/ 12 August 2009

Still a long way to go

South African companies are falling short when it comes to responsible environmental reporting, a new study has found.

In particular, reporting on carbon emissions is lagging behind. The finding, in a review on sustainability report ing in South Africa, comes against the backdrop last week of environmentalists saying that companies such as Mittal Steel are cutting down on environmental spending because of the recession.

According to the researchers, Sustainability Assurance, South Africa put up quite a good show in general when it came to sustainability reporting.

But questions remain about what companies are actually doing to increase awareness of, and act upon, environmental issues within their businesses.

The report investigated companies listed on the JSE and any additional ‘known own reporters” that issued sustainability reports.

Altogether a pool of 398 companies were scrutinised. Michael Rea, the lead researcher, said he was especially disappointed with the weak showing of mines. ‘You can understand banks not focusing on environment and carbon emissions, but for mines this should be part of their business plan,” he said.

Although all the big JSE hitters in the mining industry had a report of some sort, the smaller mining houses did not even produce a sustainability report.

And, according to the researchers, some of the bigger mining houses should also be paying more attention to environmental sustainability reporting.

Reporting around carbon issues was especially problematic. ‘In our research it was clear that transparency and accountability around carbon emissions is significantly lacking and it is assumed that this is due to a scarcity of relevant knowledge and experience in the South African market,” Rea said.

Of the reports that were reviewed, only 53 companies — 13.3% of the total sample — provided a ‘reasonable” response to disclosure requirements for greenhouse-gas emissions, and a further 25, or 6.3%, provided a ‘basic” response.

He said the comments of Brian Molefe, the chief executive of the Public Investment Corporation (PIC), should be taken to heart. Molefe said that ‘of the PIC requirements with which many JSE-listed companies did not comply, environmental issues are the most critical”.

Rea said in his study that the evidence was clear that South African businesses were not doing enough to ensure their own competitiveness or the future viability of our resources.

‘Companies are irresponsible in their lack of carbon disclosure, even at a basic level, and about their efforts to reduce energy consumption and emissions,” he said. ‘Investors, often the key drivers of change, are equally negligent [through] their lack of investing in a manner that might be deemed more ‘responsible’, and/or coaxing their investments into enhanced efforts to reduce their emissions and overall environmental footprints.”

He warned that lack of meaningful effort on the part of both the companies and their investors indicated a profound lack of understanding of how climate change would drive fundamental socioeconomic changes.

Of all the sustainability reports examined by the researchers, AngloGold Ashanti scored an impressive 96.1% compliance; Absa also scored 96.1%.