Instituting sustainability reporting competencies

Overview

Mandatory recurring financial and non-financial sustainability reporting for companies around the world is imminent, and guidelines, such as those for JSE listed companies, have already been published. This is wholly new territory for most corporate C-suites and boards and on the front line for this task will be companies’ reporting officers. Most aren’t prepared. As a leader of a listed, private or non-profit company, you have a responsibility to ensure that you and your staff understand and are prepared to meet the impending global sustainability reporting requirements.

Bruce Whitfield hosts this interactive one-hour engagement with an expert panel. Watch the video to obtain an understanding of what corporate competencies are required to publish assurable sustainability reports according to the JSE guidance, emerging international standards, and developing stakeholder requirements.

Intended audience

  • Directors
  • C-suite / executives
  • CFOs, accountants, investment managers and analysts
  • Assurance providers including audit, risk and compliance
  • Operational managers including information officers and IT leaders
  • Stakeholder relationship managers including investor, employee and corporate relations

Questions from the audience and answers from the panellists

What kind of qualifications or studies can a chartered accountant pursue to advance their knowledge in the sustainability and the ESG space?

  • The University of the Witwatersrand, Johannesburg, offers an online CVO (Chief Value Officer) programme which addresses sustainability. See more here
  • Audencia Business School offers an Executive Master Chief Value Officer which is a graduate degree. See more here.
 

What are your views on Taxonomy?

  • The panellists recommended all boards and management teams consider sustainability reporting in two ‘layers’, namely, principles and practices. Principles provide high-level guidance, with universal application. In contrast, practices are organization-specific implementations of the guiding principles. As such they are idiosyncratic. Such a categorisation should enable leaders to think more clearly about what they are trying to achieve (principles) and how (practices).
  • Another categorisation concerns organisational type. To date, many people have sought guidance by industry. If the principles and practices taxonomy is embraced, industry-based distinctions become less relevant.
 

I enjoyed Peter Crow’s comments on director’s duties regarding ESG. What does ‘good look like’ in terms of directors’ fiduciary duties to obtain success in terms of people, planet & profit (prosperity)?

  • Fiduciary duties are specified in the Companies Act (or similar, the name varying from country to country). Fulfilment of duties is necessary, but not sufficient. Given the duty to ensure the on-going performance of the business, directors need also to consider corporate purpose, external factors, strategy, performance measures, and stakeholder engagement. The Learning Board Framework is an exemplar in terms of ‘good’ board activities. The Strategic Governance Framework extends the LBF (it adds relevant capabilities and behaviours) to provide a more holistic expression of the practice of governance and priorities if boards are to have any impact beyond the boardroom including, importantly, on sustainable performance.
  • The embrace of ‘people, planet and prosperity’ is realised through purpose and strategy. Boards and executive teams should specify overarching goals to be achieved, how these various capitals will be use in the conduct of business and pursuit of strategy, and then report the impacts (by capital category) having operated the business.
 

Is a framework available for private company boards to assist with this way of thinking or with matters to consider?

  • The ESG Exchange’s How-To Playbook equips participating directors with the competencies and capabilities necessary to govern their organizations effectively in respect of sustainability matters, resulting in the company’s production of assurable sustainability reports as per the adopted and applicable international standards. This includes a sustainability governance framework, associated governance policies, terminology, and questions which need to be answered.
  • At a higher level, the guidance provided in ISO 37000, and its Organizational Governance Framework, both help boards focus on relevant matters.
 

What do you believe are the short-term and long-term effects on organisations for boards that neglect / refuse to implement?

  • Bruce says it well at the end of the webinar when he said that the opposite of sustainable is unsustainable. Short-term impacts will probably be very limited while the reporting systems are implemented, and report quality improves. However, over the medium to longer term, organizations that do not report on sustainability matters will be seen to only be reporting on part of the story regarding the stability of the organization.
  • Peter Crow noted in his opening remarks that organizations and their governing bodies should have been doing this “all along”, that this shouldn’t come as something new or as a shock. In recent years, stakeholders, especially the providers of capital, are holding organizations, and their governing bodies, accountable for exactly this. There are various reasons for this, including the current social and climate impacts, but whatever the reason, stakeholders are demanding that organizations now disclose “the whole truth”.
  • The main lever to achieving change is reputational pressure. Once directors and boards realise that refusal may (will?) have an impact on their personal and professional reputation, expect changes to follow. The challenge, of course, is to embrace the benefits, and specifically the opportunity to drive towards higher company performance. Boards that continue to think in terms of compliance will, over time, find themselves on the back foot.
 

I fully agree with Peter, there should be an intersection between sustainability and viability / feasibility. This is where we see success in real sustainability.

  • Joanne supported this perspective and provided guidance in how this can be done. This is largely in the murky waters of materiality. Reporting on those matters which are “material” for the organization’s sustainability in its economic, social and environmental contexts.
 

I believe that quality ESG reporting is especially important for State Owned Entities as it will provide a basis for enabling a better understanding of the economic activities, and impacts, in the country. Would it not be advantageous to have a principle-based standard for public companies (setting out the methods for identifying what needs to be reported, materiality, etc.)? Could this “public sector” standard then be narrowed down for private companies in the same geographic area?

  • The base international standard (conceptual framework) should be the same for all sizes and types of organizations across the world. This standardization makes the information comparable and assurance against these standards makes the information more trustworthy. The same basic information is needed from all organizations no matter their size or type.
  • Beyond the basic information (conceptual framework), countries will have their individual national imperatives, whether these are of a social, environmental or economic nature. In following a “building blocks” approach as promoted by the International Federation of Accountants, such imperatives would be “overlaid” on top the basic information. Those determining these “overlays” would need to ensure that comparability is not compromised and, in fact, supported to ensure that these additional reporting obligations meet the intended purpose of the disclosures.
 

The global targets for sustainable development are necessarily ambitious and we are far behind in meeting them – particularly in the private sector. How do we support the ESG movement to move beyond simply meeting mandatory reporting to meeting targets when we are still dealing with so much greenwashing? Does this require government intervention?

  • The first step in effective sustainable development is, of course, understanding where you are. Thereafter informed decisions can be made, and improvement targets can be set. Reporting standards assist organizations to better focus their efforts on collecting, managing and analysing the right information.
  • Although we are quite confident that market forces will positively respond to the international sustainability reporting standards, governments may be called on to determine which standards to apply nationally and the minimum acceptable standard of sustainability reporting which is required to meet the needs of their societies.
  • Peter suggests that a close focus on ESG may be counterproductive, primarily because agreement as to what it is, and how it might be achieved, is yet to be achieved. Also, boards need to discuss relative priorities and the extent to which external expectations should be accommodated. Stakeholders are, increasingly, making their expectations known. That is fine, but boards are not powerless—decision-rights lie with the board!


How does this link with the alternate GDP measures that are being considered in government reporting?

  • Government agencies have long considered alternate reporting options, most of which are underpinned by ideological preferences. A large body of literature, most of which has been created since WWII, that high company performance (economic performance, having considered social and environmental factors) is a precursor to economic growth and societal well-being. More directly, if companies perform well, society benefits.


My sense from listening to the panel is that companies need to decide what its critical ESG outcomes are, based on a defined materiality level, and then processes should be embedded into the organisation beyond the just finance department but in the business units themselves where the ESG impact is generated and then collated using IT to report and assure etc. Would my understanding be correct?

  • Correctly understood, ownership for outcomes lies with the board. Sustainability needs to be a feature on board agendas, lest it be lost within the managerial hierarchy. A holistic (pan-organizational) perspective is crucial.
  • While this understanding is correct, the determination of the levels of materiality would also need to be tested. This may require information in addition to that gathered only for those, already determined, material matters.


What are companies doing, or can they do, to fast-track the induction of existing organizational roles so that they are up to speed?

  • Fast-tracking of understanding is only one side of the equation, the application of this understanding is equally important. This is why the ESG Exchange is promoting an implementation programme rather than training on its own.


How will the implementation of sustainability reporting influence those companies reporting under IFRS for SMEs (Small and Medium Entities)?

  • Sustainability is equally if not even more important for SMEs. It is important that SMEs provide a comprehensive report on all material factors impacting, negatively or positively, their longer-term success / sustainability – across the various economic, environmental and social aspects.

Were the panel members surprised at the opposition to including the new mandatory TCFD reporting framework within the Resilience Statement (from the White Paper on Restoring trust in audit and corporate governance in the UK)?

  • No. Many of the reporting proposals that have been created over the past decade have been birthed from a compliance mindset, with cursory attention paid to what is pragmatically relevant or cost-effective. Time will tell, but the regulatory-heavy approach common-place across the EU and UN/WEF may need to be moderated, if companies are to remain internationally competitive.

Supporting notes and links

Panellist profiles

Bruce Whitfield

Business Speaker, journalist, author

As a presenter, speaker and author, he interprets the noise at the murky intersection where business, politics and society collide. He has the extraordinary ability to bring clarity and transform the way we see the world. This fresh perspective shines a light on how we can fix the future. 

 

Bruce is an award-winning journalist whose daily Money Show each weeknight on 702 and CapeTalk is compulsory listening for anyone who wants to better understand the world of money and business amidst the noise and clutter of a confusing world. He has hosted numerous TV programs, is a Contributing Editor to the Financial Mail and is a foreign correspondent to multiple international news providers.

 

His latest project, Genius: How to Take Smart Ideas Global, examines what it takes to thrive in an increasingly complex, fast-paced, divisive global environment. These are lessons for anyone looking to succeed anywhere against the odds.

 

His bestselling, first book, “The Upside of Down”, focuses on how chaos and uncertainty breed opportunity. Using examples, backed up with the facts, and his signature brand of optimistic realism, he shows how current times are not the most challenging in history but actually a time of incredible opportunity.

 

Bruce is a well-known broadcaster, best-selling author and sought-after business speaker. He has shared stages and digital platforms with the likes of Bill & Hillary Clinton, Nouriel Roubini Charlize Theron, Lord Mervyn King and hundreds of business and political luminaries and personalities. He is as comfortable on a stage as he is on camera or behind the microphone. He is insatiably curious and constantly builds his understanding of the world in a way that helps him help audiences make sense of it too.

Joanne Henstock

Climate Change and Sustainability and ESG Governance, EY

Joanne is an accomplished sustainability and related services executive with 25 years’ experience working across corporate reporting, regulation and standards, sustainability strategy, and performance and impact reporting in southern Africa, New Zealand and the United States.

 

Joanne leads organisations and corporate reporters strategically to elevate the quality of non-financial performance and impact reporting, including specialism in integration of ESG strategy and reporting.

A Chartered Accountant with extensive experience spanning the business, government and education sectors, she has a sound foundation as a thought leader in governance, reporting and assurance.

Prior to joining EY, Joanne held an executive role in regulation, policy and standards, focused on influencing policy makers and standard setters towards achieving better regulation outcomes in New Zealand.

 

Joanne’s driving purpose is to help individuals and organisations focus on sustainable development impact: economic, environmental and social. Increasingly, assessments of what “value” means are re-focusing on long-term value creation capability, recognising that building prosperous communities and economies and a healthy environment must necessarily harness a wider, more holistic value equation for decision-making about how resources are applied. This long-term value lens is the foundation for driving long-term prosperity, and a better working world.

Peter Crow

Company Director • Board Advisor

Peter Crow is a company director, advisor and speaker with deep expertise in corporate governance, strategy and the craft of board work. He has an extensive international record helping boards realise organisational potential.

Peter’s board service includes director, trustee and chair appointments; principally of privately-held and high-growth companies, family firms and social enterprises:

  • Chair, Riverlock Group Holdings Limited (2018–)
  • ​​​Director, Quarry Group Limited (2001–)
  • ​​Chair, McGrath Nurseries 2019 Limited (2019–2021)
  • ​Director, CATAS Limited (2011–2019)
  • Chair, Splice Group Limited (2010–2013)
  • Director, Tracmap Holdings Limited (2008–2015)
  • Director, EnergySmart Limited (2008–2011)
  • Councillor, Baptist Union of New Zealand (2007–2013)
  • Chair, Hutt International Boys’ School (2003–2009)
  • Trustee, Hutt International Boys’ School (2001–2010)

Peter has advised thousands of boards and directors of privately-held and publicly-listed companies, government agencies, family firms and social enterprises. His contributions have been founded on deep knowledge, broad business and governance experience. His innate curiosity and strategic mindset have proved influential to the fortunes of a wide range of enterprises, across five continents.
Peter also delivers director development courses, masterclasses, and graduate programmes; to build capability and equip the next generation of directors. Peter presents globally and his activities have included:

  • Company Directors’ Course (Institute of Directors in New Zealand)
  • Executive MBA (ISM University of Management and Economics, Lithuania)
  • Director Development Programme (Hunt Partners, India)
  • Effective Director Series (Governance New Zealand)
  • Effective Director Course (Governance Institute of Australia)
  • High-Performing Board Member (Baltic Institute of Corporate Governance)
  • Characteristics of Effective Boards (Institute of Public Administration, Ireland)

Peter has made keynote, panellist and after dinner contributions at business and academic conferences, industry seminars, award ceremonies and dinner events; across the United Kingdom and Europe, North America, Asia, Australia and New Zealand. The topics he is commonly requested to present include the characteristics of high performing boards, the board’s role in strategy and business success, the board–CEO nexus, and insights from board/company failures, as well as emerging trends and practical insights from recent research. However, the breadth of his general knowledge provides the credibility for him to accept invitations to discuss a wide range of business and social topics.
Peter’s audience members have generously used terms such as ‘eloquent’, ‘authoritative’, ‘insightful’ and ‘deft communicator’ to describe his contributions. Peter, though, prefers a more straightforward term: a storyteller.

Peter’s credentials include a PhD in corporate governance and strategy (a pioneering study explaining how boards can influence company performance); a first in technology and management; chartered membership of the Institute of Directors; and memberships of several institutions including the International Corporate Governance Network, the European Institute for Advanced Studies in Management and the Peter Drucker Society.

Shameela Soobramoney

Chief Sustainability Officer, Johannesburg Stock Exchange

Shameela is the JSE’s Chief Sustainability Officer and is the current chair of the World Federation of
Exchange’s (global) Sustainability Working Group and member of the Strategy Group of the Global
Investors for Sustainable Development (GISD) Alliance.

 

She joined the JSE in 2007 and has also served as Senior Manager: Group Strategy where she was
responsible for advising the Executive Committee and Board of the JSE Limited on corporate strategy. She sees strategy and sustainability as inextricably linked to each other.

 

Her responsibilities at the JSE include all aspects of sustainability including management of the FTSE
JSE Responsible Investment Index series. She represents the JSE on various industry advisory panels
locally and globally related to sustainability, responsible investing and climate change. As a sustainability specialist she has, inter alia, been a key contributor to the JSE’s research into climate change, the potential for a local market to trade in carbon credits and environment-related products, the development of the sustainability segment of the JSE and the Green Bonds framework,
impact investing, the JSE’s sustainability, innovation and CSI strategies as well as the annual sustainability investor briefing sessions. She is a trustee of the WWF (South Africa) and served on the
board of Directors as a non-executive director until November 2016, and is the board chairperson of
the Ubuntu Wilderness Trust.

 

Her previous experience includes senior roles in the banking and insurance industries.

Shameela completed the Master’s Programme in Sustainability Leadership (MSt) at the University of
Cambridge and holds a Master of Business Administration (MBA) from the University of Pretoria,
Gordon Institute of Business Science (GIBS). She is a recipient of the Chevening and Mansion House
scholarships, and is a member of the Institute of Directors of Southern Africa (IoDSA).

Carolynn Chalmers

Chief Executive Officer, Good Governance Academy

Carolynn has spent the last 20 years assisting leaders and leadership teams to understand and apply governance principles and generate value for their organizations. She uses of her expertise and experience in corporate governance, organizational strategy, Digital Transformation and systems thinking to do so.

 

Carolynn has extensive management and governance experience and has held various Chief Information Officer, Chief Technology Officer, Board, Board Committee and Executive roles for international, listed, private and public organizations. This spans many industries, including financial services, health, energy, construction, education, tourism, media, non-profit and the public sector.

 

Carolynn is co-editor of the ISO standard for the governance of organizations (ISO 37000), co-convenor of the Governance Maturity Technical Committee (ISO 37004) and Chairperson of the associated South African Bureau of Standards mirror committee, TC309, where she also represents South Africa’s King Committee.

 

Carolynn is well known for her successes in designing and leading large, complex strategy and organizational transformation implementations – she attributes this success to the application of effective governance principles.

 

Carolynn has received numerous national and international accolades for public speaking.

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