David White – Sustainability reporting for SMEs

Bill Gates says it straight, “It is an all-out world war, but it is us against greenhouse gasses.” Much great work has already been done by entrepreneurs, engineers, and scientists to help discover and invent ways we can maintain our current standards of living – and reduce our carbon footprints. However, we still have much work to do to ensure that future generations have access to the same raw materials and living conditions most people enjoy today. There is, of course, much work to do in countries, societies, and communities to raise standards of living, improve equity and raise hope and opportunity – and these aspects are at the heart of sustainability ambitions.

We stand today, uncertain of our futures, and unsure of exactly how we will beat the climate change challenge facing each and every person, animal, creature and living organism on our planet earth. Moving to Mars to begin a new civilization is not the ‘simple’ solution we should focus on... The solution needs to come through our appreciation of the responsibility each person must have in ensuring the sustainability of our earth and all who live in it.


Sustainability is about ensuring we leave a clean and unaffected earth for future generations. It is about innovation, and it is about our economy, environment and ensuring a positive social influence. Nothing can be established without a clear understanding of the nature of the current drastic climate change situation facing each of us, noting well that innovation without a firm foundation of governance, ethics and best practice in business is likely to not be successful and sustainable.


Business Leaders’ Role

Hence, the drive of nations to help business leaders recognise their role in the combined effort and progress towards a clean earth, and to maintain a focus on the impact their enterprises are having on the economy, environment, and society. This drive in educating business leaders and guiding enterprise decision making towards ensuring value outcomes that support and benefit all stakeholders culminates in an enterprise sustainability report.


Larger enterprises have been doing sustainability reports for many years... and in many countries’ enterprises listed on stock exchanges are required to submit sustainability reports. Each enterprise has its own uniqueness, and so sustainability reports do vary greatly from enterprise to enterprise, industry to industry, and nation to nation.


DRG has been a thought leader in developing a methodology to help Small and Medium Sized Enterprises (SMEs) create sustainability reports that inform enterprise decision making and ensure that enterprise measurements include all stakeholders’ hopes and expectations – and not just profit as per business models of many enterprises of the past.


Innovation is the key to our clean earth focus, but without a sustainability intention, and a solid business foundation there is little hope that even the greatest interventions will stand the test of time and grow into products and services to serve the needs and desires of the many people in the world. Many of the old management paradigms that served previous generations now need to be become the archives we refer to as being experiences that lead us onto better and more effective ways of doing business. As Professor Mervyn King eloquently shares...“Profit focus is out, and value creation is in”. Leading a business going forward is about value creation for society. A business leader’s salt will thus be measured through their enterprise’s ability to add value to society, and to contribute positively to the economy, environment, and social challenges.


Enterprises need to recognise that their first priority is in realising their role in creating value for stakeholders, and not be singularly focused on returns to shareholders and elite role players within the enterprise. It is the mind shift of purpose within an enterprise that requires alignment to higher ‘communal’ goals and ideals, and once this is established and becomes a norm within society, the balanced focus required to tackle climate change and the effect of carbon dioxide (CO2) emission will gain clarity and momentum.


Sustainability Goals and Objectives

With so many businesses failing during their set up stage, and unemployment rising in an unprecedented manner, effort needs to be focused on guiding criteria to assist entrepreneurs and business leaders ensure their enterprises are best placed to anticipate and predict their enterprise’s sustainability.


Artificial intelligence is being developed at an incredibly fast pace, and this too needs to be cognisant of sustainability goals and objectives. A single mindedness is required, and a focus on creating a clean earth, that removes elements contributing towards climate change, and encouraging equity and social inclusiveness.


The DRG Sustainability Report for SMEs looks at thirty-four key focus areas to guide entrepreneurs and business leaders to what is required in ensuring best efforts are followed to eliminate ineffective practices and activities within an enterprise. King IV ethic and governance principles help to guide high level outcome expectations, and the DRG Sustainability Report methodology helps to define the activities and mindsets needed to achieve the King Commission’s desired outcome of sustainable enterprises that meet organisational goals and stakeholder expectations.


The thirty-four key focus areas are common within every enterprise and can be grouped into four categories, which include Leadership, Business Foundation, Measurements and Energy. The four categories inform sustainability objectives, activities, and measures within economic, environmental, and social impacts. It is critical that enterprises consider a common set of focus areas when approaching sustainability intentions but are also aware enough to be sensitive to unique conditions and circumstances which occur across industries and sizes of enterprises.


Three-step Process

A sustainability report requires a three-step process starting with an overarching statement from the CEO or board of the enterprise. This needs to be explicit and provide a broad framework for decision making within the enterprise. An example of a CEO statement may include: “It is our will and intention to ensure our enterprise supports sustainability principles, provides value to society as a whole in creating equity and transformational opportunities, meets environmental targets and ensures a move towards zero CO2 emissions and waste, ensures a strong foundation of ethics and governance as the enterprise’s foundation, and impacts positively on shareholder desires and expectations”.


This is followed by focus group communications within the enterprise, discussing the business, what makes it successful, what can be improved, etc. Actions points are grouped into stakeholder measurements… where their impact on ongoing sustainability is considered and shared with other focus groups/departments within the enterprise.


The sustainability report follows from the focus group summaries and collates into a three-to-five-year plan, where specific areas of the business are measured and monitored. It is essential that there is a common thread following from the CEO statement to the focus groups, and into the sustainability report.

As it is not possible for anyone to accurately predict the future, the sustainability report needs to be flexible enough to be adapted to new conditions and circumstances, yet stable enough to provide a framework for everyone affected by the enterprise to understand its intentions, direction, and its critical measurements defining success and sustainability.


For more information contact:

T: +27 31 767 0625

E: david@drg.co.za

W: www.drg.co.za

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