Doing business in conflict-affected countries

Empowering disadvantaged groups fosters reconciliation in South Africa
Power and automation technology
South Africa
Swiss-based ABB provides power and automation engineering technology for power grids and infrastructure, with a focus on lowering the environmental impact of the energy sector. The company operates in around 100 countries and employs about 130,000 people worldwide. The South African branch was established in 1992 and currently employs about 2,400 people.
Further information:
Throughout the 20th century South Africa operated under an apartheid system, where the black majority of South Africans were oppressed by the white minority. During this time laws favoured the white population, policy and security forces had extensive arrest and interrogation powers, and violence between the two populations was widespread. Apartheid was finally abolished in 1994, when South Africa held their first free elections, but decades of inequality had left their mark on the poorer black population.

Dilemma: Lingering effects of apartheid increasing expectations of the role of business in empowering marginalised groups

The apartheid regime in South Africa received the condemnation of groups and institutions worldwide. International campaigns were set up to boycott academic institutions, sporting events, and to put pressure on Western governments to impose economic sanctions. The end of apartheid is often attributed to the success of a campaign to disinvest, which focused on getting businesses and investors to end their business involvement with South Africa.

Recovery and integration following the fall of the apartheid system have been slow. Despite a growing black middle class, black families make up 90% of the country’s low income households, and comprise just 15% of the educated workforce, reflecting the inequality which is still widespread between the white and black populations. This, coupled with a lack of integration and lingering ill-feeling about the segregation of the apartheid regime, has left South Africa with a majority white job market, a high crime rate, and a disillusioned youth.

The strength of feeling which accompanied that anti-apartheid movement in the 20th century indicates that should a company be seen to uphold or support apartheid-like principles, the public backlash would be intense. Businesses are still perceived to be capable of influencing the situation in South Africa by divesting. Furthermore, society’s expectations of business have increased, and companies’ responsibility to respect human rights is often understood to go well beyond simply avoiding complicity in violations. To win a ‘social licence’ to operate in South Africa, companies nowadays may be required to show sensitivity towards the country’s segregated past, and to contribute to integration and reconciliation efforts for the future. Doing this could also strengthen the peace-building process and help to create a more stable business environment.

Good Practice: Supporting marginalised communities through the supply chain and philanthropic activities

ABB South Africa (SA) supports a range of empowerment initiatives which are designed to allow all communities to reach their full potential. About 20% of ABB SA is owned by Women Investment Portfolio Holdings (WIPHOLD), an investment company owned by black women and dedicated to their economic empowerment.

ABB SA also aids the development of small to medium enterprises (SMEs) and Black Economic Empowerment (BEE) companies through using them in their supply chain. It was among the first to establish such a link with BEE companies.

Internally, ABB SA provides professional training, cultural programmes, personal leadership development support and empowerment initiatives, and have not only recruited employees from the poorest neighbourhoods, but have also promoted many people from marginalised communities to management level.

Additionally, ABB SA also participates in several community development projects including, among others, education programmes about climate change and sustainability, and supporting HIV/AIDS programmes to improve access to medical and social care.

Results: Increased integration and empowerment of disadvantaged communities

ABB SA’s approach to recruitment has supported the integration of black and white communities in the workplace, allowing them to socialise and cooperate, and normalising relationships that would have been taboo under apartheid. The use of BEE companies in the supply chain fosters black empowerment, allowing those companies to gain a foothold in the industry and economy, increasing their business and revenues. This in turn helps to create jobs and ultimately can lift families out of poverty. ABBs core activities in South Africa diversify the economy and foster the development of technical know-how. Overall, ABB SA is helping marginalised communities to gain better education, better job prospects and a better quality of life, while growing their business in a developing economy. This helps to diminish the divides between South Africa’s communities, previously alienated by differences in wealth, education, employment and opportunities, by promoting equality between black and white South Africans.