Ernst & Young sustainability reporting awards salute resources industry

Jeremy Grist, head of climate change and sustainability services at Ernst & Young, says the top ten stood out from the pack through their understanding of and commitment to sustainability. "By the nature of their businesses, resource companies have to be very aware of sustainability because of the lifecycle of the mined resource and their responsibility to rehabilitate the environment at the end of the project. In addition, they often operate in hazardous environments where safety is paramount.

"While the Bidvest Group and Eskom are not resources players, they have demonstrated a strong commitment to sustainability reporting and shown that their boards consider it to be important to their businesses."

He says excellent sustainability reporting is often driven from board level down into the fibre of the organisations they oversee. Unfortunately, not all companies are as aware of the value of sustainability to their organisations and their future. Such companies tend to pay lip service to sustainability reporting and they do no more than they have to for compliance purposes.

A key indicator of this lack of commitment is that sustainability information is simply 'bolted' on to the annual report and no effort is made to integrate sustainability. "Simply adding pages to the annual report does not impress the adjudicators. They want to see that the company has taken a fresh look at the structure of its annual report and put the necessary work into integration," he says.

Integrated reporting essential

All companies should be preparing integrated reports or acknowledging it this year. However, integrating reporting has its challenges and around the world, debate continues.

"South Africa issued a discussion paper a while ago and the international version, released a month ago, made use of many of the points we raised in this country. We spend a lot of time talking to companies about integrated reporting and what it could mean for their businesses."

Within the context of integrated reporting, excellent and effective sustainability reporting sends a clear message to all stakeholders that the organisation is sustainable and that management is focused on its long-term viability.

"Sustainability talks to more than shareholders and, as King III emphasises, all stakeholders from employees to suppliers need assurance that the company is here to stay."

He says there have long been concerns that management tends to be given incentives that reward them for short-term gains instead of long-term sustainability and profitability. The international financial crisis has thrown a harsh spotlight on this issue, particularly in the banking sector.

"This has influenced remuneration in both Europe and South Africa. While managers were still rewarded for this year's performance, many of their benefits are deferred over three and five years to ensure that managers take the longer view and safeguard a company's future," he concludes.

The survey is intended to encourage companies to raise the standard of their reporting and reward and acknowledge those organisations that make the effort to do more for their stakeholders.

With integrated reporting around the corner, next year Ernst & Young will be launching Excellence in Integrated Reporting Survey, which will merge Excellence in Sustainability and Excellence in Corporate Reporting.