When the Covid-19 pandemic hit South Africa, the country went into one of the harshest lockdowns in the world. In response, Anglo-American’s South African iron ore subsidiary, Kumba, implemented the company’s WeCare programme.
This included an extensive health campaign, with Covid-19 testing for workers, their families and community members. According to Kumba’s chief financial officer, Bothwell Mazarura, the company also luanched a campaign to send food parcels out into the community.
As lockdown was imposed across the country mining was not initially classified as essential and was ordered to shut. But on the strength of its community involvement, the company was granted permission to restart mining and shipping.
Speaking at the annual conference of the International Integrated Reporting Council (IIRC) on the use of integrated reporting in a crisis, Mazarura said the community action came as a direct result of considering people and communities as part of the company’s capital.
“One of the things that became very clear, was we do not exist as an island, we exist among a community. The Covid pandemic, first and foremost, posed a health risk and we understood that there was no way we could manage the health and safety risk just within our mine gates,” he said.
“If we were to manage it, and manage it properly, we had to take a holistic approach; whatever we did for employees and contractors, we had to do for the communities as well.”
Mazarura’s account caputures a key them in “integrated thinking”: considering the impact of a company’s impact on workers, people and communities. In all, integrated reporting classifies six elements as essential “capitals” to be considered in financial reporting: financial, manufactured, intellectual, human, social and natural resources.
The reporting system was first published in 2013 (though work on its development began as early as 2009) as part of a project to find a corporate reporting system that takes account of natural and human resources. Since then the system has spread around the world and is now in use in countries as diverse as the UK, Australia, Brazil, Japan and South Africa, where it has become a key component of running “sustainable” businesses.
Sustainability-related risks
The IIRC’s virtual conference revealed how the Covid pandemic has clearly had an effect on big business, causing many to confront the looming dangers of climate change and environmental degradation.
Offering opening remarks to the conference, Paul Andrews, secretary general of the International Organization of Securities Commissions, told those tuning in online that the pandemic had helped regulators around the world “acknowledge sustainability-related risks”.
“If Covid has done anything for us as securities regulators, it’s really underscored the relevance of sustainability factors and reminding all of us, frankly, of the importance of risk management and the need to monitor different types of risk that can impact our overall financial system.”
Integrated reporting is one of a number of systems addressing the need to address sustainability issues. However, the arcane world of sustainability reporting is going through singificant change. Currently there is much talk about at least five bodies—the IIRC, Sustainability Accounting standards Board (SASB), the Global Reporting Initiative (GRI) and the Climate Disclosure Standards Boards and FASB—working to “align” their standards. Last week the IIRC revealed it would formally merge with SASB. The International Financial Reporting Standards Foundation is consulting on where it should put together its own set of sustainability standards and the UK government is moving to mandate reporting the use standards drafted by the Taskforce on Climate-related Financial Disclosures (TCFD)
The proliferation of sustainability reporting schemes and their organising bodies suggests the topic is increasingly on the agenda of companies. Conor Kehoe, chair of the IIRC’s council, told the conference it was now “mainstream” in defiance of economist Milton Friedman’s much quoted statement that the “business of business is business”.
“We’re rolling back Friedman,” he said and added: “It’s becoming mainstream because shareholder value can no longer be maintained, or enhanced, without attention to people and climate. Degrading the physical or social environment is a big threat to most companies, and companies who degrade their physical or social environment lose their reputations.”