Abstract
To sensitize companies to socio-economic issues which affect the stakeholders where the company operates, the legislature introduced the mandatory establishment of Social and Ethics Committees (SECs) for specific companies under section 72(4) of the Companies Act. These committees would have a reporting and monitoring function on issues which are central to the company developing the communities in which they operate. However, these committees are faced with challenges and limitations which threaten their ability to carry out their functions. A study was conducted by the IoDSA which showed that the challenges and limitations faced by SECs stems from unclear roles, limited resources and time, lack of stakeholder buy-in, and difficulties addressing environmental, diversity, and inclusion concerns. Additionally, their functions overlaps with other committees, such as audit committees, creating further complexities.
While there has been research into the challenges faced by SECs, there is yet to be sufficient research done on effective practical measures which can be implemented to enhance the efficacy of this committees. Therefore, an exploration is made of how the inclusion of employees in SECs can enhance the committees’ effectiveness. Through the analysis of legal text on the framework surrounding SECs, this dissertation demonstrates how issues faced by SECs stem from the way in which they are structured, and it is through the inclusion of workers in these committees that they can be better suited to achieve their intended objectives. This dissertation shows that lessons can be learned from the German co-determination of employees’ model, which South Africa can potentially mimic to enhance the effectiveness of its SECs, thereby ensuring that companies meet their social and economic responsibilities. This research is important because it will contribute on the practical measures that can be adopted to enhance the effectiveness of SECs in South African companies. It will also provide the potential benefits that involving employees could have in improving the decision-making of the companies when it comes to social issues.