sustain

Corporate social investment (CSI) is a critical practice for corporates and their stakeholders to have long-term sustainable success. Sustainability is defined as the “reduction of organizational risk that increases the likelihood that an organization will survive and thrive in the future, coupled with the mitigation of any harm to the things and people around it.” As corporates recognize the importance of sustainability practices to long-term success, it is critical to understand how to effectively carry out these practices in society.


Ethics is more prominent in King IV than in King III. King IV consists of 16 principles, the first three of which are specifically focused on ethics: Ethical leadership (The governing body should lead ethically and effectively), Ethical culture (The governing body should govern the ethics of the organisation in a way that supports the establishment of an ethical culture), and Corporate Citizenship (the governing body should ensure that the organisation is, and is seen to be, a responsible corporate citizen (the ethical responsibilities of organisations).

In practice, having a basis for making these disclosures would appear to imply that the company/its board will need to set measurable objectives and indicators for organisational ethics and responsible corporate citizenship, and to monitor those indicators to understand progress being made against the objectives (King IV is not prescriptive in this respect).

Read more: EY Trialogue Sustainability Forum: Is ethical conduct becoming embedded in company culture, or is...

40 000 for 1 000

In early July, Glencore Xstrata received 38 398 applications for 1 000 positions, vacated after dismissals following strikes, at its operations in Limpopo. According to Stats SA, in the first quarter of 2013 the mining sector shed 1 000 jobs, while unemployment in the country edged over 25%.

GMO OMG!

Food company Tiger Brands found itself a social media pariah in April after watchdog NGO, the African Centre for Biosafety (ACM), released the results of tests conducted on its baby products, which were found to contain significant amounts of genetically modified (GM) cereals. In June, the company bowed to consumer pressure and announced it would be sourcing non-GMO cereals for its Purity line. The Consumer Protection Act and recently released food labelling regulations require that foods containing GMOs be labelled, but many producers have cited lack of clarity over a labelling standard as a reason for not declaring them.

Read more: News round up: The quarter that was - Aug 2013 (Sustainability Review Issue 13)

Lucy Baker, University of Sussex

South Africa has become one of the leading destinations for renewable energy investment with an estimated R193 billion already committed. But there are question marks over how successful the programme has been in balancing the demands of financial and commercial soundness, and requirements of economic development and community co-ownership.

The investment is the result of a renewable energy programme introduced by the government four years ago. Tariffs offered by the most recent renewable energy projects are now well below those that will come from the state energy utility Eskom’s future coal plants.

The programme has been applauded internationally for its strong regulatory framework, tough qualification criteria and strong economic development and community ownership requirements.

Read more: South Africa's renewable energy plan needs a close eye

In 2003, Nedbank was in crisis. Its headline earnings were down 98%, its return on equity was 0.4% and its market capitalisation was the lowest of the ‘big four’ banks and on a downward trajectory. To keep the bank afloat Old Mutual had to inject R2 billion of secondary capital and R5.2 billion of primary had to be raised through a rights issue. “If one looks back at those very dark days, the responsibility of the current Nedbank leadership team above and beyond all else is to make sure we never go back there, because we know how damaging that period was to all of our stakeholders,”says Mike Brown, Nedbank’s current chief executive.

“The only highground left at that point was the green image of the brand,” states Brown. Tom Boardman stepped onto the ‘burning platform’ as chief executive with a vision that kept the bank’s environmental focus, but supplemented it with an understanding of all the stakeholders that contribute to its success. The five stakeholder groups encapsulated in the vision are staff, clients, shareholders, regulators and communities.

Read more: Sustainability Journey: Mike Brown (Sustainability Review Issue 13: Aug 2013)

Green building is on the rise in South Africa. One need look no further than the tangle of cranes on the Sandton skyline to spot the launch of the next generation of cleaner, more efficient infrastructure. But most businesses occupy older buildings. Can these properties also benefit from the principles of green building?

With so much waste and inefficiency in existing buildings, smart investments can reap substantial returns. A study released last year from Deutsche Bank and the Rockefeller Institute identified a $279 billion investment opportunity in US commercial building efficiency over the next decade, with potential returns of more than $1 trillion over the same time.

The most successful retrofits have a purpose, meeting stakeholder concerns, reducing costs, or improving productivity and brand image.

Read more: The benefits of greening existing buildings (Sustainability Review Issue 13: Aug 2013)

Water, energy and food are interlinked: impacts in one area affect the other two. This relationship is particularly evident in Lephalale, the impoverished, water-stressed area where Eskom is building its Medupi power station. Business can learn from how Eskom is collaborating with government and other businesses to manage water, a constraint to social and economic development in Lephalale.

Read more: Water – we’re all in it together (Sustainability Review Issue 12: May 2013)

In seeking to respond to increasing pressure for ‘responsible investment’, various financial services players are looking for a yardstick that can inform sound investment decisions as well as influence corporate behaviour. Here we unpack some of the issues.

There is a subtle difference between responsible investment and investing for societal impact. In the latter, emphasis is placed on investing in themes aimed at redressing social and environmental challenges, and the investor may not be focused only on financial returns. Such themes include education, healthcare, agriculture, public transport, infrastructure, water, low carbon energy, affordable housing, food and waste management.

If that is investing for societal impact, what is responsible investing? Is it the inclusion of social issues, such as fair trade and human rights, or does it require that we avoid certain industries such as alcohol, tobacco, gambling and weapons?

Read more: What is responsible investment? (Sustainability Review Issue 12: May 2013)

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