Hi All
It’s funny how stimuli sometimes seem to conspire to coalesce one’s thinking. My last blog post was on employee debt and this evening, while doing some late night browsing I came across this article speaking of how debt collectors unscrupulously exploit employer and employee ignorance to impose illegitimate garnishee orders on employees. I was reminded of a telephone discussion I had with a client who, in preparation for presenting the business case for sustainability had sought our advice. It struck me that this was a classic case.
Simply put, employees under the considerable strain of over indebtedness can end up, among other things, resigning to cash in their pensions, missing days at work to try to sort out their affairs, becoming ill as a result of stress or simply unproductive at work as a result of the strain. In addition, those desperate may resort to fraud and other forms of theft. Informing managers and employees of consumer rights regarding debt, as set out in the National Credit Act, and creating a referral service for employees to see debt counsellors seems a humane thing to do and an important part of employee well-being. Surely one’s needy employees should be amongst the first on the recipient list for CSI?
Another question to ponder is, what is the business case for sustainability reporting? Is it an expensive glossy document which companies have to be seen to be producing but which nobody reads or is there something more to it? There certainly should be. King III requires integrated reporting. My interpretation of this is that companies ought to start making audited sustainability indicators part of their annual reports. But why and what should they report on? Savvy investors already know most of the big ticket industry risks that companies face. Labour brokers are under threat with the proposed banning of labour broking. The medical schemes have a potential threat from the advent of the intended national health insurance. The government is intending to play in the savings space, possibly threatening life companies. We all know about employee debt, we all know about climate change, we all know about transformation. So what do we want from a sustainability report? A set of good news articles with lots of colour photos of white CEO’s shaking hands with black people in the name of political correctness? No, what we need to see is confident assurance that companies have recognised the threats they face and speak with confidence and authority on how they are addressing these. No generic paragraphs on risk management but reports on engagements with key stakeholders, implementation of control measures, transparent disclosure on the sustainability of the core products and services not only of the company in question, but of its suppliers and customers.
King III requires that sustainability be integral to strategy. Sustainability is really about ensuring that we, or the company, are still going tomorrow. The issues I have mentioned above, therefore need to be incorporated into strategic thinking. There is nothing new about this, the good, old fashioned SWOT analysis, is exactly about this, done properly, but now it is time to report on these issues. We are living in a time of global turmoil. Technology and the information age are moving a rate that leaves the mind boggling. The world economy is highly unstable, global warming looms like a wolf in the shadows. Sustainability reporting needs to move the threats out of the darkness and bring them to the forefront of planning. Investors, employees, customers, suppliers and the government, now more than ever, need to see that enterprises are taking these matters seriously and have plans to deal with them. That is where stakeholder confidence comes from. Nothing like investor confidence to push up a share price. Nothing like a rising share price to put your share options in the money. Oh, and if such transparent reporting is not good for your share price? Well then, you have some work to do.
Until next time
Paul Ellis-Smith
BkP88C Excellent article, I will take note. Many thanks for the story!