Joanne Yawitch, CEO of the National Business Initiative (NBI), shared her reflections on the importance of sustainable development for long term business success during an interview with business journalist Bruce Whitfield and EY Senior Researcher, Jess Schulschenk, on 13 March 2012. The video interview is included above, and reflections from both this and the longer research interview are given below. These findings were made possible by the Gordon Institute of Business Science (GIBS) and form part of the ongoing Corporate Governance Research Programme with the Albert Luthuli Centre for Responsible Leadership (University of Pretoria) supported by Ernst & Young.
Corporate governance should provide a benchmark that ensures a minimum standard of consistency that one can expect in relation to the way in which companies are managed and governed. The successive King Reports have played an important role in setting these standards of governance practices and whilst their implementation remains a contentious issue, Yawitch recognises the tremendous opportunity that South Africa had in writing a set of progressive governance principles as has been embodied by the King Reports.
Yawitch agreed that whilst many had adopted the tick box compliance approach, the core question was not whether companies were only adhering to rules and regulations but rather if they understood the value that corporate governance added. She confirmed that there certainly are pockets of excellence exhibiting a sense of increased proactivism in the market place. For the most part, we still have a long way to go: “There are outstanding corporate leaders who have taken the challenge and risks, given space and integrated sustainability issues into their core business. I think that they are generally reaping the benefits of it, but they are still pretty much at this point in a minority”.
Whilst it was felt that legislation has strongly driven sustainability compliance to date, there was a strong argument made for the need for incentives that further build the business case for a sustainable approach which is only starting to unfold in South Africa. Sustainability legislation is in line with international developments, whereby sustainability is increasingly being recognised as a core driver of business, and a business opportunity. A number of drivers are already at play, not least of which is the energy crisis.
A call for integrated thinking
When it comes to the recent trends in integrated reporting, Yawitch calls for substance over form. She relates the levels of resonance in a report with the extent to which companies are engaging with real sustainability issues: “Integrated report is still something that is being struggled with and how to make it work, so there is a fair amount of cobbling. Over time, as companies begin to understand what is required of them and begin to produce better quality reports, that in itself will begin to compel a different kind of thinking”.
Yawitch argued that reporting frameworks are highly complex and, in many cases, duplicate themselves. Companies with less successful integrated reports have tended to adopt a tick box approach which is reflected in the reports themselves. The challenge will be to navigate the integration of principles, actions, outcomes and strategy in a concise and accessible manner. Yawitch urges companies to look beyond the report and requirements in favour of what is being reported and why.
“If you start with: ‘How do we best run our company? What is the best form of accountability to our investors and to our shareholders? What are the codes and the principles and the ethics according to which we want to run the company and why?’ Fundamentally, what one wants to do is drive behaviour within companies and then see evidence that it has been done in a particular way. If it's going to be a meaningful document then it must be owned by the decision makers in the company. It is not about the actual document, but rather the actual process”.
We asked for a radical vision for the future, and what would need to change between now and 2030 if this were to be realised?
“This notion of moving towards the long-term essence of Africa and what it takes to get there is a very important topic. South Africa is a very short-term society. We’ve got a frontier kind of culture. We are all living for the moment and sort of either in the depth of despair or heights of delight. We are very up and down. We need to become a little bit more of an even country that enables you to move forward with this sort of unbelievable level of emotion that surrounds everything that we do. We need change and people who are going to come in and show us how to think about it differently. We need examples and push”.