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Green - by Graham Terry

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Sustainable development is a non-negotiable business process obligation that is not only critical to the environment, …

Sustainable development is a non-negotiable business process obligation that is not only critical to the environment,
but also to the survival of business and society for the benefit of the world and future generations. Dr Arnold
Smit, programme director for Business and Society at USB Executive Development (USB-ED), will present Green,
a publication that deals with the reasons why corporate leaders should embrace sustainability to ensure future
profitability. Green was compiled by Graham Terry and launched by the Institute of Chartered Accountants (SAICA).

In this session of We Read For You Dr Arnold Smit presents the insights provided by Green to assist leaders in finding the initiatives that could make sustainability a daily practice in business.


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Transcript

  • 1. Graham Terry: GreenWe Read For You – March 2010
  • 2. 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
  • 3. 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
  • 4. • 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
  • 5. • 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
  • 6. 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…
  • 7. Sustainability issuesGlobal warming and climate change: •Economic: a fossil fuel dependent emissions producing and consumption and growth driven Profit economy •Environment: extraction and Planet depletion of limited resources; degradation of biosphere and eco- systems People •Social: population growth, poverty, disease, inequities, conflict
  • 8. Energy, emission markets, carbonsequestration (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
  • 9. • 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
  • 10. 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.‟
  • 11. Initiatives and/or requirementsInternational South Africa• CERES principals • Constitution (Section 24)• ICC • EEA• ISO • B-BBEEA• UNGC • National Environmental• OECD Management Act• Equator principles • National Water Act• WBCSD • Environment Conservation Act • Corporate Governance
  • 12. Socially responsible Investment South Africa JSE SRI Principles Public for Global Investment Responsible Corporation Investment Social Socially State of SRI Investment Responsible Investment in SA Forum
  • 13. • 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
  • 14. 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
  • 15. • 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…‟
  • 16. • GRI sustainability reporting – Reporting guidelines – Reporting principles Reporting should fit into a broader – Indicator protocols process for setting – Sector supplements organisational strategy, – Technical protocols implementing action plans, and assessing – Standard disclosures outcomes.
  • 17. „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 businesshelped melt this year? By how many inches have weraised sea-levels? How many species have we putat risk? How many homes will be flooded, how manypeople will die of thirst or starvation because of ouractivities?” These are not comfortable questions –but, by God, they need to be asked.‟ Prince of Wales
  • 18. • Sustainability assurance – Credibility of sustainability reports – International Federation of Accountants – Institute of Social and Ethical Accountability (AA1000) – GRI G3 Guidelines
  • 19. Assessment on progress (8, 9, 18, 19)MDGs: (some) progress MDGs: (some) stuckness• Eradicate extreme • Reduce child mortality poverty and hunger • Improve maternal health• Achieve universal primary • Combat HIV/AIDS, education malaria and other• Promote gender equality diseases and empower women • Ensure environmental• Develop a global sustainability partnership for development
  • 20. • 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…
  • 21. • 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.‟
  • 22. Applying the insights from “Green”Organisational Domestic• Worldview and vision • Worldview and beliefs• Values and policy framework • Virtues and values• Functional positioning and • Habits and disciplines structures• Practice and process development •Economic: what standard of• Auditing and reporting living can we afford to aspire• Leadership commitment to? •Social: do we enhance dignity and equity? •Environmental: are we responsible stewards?
  • 23. 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