Wake-up call for South Africa

By Palle Ellemann, Senior Consultant at GES

Just a few days after the dramatic confrontation between striking miners and the police leaving 34 miners dead, GES is in Johannesburg. I am conducting engagement meetings with eight South African companies, including various mining companies. The fatal strike is on top of the agenda and the companies are obviously concerned about what to do in order to avoid similar conflicts among their own employees.

The conflict seems to have originated from South African unions fighting to recruit members in the mines. The relatively new union AMCU has been successful in recruiting new members by applying a more militant approach and demanding high salary increases for miners. But as the days are going, the fatal confrontation between police and strikers unfold more aspects of this event that has much deeper roots and consequences for the South African society and particularly the political scene.

The traditional and dominating union in the mining industry, NUM, has very close connections with the established part of the government party ANC and with an upcoming presidential election, the membership and mobilisation of the mining workers is essential for South African politics.

The South African president Zuma has demanded an investigation of the confrontation between the police and strikers that left 34 people dead on top of the 10 people killed in the confrontation between the two unions in the week before. The brutality of the conflict is taking the South Africans back to the days of Apartheid and many people refer to the event as a wake-up call for the entire country. The conflict and rivalry among the unions is not new and has been developing in the past eight months, particularly in the platinum industry. It reflects an industry under huge pressure as the price on platinum has plunged during the economic crisis and the platinum companies have been laying people off at several occasions. Together with a lack of collective agreement in the platinum industry, poverty and an increasing gap between rich and poor, it was an exploding cocktail.

The challenge now for South Africa and the mining sector is to prevent the conflict to spread and deal with the underlying problems the event has unfolded. It is not going to be easy….

On the positive side, the second annual ESG Africa conference took place in Johannesburg and I was invited to join a panel discussion on global trends in ESG integration. The conference showed a strong leadership from the largest pension fund in South Africa, GEPF, and the Johannesburg Stock Exchange to really drive Responsible Investment forward in the country. The challenge is now to get more investors on board.

Many of the companies that  GES is engaging with in South Africa are making good progress and have a high level of disclosure, but work still needs to be done and having more local investors joining the engagement could really drive sustainability to the next level.

GES will follow the situation in South Africa closely and continue engaging with companies, particularly in the mining sector.

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