Consumers and accountants – unlikely partners in the global warming battle

Johannesburg, Thursday, 17 September 2009
The consumer’s demand for sustainable business practice is a speeding bullet that is gaining momentum every day – and corporate leaders who do not get with the programme might very well find themselves to be sitting ducks.

There are already signs on the international and local business front that as consumer awareness of issues such as global warming is increasing, their support of businesses that do not account for and reduce their environmental impact is beginning to decline (witness the fact that the giant retailer Tesco is already recording the carbon footprint on the label of all its house brands). The Copenhagen Conference on Climate Change, which takes place in December, is expected to out the spotlight on these issues.

The focus on the green economy and sustainable business practices will no doubt prompt interest in a company’s sustainability report.

“The Global Reporting Initiative (GRI) is currently the only globally accepted guideline to assist the business community in defining goals and procedures for their sustainability reporting,” says Dr Nelmara Arbex, Learning Services Director at the GRI on a recent visit to South Africa. “In a South African context, the GRI is now complemented by the recently released King III Code, the first international report on corporate governance that comprehensively sets guidelines for sustainability reporting, and which clearly places responsibility for this reporting on the shoulders of the directors.”

According to Dr Arbex, 48 major South African companies currently comply with the GRI.

“The GRI coordinates worldwide discussion with representatives from business and other sectors in order to define best practice when it comes to sustainability reporting. We aim to establish where the responsibility of sustainability reporting lies, and how it should be incorporated by business leaders.”

In addition, the King III Report provides a detailed look at corporate governance in terms of sustainability. “The King III Report is the first report discussing how the governance model should work,” states Dr Arbex. “Its purpose is to bring the whole sustainability issue in line with the new context that business is operating in – an invaluable tool to board members in the modern business era. King III also links sustainability issues with the responsibility of board members and this shapes the future that business leaders now face.”

Graham Terry, Head of the Office of the Executive President at the South African Institute of Chartered Accountants (SAICA) and author of the recently published book Green, why corporate leaders need to embrace sustainability to ensure future profitability, agrees that sustainability reporting, although being an important issue facing South African business, is not always fully understood.

“South African companies are starting to realise the importance of sustainability reporting, but it’s a slow process,” says Terry. “Although more and more companies are incorporating non-financial information into their reporting functions, we still have a long way to go before we can convert the risks associated with sustainability reporting into opportunities for growth. One of the main problems is that there is a lot of uncertainty about what compiling clear and pertinent sustainability reports entails.”