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The Role Of Compliance In Building A Sustainable Business

Businesses today operate under the scrutiny of consumers, governments, and a society that is more attuned to corporate responsibility than ever before. No surprise that compliance and ethics have emerged as pillars of sustainable business. At the recent Absa Business Ethics Network (BEN)-Africa Conference 2024, compliance experts, academics, and industry leaders explored how businesses can integrate ethical practices and compliance into their DNA, moving beyond checkboxes to real, meaningful change.

But what does compliance really mean in an African context, and why is it so essential for businesses, especially small and medium-sized enterprises (SMEs)? For many companies on the continent, survival comes before sustainability. Lured by short-term gains, often obtained through unethical means, these businesses take shortcuts to deal with the daily pressures they face—keeping the lights on, paying employees, and securing the next big contract. This presents a complex challenge: How can we inspire ethical integrity in businesses when corruption is seen as a mere operating expense?

The discussions at this year’s Absa BEN-Africa conference highlighted one thing clearly — we need more than just rules to establish sustainable business practices in Africa. It calls for a deep-rooted shift in mindset and a commitment to build a culture of integrity from the ground up. While this change will not happen overnight, it is increasingly clear that ethical practices and long-term success go hand in hand.

 

Defining Compliance and Ethics in Business

Compliance and ethics, though closely linked, serve different yet complementary roles in the corporate world. Compliance refers to following laws and regulations set by authorities—a baseline for operating legally. Ethics, on the other hand, involves adhering to moral principles that govern behaviour—doing what is right even beyond legal requirements. In essence, while compliance asks, “Is this legal?” ethics asks, “Is this right?”

True sustainability in business comes from compliance with external standards, and also from internal ethical commitments. As businesses across Africa strive to align their operations with global best practices, the challenge is not just in adopting new policies; we need to cultivate a mindset where ethical considerations lead decision-making.

Ethics should be seen as a personal responsibility for every employee, from the CEO to entry-level staff. This personal aspect of ethics makes it a powerful tool for shaping corporate culture. When individuals at all levels of an organisation commit to ethical behaviour, the organisation will become resilient against the pressures that lead to corruption and short-term thinking.

In the African context, where many businesses operate in environments with high levels of regulatory uncertainty and varying standards of corporate governance, the role of ethics becomes even more critical. Ethical businesses can build trust with their stakeholders—customers, investors, and the communities they serve. This trust is foundational for long-term success and can differentiate businesses in competitive and often volatile markets.

Therefore, integrating ethics into the core strategy of a business is not only about avoiding penalties or bad press, but building a sustainable business model that can thrive in an increasingly interconnected and transparent world. Businesses that prioritise ethical practices stand a better chance of sustaining their operations and leading in their respective industries.

 

The Educational Gap

A recurring theme at the Absa BEN-Africa Conference 2024 was the significant educational gap that exists in embedding ethics and compliance within the curriculum of business schools and training programs across Africa. This gap has profound implications for the next generation of business leaders, who may enter the workforce without a solid foundation in these critical areas.

While some educational institutions have integrated ethics and compliance into their curricula, the coverage is often superficial or not widespread. There is a need for a deeper, more comprehensive approach that goes beyond theoretical knowledge to practical applications in real-world scenarios.

Academics are uniquely positioned to influence future business leaders. By incorporating ethics and compliance into the curriculum, educators can play a pivotal role in shaping the mindset of students, preparing them to expect and instil ethical practices in future workplaces. Beyond theoretical knowledge, there is a pressing need for practical training initiatives that simulate real business challenges and ethical dilemmas students will face in the workforce. Such training helps bridge the gap between knowing what is right and understanding how to act rightly, even under pressure.

In this light, there is immense potential for collaboration between educational institutions and businesses to ensure that the training provided is relevant and tailored to the actual needs of the industry. Partnerships like these can lead to internships, case studies, and training programs that provide practical insights and experiences, making ethics and compliance a tangible part of the learning process.

 

The Role of Leadership in Cultivating an Ethical Culture

Leadership plays a pivotal role in setting the tone for ethical behaviour and compliance within any organisation. Leadership must exemplify the ethical standards they expect to see throughout their organisations. This involves more than just verbal endorsements of ethical behaviour; leaders must demonstrate these values in their daily actions and decisions.

Middle managers play an essential role in disseminating ethical values throughout the organisation. They act as the bridge between executive vision and operational execution. Effective leadership should empower middle management to promote and uphold ethical standards within their teams, ensuring that the organisation’s ethical culture is not just top-down but pervasive and inclusive.

In order for this to work, however, leaders must provide their teams with the tools and knowledge necessary to maintain ethical standards. This includes regular training on compliance and ethics, as well as open channels for communication where employees can report unethical behaviour without fear of retaliation. Supporting employees in this way helps to reinforce a culture of ethics and compliance.

 

Incentivising Ethical Compliance

During the discussions at the Absa BEN-Africa Conference 2024, a key strategy emerged for encouraging businesses, particularly SMEs, to adopt ethical practices: incentivising ethical compliance.

It is crucial to articulate the tangible benefits of ethical compliance clearly. These include enhanced reputation, increased investor confidence, and better opportunities for partnerships and funding. Businesses need to understand that ethical practices can lead to sustainable growth and potentially more profitable operations over time.

One practical way to incentivise ethics is through providing resources that make compliance easier and more accessible. This includes tools for risk assessment, training programs, and compliance software that can simplify the process of adhering to regulations and maintaining ethical standards. For instance, initiatives like Ethics First, which was discussed at the conference, offer platforms where businesses can access resources and networks committed to ethical practices.

Financial incentives such as tax breaks, grants, or funding opportunities specifically targeted at businesses that meet high ethical and compliance standards can make the prospect of investing in compliance more attractive to business owners, particularly in the challenging economic environments that many African SMEs operate in.

Finally, recognitions and the public celebration of companies that excel in ethical business practices can also be a powerful motivator. Awards, certifications, and public endorsements can enhance a company’s reputation and open up new business opportunities, making the investment in ethical practices more appealing.

It is important to remember that the drive towards ethical business practices is a journey. The insights shared at the Absa BEN-Africa Conference 2024 serve as a valuable guide, but it is up to each business leader, employee, and stakeholder to take these principles to heart and act on them every day. By doing so, we can make ethical compliance a cornerstone of business success and societal progress.