THE MASSIVE fire at the warehouse of chemicals company UPL in Durban has many lessons for directors and regulators across all sectors, according to Advocate Fay Mukaddam, a Chartered Director and technical adviser at the Institute of Directors in South Africa.
The fire was an environmental disaster on a scale that has yet to become clear and had put the company in the headlines for all the wrong reasons.
“When something on this scale happens, those who are accountable need to take a hard look at what went wrong,” she said. “Directors, in particular, bear the ultimate accountability for anything that happens to their organisation, and so should be looking at this disaster very carefully. There are key lessons we should all take to heart.”
The lessons included that organisations needed to understand the impact they have, or could have, on the economy and society, and thus what it meant to be an ethical and effective corporate citizen. In this instance, it seems there wasn’t a deep enough examination of the stakeholder universe, and what that meant for the company’s business strategy, Mukaddam said.
A related issue was crisis communication, she said.
“It seems clear that neither UPL nor the regulator or other parties concerned had an effective crisis communication strategy, leaving an exceptionally broad body of stakeholders largely in the dark about something that could have severe health and environmental ramifications,” Mukaddam said. She said that for UPL’s directors, a big question was whether this risk had been foreseeable.
“Directors and regulators alike need to be looking at the UPL disaster to see what they can learn, and at a minimum, I would hope that they are stress-testing their own contingency plans,” she said.
BUSINESS REPORT