides the employees and other stakeholders’ security as well as sustainability.
ASX concentrates on the risk management issues with its “Principle 7: Recognize and manage risk.” According to this principle, the listed companies need to have a “committee or committees to oversee risk.” As mentioned by Conway (2012) by maintain a committee the association tries to limit the risks and ensure sustainable impact on the environment and the society.
As mentioned by WBCSD, the corporate social responsibility can be discussed as the “continuing commitment by business to behave ethically and contribute to sustainable economic development while improving the quality of life of the work force and their families as well as of the local community and society” (Wbcsd.org 2016). As opined by Raufflet et al. (2014) the companies have a huge range of responsibility towards its employees. The published standards of CSR in the Beijing declaration talk about the rights of the woman workers in the workplace. These rights were about the “Human rights of women, Women and the environment and Women and health.” These include the safeguards of women during her pregnancy. Moreover, the International Labour Organization (ILO) guidelines also support the same safeguards to the women workers (Mzembe et al. 2016). In addition, the ASX has also guidelines for its listed companies to maintain humane condition in the workplace for the employees.
In the case of this particular organization, they have certain human rights policies declared. According to the company website, the organization follows the International Labour Organization (ILO) guidelines, the UN Universal Declaration of Human Rights and many other international legal boundaries. This can be identified as compliance to the ASX measure of ethical governance for the listed companies. With the listing down of the relevant regulations in the company constitution, the organization is maintaining the guidelines of providing safe and non-discriminating working environment to the workers. It can be identified as one of the major guidelines of ASX in for corporate responsibilities of the companies.
In case of Paladin Energy Ltd, the board of directors is solely responsible to comply with the ASX’s guideline. Apart from that, board of directors need to identify appropriate strategies in order to conduct sustainable business. The business process of the company directly harms the environment and therefore, the company should take suitable approach for mitigating environmental issues (Raufflet, Cruz and Bres 2014). When it comes to the internal environment, the board of directors should set efficient policies for employees’ health and safety. Organizational structure has huge impact on the corporate social responsibilities. Here, the company has adopted hierarchical organizational structure. In such organizational structure, the company should maintain equal opportunity and low discriminative practice. Therefore, the board of directors should implement policies in order to encourage equality within the organization. Apart from that, the board of directors need to comply with the ASX’s guideline while decision-making process. The company would be able to conduct sustainable business with efficient environmental policies. Policy development of an organization depends on the organizational structure, functionality and its board of directors (Wilson 2015).
However, in the year 2013, the ICIJ (The International Consortium of Investigative journalists) had reported “At Paladin’s second Africa-based mine in Namibia, unions criticized the company’s safety record after allegations that three female miners miscarried due to radiation exposure” (International Consortium of Investigative Journalists 2016). According to them, it is not a sporadic phenomenon in the Australia based mining companies in Africa (International Consortium of Investigative Journalists 2016). As mentioned by Conde and Kallis (2012) due to the lack of governmental vigilance in these countries, the organizations like Paladin Energy Ltd. find no difficulty in curbing its own human rights policies. However, the organization has denied any responsibility for this particular case (Kamlongera 2013). Moreover, with further investigation, the reporters of ICIJ find a significant breach of the “health and safety requirements” of the organization.
On the other hand, as opined by Kemp et al. (2012) providing healthy work environment and welfare services to the employees can be identified as a corporate responsibility for the companies like Paladin Energy Ltd. it encompasses the ethical as well as the legal responsibilities of the company. According to the ASX guidelines, the company has maintained a Human Rights Policy for the employees in the organization. However, the ASX does not have any specific regulation regarding this, but the company has incorporated the global guidelines by following the recommendations of ASX. Thus, it can be noted that, in spite of having an ASX supported CSR guidelines; the company has failed to implement it in the real life operation.
As mentioned previously, the ASX suggests to maintain a committee for risk management (Asx.com.au 2016). According to the company website, the company has a well-structured risk management policy. The policy has a clear mention of the “Principle 4 of the Australian Securities Exchange Corporate Governance Principles and Recommendation,” and according to this guidelines, the company has formulated audit committees for over viewing the day-to-day risks (Paladinenergy.com.au 2016).
However, in the year of 2007, as mentioned by Edwards et al. (2014) the organization “Paladin Africa” was tangled in a legal case regarding its step of “uranium exploration” “at the Kayelekera project in Karonga district.” The case was filed by a local NGO, which claimed, “that uranium mining would cause environmental degradation and pollution of local lakes and rivers, leading to groundwater contamination” (Wilson 2015). Moreover, A claim was also been made that the organization needs to make an agreement with the “local communities requiring the company to protect their environment and health.” As mentioned by Mzembe and Downs (2014) at that time the Mawali Government did not have any legal boundary regarding the uranium mining. The company was trying to get the advantage of it and make a profitable business without making any commitment to the local authority. This outlook of the company was completely deviating from the ASX recommendation of not utilizing the position for any unethical advantage. The company had an infamous reputation by deviating from the “Principle 3” recommendation of “acting responsibly towards the environment.”
The company now has a clear charter of community relation, environment and radiation policy. With their radiation policy, the company has tried to follow the recommendations of the principle. They have a clear charter of providing information and training to the employees’ radiation management. These were according to the ASX guidelines.
However, in that very year the company complied with the specifications after the legal issues took place. The company has a clearly stated policy of “respecting the attitudes and expectations of host communities”, “contributing to the growth and prosperity of host countries through community development” and “working safely, with due regard to employees’ welfare and the environment” (Paladinenergy.com.au 2016). The company is trying to regain its name and the brand value by collaborating to the Malawi government. As opined by Littlewood (2014) the company has promised to share the governmental burden of community development in this locality.
The ASX does not have any specific guidelines for these issues; however, the “Principle 4” in recommendations can be maintained in this regard. The company has already maintained the guidelines, but they failed to utilize the policy maintained by their own. However, in the later period with the compliance of the Mawali’s governments rule the company has tried to maintain the ASX suggestions of compulsory compliance with the governmental laws and upholding the aboriginal cultures.
Conclusion:
Hence, from the above discussion, it can be noticed that the company has a well-structured corporate social responsibility policies in its company constitution. However, in realty the company has failed to serve the guidelines and publically accused of being an irresponsible corporate organization. The company has failed to maintain the ASX suggested guidelines and lagged behind in the maintaining the welfare of the human resources and the brand name as suggested in the ASX guidelines. Hence, it can be said that by rigorously following the company constitution, which is, maintaining the ASX recommendations the organization can get the label of “A Good Company” among the customers and the stakeholders.
To achieve this strata the company may follow the recommendations mentioned in the following paragraphs.
Hence, it can be noted that the company has faced a number of legal issues during its operation in the national as well as the international field. Hence, it is important for them to review their human rights policies and corporate social responsibility.
Hence, for the betterment of the scenario the organization can opt for the following recommendations:
The organization needs to focus on its “occupational health and safety policy.” According to the company policy, the Managing Director/CEO is responsible to the Board of Directors for the compliance of the legal guidelines. However, it is not enough for achieving the highest level of CSR activities. In the branch offices, enough tools and techniques are needs to be arranged so that the employees mainly the miners can be able to register their problems to the organization’s record. Moreover, a competent employee is needed to be appointed who will directly report to the CEO.
For the review of the reported issues with the company policies those are oriented to the employees, the employees need to wait for the executives from the head office situated in Perth. However, the company is mainly operating in Africa. Hence, it is important for the company to make a review establishment in the operational stations. It will help the apex authority to keep a close eye on the ongoing operation of the company and ensure better employee management.
The corporate social responsibility policy of the company needs to include some strategies, which will make the indigenous population connected to the company. As discussed before, the scandal in Africa and the authorities insensitive press comments has made the organization badly reputed in Africa. Hence, as opined by Schnug and Lottermoser (2013) it is important for them to blend to the community and make them feel safe for better operation. The company can opt for some charitable projects for uplifting the life style of the African aboriginal communities. It will help them to come closer to the communities and gain their faith.
The company needs to follow the ASX guidelines by understanding its essences. The management needs to understand the compliance issues for the listed companies. ASX concentrates on uplifting the company share and the brand name. Hence, by following the ASX guidelines in real life operations the organization can obtain a better level of corporate eminence.
References:
Anderson, W. and Lama, T., 2015. Company characteristics and compliance with ASX corporate governance principles.
Asx.com.au. 2016. Home – Australian Securities Exchange – ASX. [online] Available at: https://www.asx.com.au/ [Accessed 6 Sep. 2016].
Conde, M. and Kallis, G., 2012. The global uranium rush and its Africa frontier. Effects, reactions and social movements in Namibia. Global Environmental Change, 22(3), pp.596-610.
Conway, S.L., 2012. Guidelines for Corporate Governance Disclosure–are Australian listed companies conforming?. Journal of the Asia-Pacific Centre for Environmental Accountability, 18(1), pp.5-24.
Devinney, T.M., Schwalbach, J. and Williams, C.A., 2013. Corporate social responsibility and corporate governance: Comparative perspectives.Corporate Governance: An International Review, 21(5), pp.413-419.
Edwards, D.P., Sloan, S., Weng, L., Dirks, P., Sayer, J. and Laurance, W.F., 2014. Mining and the African environment. Conservation Letters, 7(3), pp.302-311.
Hecht, G., 2012. Being nuclear: Africans and the global uranium trade. Mit Press.
International Consortium of Investigative Journalists. 2016. International Consortium of Investigative Journalists. [online] Available at: https://www.icij.org [Accessed 6 Sep. 2016].
Kamlongera, P.J., 2013. The mining boom in Malawi: implications for community development. Community Development Journal, 48(3), pp.377-390.
Kemp, D., Owen, J.R. and Van de Graaff, S., 2012. Corporate social responsibility, mining and “audit culture”. Journal of Cleaner Production, 24, pp.1-10.
Littlewood, D., 2014. ‘Cursed’communities? Corporate Social Responsibility (CSR), company towns and the mining industry in Namibia. Journal of business ethics, 120(1), pp.39-63.
Marano, V. and Kostova, T., 2016. Unpacking the institutional complexity in adoption of CSR practices in multinational enterprises. Journal of Management Studies, 53(1), pp.28-54.
Mzembe, A.N. and Downs, Y., 2014. Managerial and stakeholder perceptions of an Africa-based multinational mining company’s Corporate Social Responsibility (CSR). The Extractive Industries and Society, 1(2), pp.225-236.
Mzembe, A.N. and Meaton, J., 2014. Driving corporate social responsibility in the Malawian mining industry: a stakeholder perspective. Corporate Social Responsibility and Environmental Management, 21(4), pp.189-201.
Mzembe, A.N., Downs, Y. and Meaton, J., 2016. Corporate social responsibility in Malawi: Antecedents, issues, practices and future directions. In Corporate Social Responsibility in Sub-Saharan Africa (pp. 3-29). Springer International Publishing.
Paladinenergy.com.au. (2016). Paladin Energy. [online] Available at: https://www.paladinenergy.com.au/ [Accessed 6 Sep. 2016].Paper
Raufflet, E., Cruz, L.B. and Bres, L., 2014. An assessment of corporate social responsibility practices in the mining and oil and gas industries.Journal of Cleaner production, 84, pp.256-270.
Schnug, E. and Lottermoser, B.G., 2013. Fertilizer-derived uranium and its threat to human health. Environmental science & technology, 47(6), pp.2433-2434.
Wbcsd.org. 2016. WBCSD – World Business Council for Sustainable Development. [online] Available at: https://www.wbcsd.org [Accessed 6 Sep. 2016]. Dashwood, H.S., 2014. Sustainable Development and Industry Self-Regulation Developments in the Global Mining Sector. Business & Society,53(4), pp.551-582.
Wilson, S.A., 2015. Corporate social responsibility and power relations: Impediments to community development in post-war Sierra Leone diamond and rutile mining areas. The Extractive Industries and Society, 2(4), pp.704-713.
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