Graham Terry: Green We Read For You – March 2010

Orientation

Global positioning

• CSI CSR Sustainability

• responsibility – sustainability

• from financial bottom-line to social

and environmental inclusion

• from voluntary orientation to

governance, accounting, reporting

• stakeholder activism

The book

• Author:

– Graham Terry: Head of

Thought Leadership and

Strategy at SAICA

• Title:

– Green: Why corporate leaders

need to embrace sustainability

to ensure future profitability

• Framework

– What is the issue?

– What will a responsible and

appropriate response look like?

– How well do we do?

• Highlights

– An “encyclopaedia” on

sustainability

– Rich in information and references

– Attractive design

• Structure

– Chapters 1-4, 8:

perspectives on sustainability, sustainable

development and global responses

– Chapters 5-7:

energy, emission markets, carbon sequestration

– Chapters 11-14:

corporate social responsibility

– Chapters 16, 17, 20, 21:

reporting, accounting and assurance

– Chapters 8, 9, 18, 19:

assessment on progress

– Chapter 21:

implications for CAs

Sustainability, sustainable develop-

ment, global responses (1- 4, 8)

• From Stockholm (1972) to Copenhagen

(2009) – Brundtland Report (1983): working definition

– Rio Summit (1992): working agenda

– Kyoto Protocol (1997): binding targets for

greenhouse gas emissions

– Millennium Declaration: global commitment

– World Summit (2005): pushing for progress

– Copenhagen (2009): breakthrough, disappointment,

suspicion…

Sustainability issues

Global warming and climate change:

•Economic: a fossil fuel dependent

emissions producing and

consumption and growth driven

economy

•Environment: extraction and

depletion of limited resources;

degradation of biosphere and eco-

systems

•Social: population growth, poverty,

disease, inequities, conflict

People

Planet

Profit

Energy, emission markets, carbon

sequestration (5-7)

• The case

– Projections differ on the quantity of non-renewable

reserves left: oil, gas, coal, uranium

– The challenge is to switch to renewable sources:

solar, hydro, wind, bio-fuels and others

– An emerging global consensus:

• drastic change is necessary

• the window-period is relatively short

• commitment is required from every government, business,

community and individual

• Emission markets

– Regulated measures: reduce

global emissions through cap-

and-trade

– Voluntary measure: compensate

for individual or corporate

emissions through offsetting

• Carbon sequestration

– Carbon reservoirs:

• Trees: planting projects

• Soil: rebuild fertility

• Carbon storage

Corporate Social Responsibility (11-14) • Definitions

– Carroll: „… economic, legal, ethical, and discretionary

expectations that society has of organisations at a given point in

time.‟

– WBCSD: „… the continuing commitment by business to behave

ethically and contribute to economic development while

improving the quality of life of the workforce and their families as

well as the local community and society at large.‟

– EU: „… the voluntary integration of social and environmental

concerns in enterprises‟ daily business operations and in the

interaction with their stakeholders.‟

Initiatives and/or requirements

International

• CERES principals

• ICC

• ISO

• UNGC

• OECD

• Equator principles

• WBCSD

South Africa

• Constitution (Section 24)

• EEA

• B-BBEEA

• National Environmental

Management Act

• National Water Act

• Environment

Conservation Act

• Corporate Governance

Socially responsible Investment

Socially Responsible Investment

Social Investment

Forum

Principles for

Responsible Investment

JSE SRI

Public Investment Corporation

State of SRI in SA

Glo

ba

l S

outh

Afric

a

• The CSR business case

– Reputation management

– Risk profile and risk management

– Employee recruitment, motivation and retention

– Investor relations and access to capital

– Learning and innovation

– Competitiveness and

market positioning

– Operational efficiency

– License to operate

Reporting, accounting and assurance

(16, 17, 20, 21)

• Different standards:

– Principles-based: e.g. UNGC

– Performance-based: e.g. ISO

– Process-based: e.g. GRI

– Hybrids: e.g. FTSE4GOOD

• GRI

– Initiative of CERES and Tellus Institute,

supported by UNEP, chaired by Mervyn King

– Mission: „to develop globally applicable

guidelines for reporting on the economic,

environmental and social performance of

corporations, governments and non-

governmental organisations.‟

– „… the world‟s most

widely used sustainability

reporting framework…‟

• GRI sustainability reporting

– Reporting guidelines

– Reporting principles

– Indicator protocols

– Sector supplements

– Technical protocols

– Standard disclosures

Reporting should fit

into a broader

process for setting

organisational

strategy,

implementing action

plans, and assessing

outcomes.

„Few accountants and business decision-makers ask,

“How much of our critical natural resources is left?

How many miles of polar ice-cap have our business

helped melt this year? By how many inches have we

raised sea-levels? How many species have we put

at risk? How many homes will be flooded, how many

people will die of thirst or starvation because of our

activities?” These are not comfortable questions –

but, by God, they need to be asked.‟

Prince of Wales

• Sustainability assurance

– Credibility of sustainability

reports

– International Federation of

Accountants

– Institute of Social and Ethical

Accountability (AA1000)

– GRI G3 Guidelines

Assessment on progress (8, 9, 18, 19)

MDGs: (some) progress

• Eradicate extreme

poverty and hunger

• Achieve universal primary

education

• Promote gender equality

and empower women

• Develop a global

partnership for

development

MDGs: (some) stuckness

• Reduce child mortality

• Improve maternal health

• Combat HIV/AIDS,

malaria and other

diseases

• Ensure environmental

sustainability

• SA: National strategy for sustainable

development

– „South Africa aspires to be a sustainable,

economically prosperous and self-reliant nation

state that safeguards its democracy by meeting the

fundamental needs of its people, by managing its

limited ecological resources responsibly for current

and future generations, and by advancing efficient

and effective integrated planning and governance

through national, regional and global collaboration.‟

• The vision is relevant, but…

• How well are companies doing?

– Globally

• KPMG Survey: „Corporate responsibility is increasingly

considered an integral part of core business values and

strategy…‟

• … corporate governance, stakeholder engagement, social

issues, standards, supply chain, climate change

– South Africa

• KPMG and UNEP: „An increase in corporate social

responsibility awareness and activity, sustainability

reporting, and the emergence of an effective reporting regime

is underpinned by a commitment to transformation in South

Africa.‟

Applying the insights from “Green”

Organisational

• Worldview and vision

• Values and policy framework

• Functional positioning and

structures

• Practice and process

development

• Auditing and reporting

• Leadership commitment

Domestic

• Worldview and beliefs

• Virtues and values

• Habits and disciplines

•Economic: what standard of

living can we afford to aspire

to?

•Social: do we enhance

dignity and equity?

•Environmental: are we

responsible stewards?

USB-ED Centre for Business and Society

• Embedding responsibility and sustainability in

organisations

– Management development

– Practitioner development

– Bottom of the Pyramid

– NGO capacity building

– Contact: Arnold Smit, 021 918-4404, 083 301-8713

Arnold.Smit@usb-ed.com