The ‘Governance Gap’, or missing links in transnational chains of accountability for extractive industry investment

Abstract

This article seeks to address the urgent need for emerging-market economies to more firmly tackle the corporate social responsibility (CSR) of their overseas enterprises in Africa. Focusing on Africa's mining sector, it analyses complementarities among: international guidelines for multinational enterprises (Section 2); domestic management norms from countries of origin (Section 3); and African countries’ legal frameworks for CSR (Section 4). Three emerging-market countries are investigated (China, India and South Africa), while Canada – a ‘traditional’ investor long engaged in mining in Africa – is used as a ‘benchmark’ for assessing whether the CSR characteristics of emerging-market companies differ from those of more ‘experienced’ investors. The article has two aims. First, to build toward a framework that could help emerging-market investors engage in mutual learning and systemize their CSR approaches in accordance with African host government requirements. And secondly, to shed light on the chains of accountability stretching from governing bodies in countries of origin, to company operations in Africa. This analysis reveals a clear ‘governance gap’ between CSR constraints imposed on companies operating within their countries of origin, and the more lenient standards to which companies investing overseas are held. Section 5 and the Conclusion investigate mechanisms for bridging this ‘gap’.

Keywords:

• accountability
• corporate responsibility
• governance
• socially responsible investment