By Jonathon Hanks, writing for ISO Focus magazine.

Given South Africa’s history and role in global discussions on corporate ethics, the country provides a useful context to consider the application of ISO 26000. The role of voluntary International Standards on social responsibility has been informed in part by the country’s history, most notably through efforts to influence international companies operating in apartheid South Africa. The attempts of business to ward off calls for a total boycott of investment in the country prompted the development of early social responsibility initiatives, such as the Sullivan Principles, a list of tenets for responsible business conduct focusing on US companies active in the region.

In recent years, South Africa has had a positive influence on the international social responsibility agenda, including progressive initiatives such as the King III Code of Governance, the Johannesburg Stock Exchange’s Socially Responsible Investment (SRI) Index, as well as the actions of leading companies in addressing societal challenges, such as HIV/Aids and taking the lead in sustainability reporting.

At the individual level, South Africans have also had an influence on the development of important voluntary initiatives. For example, the Chairman of the Global Reporting Initiative (GRI) and the Chairman of its Stakeholder Council are both South Africans. In addition, South Africans were influential on the ISO 26000 integrated drafting task force that played a pivotal role in the development of the standard.

Although ISO 26000 is explicitly referenced in King III, the standard does not yet seem to have the high level of awareness and interest in South Africa that it has earned elsewhere, nor does it enjoy the same brand reputation locally as, for example, ISO 14001 for environment management, the Global Reporting Initiative (GRI) or the UN Global Compact. This may yet change, as there are certainly signs of growing interest. A recent workshop on the standard was attended by almost 200 practitioners.

ISO 26000 and SMOs

One of the fundamental characteristics of ISO 26000 is that it seeks to provide guidance to all types of organisations, regardless of their size or location. Recognizing the economic significance of small and medium-sized organisations (SMOs) – which typically account for more than 97 % of all firms in both developed and developing economies, providing around 50 % of productive employment and contributing 30 % to 60 % of GDP – there is a compelling case for ensuring that the guidance offered in ISO 26000 is relevant and applicable to these organisations.

Still, the extent to which the guidance is to be useful for SMOs has been the subject of considerable debate. A number of participating experts (primarily from industry) have argued that the document is inappropriate for SMOs. For example, a November 2009 letter from joint industry bodies to the ISO Secretary General suggested that it is “too complex and difficult to read” and that it is “clearly focused on large organizations as evidenced by the over-emphasis on such things as supply chains and ‘sphere of influence ’.”

Other experts – including some from within the industry stakeholder group – have countered that ISO 26000 provides significant value for SMOs, and that it would be presumptuous to suggest that these organisations would not be able to read or understand the document.

Responding to some of the experts’ concerns, ISO 26000 makes explicit provision for SMOs in clause 3, in which it describes how the standard addresses the activities of SMOs. It maintains that smaller organisations should be able to integrate social responsibility throughout the organisation through “practical, simple and cost-efficient actions”, and argues that, “owing to their small size, and their potential for being more flexible and innovative, SMOs may in fact provide particularly good opportunities for social responsibility.”

Social responsibility in developing countries

To test this assumption, and to assess the value and applicability of ISO 26000 for a developing-country SMO, a South African MBA student recently developed a teaching case study on social responsibility standards in which he worked with the management of an SMO to review the extent to which the company might already be following its guidance.

Impahla Clothing is an SMO textile company that employs some 170 people in Cape Town, South Africa. The company manufactures clothing predominantly for an international supply chain, including some of the world’s most recognized apparel companies such as PUMA, Levis, Adidas and New Balance. In 2007, Impahla participated in PUMA’s international pilot project that saw three of PUMA’s SMO suppliers submit a sustainability report in accordance with the GRI’s G3 Guidelines. The company is now in its fourth year of producing a sustainability report.

Discussions with company management suggest that the reporting process and associated awareness activities on social responsibility have been valuable in highlighting key areas for improvement and in “identifying ways in which our management systems could become more efficient.” As part of its first GRI report, Impahla began to monitor company absenteeism and late arrivals. While the observed rate of 3 % was half the industry standard of 6 %, absenteeism and late arrivals were nevertheless costing the company valuable production time, a critical issue in an industry with thin margins. The company subsequently set an ambitious target of 1 %, and noted valuable progress by the time the second GRI report was completed.

Impahla’s low absentee rate compared with its industry peers – along with the fact that the company’s unionized workers did not join a recent nationwide strike in the textiles sector – may be largely attributable to the strong ethical values and social responsibility ethos demonstrated by management. Impahla Clothing serves as a good indication of the business case benefits of socially responsible behaviour.

Applicability testing

In reviewing the applicability and value of ISO 26000 guidance for Impahla, the company’s management found that all of the seven core subjects and almost all of the 36 associated issues were relevant for its activities; the only issues not deemed relevant included the consumer issue relating to access to essential services, as well as some expectations relating to technology development and access.

The company found that it was already following more than 80 % of the actions and expectations associated with core subjects. Those that the SMO was not currently addressing – almost all of which were deemed ‘not onerous’ to implement – included activities relating to responsible political involvement, the protection of natural habitats, sustainable resource use, and protecting consumers’ health and safety.

A very small number of the remaining applicable recommended expectations – relating primarily to expectations associated with the provision of economic, social and cultural rights – were considered to be ‘onerous’ but nevertheless useful guidance.

While we cannot assume that Impahla’s experience in judging the value and applicability of ISO 26000 is necessarily representative of other South African SMOs, it is still encouraging that – despite the reservations of some stakeholder experts – the organisation’s management team found the guidance to be readily accessible and very useful.

Very few of ISO 26000’s recommended actions and expectations were seen as not relevant, and almost all of those elements not yet being implemented were seen as valuable guidance to follow.

Simply good business

Impahla’s earlier experience with social responsibility informed its positive assessment of the value of ISO 26000. In the words of Imphahla’s Managing Director and Co-Owner, William Hughes: “This is not about a branding or PR exercise for Impahla. We don’t have the personnel, time or money to bother with such things. This is about repaying our debt to both society and the natural environment in which we have been given an opportunity to live and work. We must do whatever we can to ensure that we are operating our business in a manner that ensures a shared responsibility for all of us.”

Impahla’s experience shows that social responsibility makes good business sense. ISO 26000 offers SMOs the potential to realise further opportunities for better business practice.