Dan Sonnenberg SR & I. Sustainability Challenges for the High Impact Sector. Business seen increasingly as: A developmental agent An agent of societal change A challenge to local culture An exploiter of environment Responsible for indirect impacts of its activities.
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SR & I
Business seen increasingly as:
A developmental agent
An agent of societal change
A challenge to local culture
An exploiter of environment
Responsible for indirect impacts of its activities
Business is now answerable to, and can be materially affected by, more than just its shareholders and regulators.
Bottom line: it’s now about the way a business makes money, rather than what it does with its profits.
Confusion of terminology- Corporate Social Responsibility, Sustainable Development, Corporate Citizenship, Corporate Social Investment, Sustainability
You cannot integrate what is not defined
Sustainability as Non-Financial Risk Management
…is a business approach to create long-term shareholder value by embracing opportunities and managing risks deriving from economic, social and environmental issues in a systematic manner.
A response to King II Report’s effect on South African company corporate governance & sustainability reporting
Designed as a sustainability index – social / environmental / economic pillars
Meshes South African priorities, FTSE 4 GOOD and DJSGI criteria.
Developed by the JSE in partnership with SR & I, an Advisory Committee and other stakeholders.
Targets the top 160 companies on the JSE (by market cap)
Process includes dispute resolution, verification & formal ongoing company & stakeholder liaison
Criteria designed to evaluate a company’s ability to, identify, understand, manage and report on non-financial issues
Values substance over form
Performance against targets over aspirational statement
Recognises the importance of social challenges in South Africa (BEE, EE, HIV/Aids)
No negative screening or weighting, but greater disclosure required from high-impact companies
Disclosure of ‘social’ and ‘environmental’ greatest strength of the high impact sector
Awareness of environmental impacts and disclosure high, including provision of numerical data
High impact sector above average in GRI usage
Social and environmental performance still described in aspirational, anecdotal and episodic manner
Stakeholder ability to compare year-on-year performance still limited
Areas with regulatory disclosure requirements well reported
HIV/Aids disclosure demonstrates that even in the absence of disclosure requirements business can respond to perceived societal information need.
and decent work
Emissions, effluents and waste
Products and services
Providers of capital
King II guideline
King II mandatory in the future for listed companies
formal requirement for reporting on non-financial risk management and sustainability
The value of formal policies for companies
The risks of policies for companies
-Divergence from reality
-Poorly defined and thus unachievable
Good versus bad policies
Clarity of targets
Absence of qualifiers e.g. “where appropriate”
The highest international standards
In line with best practice
Is committed to…
The spirit of
YOU CANNOT MANAGE WHAT YOU DO NOT MEASURE
Credible risk management explicitly considers all risks and prioritises them
Credible risk management creates targets for management systems
Credible management systems generate data for management use
Management action based upon their data
Include review/audit capability
Companies must demonstrate capacity to
Although there is a role for PR, non-financial reporting should be guided by principles comparable to statutory disclosure:
Relevant, true, non-selective & fair
Systematic & comparable
Quantitative with context