Smart Office
Handbook
A guide to greening your office
Sustainable
development
in the business
This section provides a brief overview of some international best practice
around corporate governance, reporting and social investment.
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The triple bottom line
captures the spectrum of
values that organisations
must embrace - economic,
environmental and social.
In practical terms, triple
bottom line accounting
means expanding the
traditional company
reporting framework to
take into account not
just financial outcomes
but also environmental
and social performance.
John Elkington - Cannibals with Forks:
the Triple Bottom Line of 21st Century
Business (1989)
Sustainable development
in the business
Social
“Focusing solely on the environment did not suffice – did not save lives,
livelihoods, or neighbourhoods. We needed to fight for a larger kind
of sustainability: one that took into account our social, economic, and
cultural sustainability, as well as our ecological surroundings.
Bearable
I could not just be an environmentalist. I had to think more
comprehensively. ...Then the second big idea hit me: the corporate
sector has the incentives, operational know-how, scalability, and
ingenuity to respond to the global challenges we face today,
challenges on all four fronts – social, economic, environmental and
cultural.”
Sustainable
Environmental
Sustainability is about balancing the ecology, economy and society.
Sustainability in organisations is not only about environmental responsibility,
but also has to contribute to economic and social development. A business
that focuses on efficient use of energy, waste and water, also makes financial
sense, and can increase cost savings over the short and long-term that have
an immediate effect on their financial bottom line.
Viable
Economic
The balance to ensure sustainability
Sustainable development is the balance between social, environmental and
economic elements, in order to ensure a bearable, equitable and viable society.
Environmental Management Systems
Your company could select to have a formal
environmental management system (EMS)
such as ISO14001 or EMAS, or you can
decide to have a simplified management
system, which includes your policy, strategy
and action plan. It is advisable to have a
continual improvement process in place based
on the principles of ‘plan, do, check, act’.
Triple bottom line
The concept of the triple bottom line (TBL, also known as ‘people, planet and
prosperity’) is an accepted approach to measuring sustainability. ‘People’ and
‘planet’ refer to human and natural capital, while ‘prosperity’ relates to longterm economic benefits.
When considering TBL it is important to look at full-cost accounting;
meaning that the real cost of a company’s inputs and outputs must be
accounted for. It is not just about the direct financial cost of a specific
product, but the full cost relating to that product, including (for instance) the
social impact of child labour, or the environmental cost relating to pollution,
resource depletion, environmental damage or health-related problems.
Smart Office Handbook
Equitable
– From Adam Werbach’s Strategy for Sustainability: A Business Manifesto (2009).
Sustainability principles can make your business more resilient to internal
and external factors that may impact on your business operations. Negative
factors to consider are increased energy costs, loss of key staff, changing
weather patterns, new environmental legislation, and changes in consumer
behaviour. Carbon tax is already levied on cars in South Africa, and is being
considered for business.
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ISO 14001 is an environmental management
system pertaining to
the production process
and business operations.
ISO 14000 is a family of standards related to environmental management
that exists to help organisations to:
•
minimise how their operations negatively affect the environment
(i.e. cause adverse changes to air, water, or land);
•
comply with applicable laws, regulations, and other environmentally
oriented requirements, and
•
continually improve in the above.
ISO 14000 is similar to ISO 9000 quality management in that both pertain to
the process of how a product is produced, rather than to the product itself.
As with ISO 9000, certification is performed by third-party organisations
rather than being awarded by ISO directly. The ISO 19011 audit standard
applies when auditing for both 9000 and 14000 compliance at once.
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In terms of the
King III Report on
Good Governance,
companies listed
on the JSE must
provide an annual
sustainability report.
Non-listed companies
are also encouraged
to provide such a
report to enhance
transparency and set
benchmarking.
ISO 14001 was first published in 1996 and specifies the actual requirements
for an environmental management system. It applies to those environmental
aspects that the organisation has control and over which it can be expected
to have an influence.
ISO have an easy-to-use checklist for small and medium-sized enterprises
to achieve the benefits of implementing an environmental management
system based on ISO 14001. Working through the checklist format in a
step-by-step manner will enable managers of an organisation to determine
its present environmental performance, and will help them identify areas
for improvement (www.iso.org).
Corporate governance
The King Report addresses Corporate Governance in South Africa and was
updated in 2009 due to proposed changes to the Companies Act, as well as
changes in international governance trends. One of the big changes is in its
applicability, as it now applies to all entities, regardless of their nature, size
or form of incorporation. The governance framework has changed from
‘comply or else’ to ‘apply or explain’.
One of the new key principles in the King III Report is that sustainability
is now the primary moral and economic imperative, and one of the most
important sources of both opportunities and risks for businesses. Nature,
society, and business are interconnected in complex ways that need to be
understood by decision-makers. Incremental changes towards sustainability
are not sufficient – we need a fundamental shift in the way companies and
directors act and organise themselves.
One of the new requirements of the King III Report is the need for an
annual integrated report (see Sustainability Reporting section) that focuses
on the impact of the organisation in the economic, environmental and social
spheres together with the annual financial statements.
Companies are therefore encouraged to consider issues such as:
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A company should continually seek to improve its environmental performance by:
•
Working to reduce and control its direct negative environmental impacts;
•
Promoting awareness of its significant direct and indirect impacts;
•
Working to use natural resources in a sustainable manner; and
•
Committing to risk reduction, reporting and auditing.
Sustainability reporting
GRI is a sustainabilityreporting framework
that covers the key
areas of economic,
environmental, social
and governance
performance.
The traditional focus of considering only the financial aspects of a business
has been replaced with a broader triple-bottom-line approach, and in a
similar manner the ‘old’ annual report is being replaced by or supplemented
with sustainability or integrated reporting. Other initiatives have also been
established within the business sector to encourage more transparent
reporting, as outlined below.
Global Reporting Initiative (GRI)
The Global Reporting Initiative (GRI) is a non-profit organisation that promotes
economic, environmental and social sustainability. It provides all companies
and organisations with a comprehensive sustainability-reporting framework
that is widely used around the world. A sustainable global economy should
combine long-term profitability with social justice and environmental care.
This means that, for organisations, sustainability covers the key areas of
economic, environmental, social and governance performance.
GRI’s Sustainability Reporting Framework enables all companies and
organisations to measure and report their sustainability performance.
By reporting transparently and with accountability, organisations can
increase the trust that stakeholders have in them, and in the global economy.
•
Energy reduction and efficiency, and alternative clean energy;
•
Reduction in reliance on fossil fuels;
•
Waste reduction or zero waste and internalising the costs of emissions;
•
Reduction in non-renewable resource dependency, or using resources
in a sustainable manner;
•
Seeking ways to achieve the functional integration of the environment
into achieving sustainable development;
The GRI Guidelines can be downloaded off the Internet at no cost and
provide detailed guidance on specific indicators relating to the triple bottom
line. There are also sector-specific guidelines relating to specific sectors such
as mining, finance, real estate and media.
•
Developing or contributing towards technologies that reduce adverse
environmental impacts;
For more information see www.globalreporting.org
•
Understanding the cumulative effect of its businesses with others locally
and globally; and
•
Encouraging public policy-makers to provide financial incentives for
improving environmental performance.
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GHG Protocol is an
international accounting
tool to understand,
quantify, and manage
greenhouse gas
emissions.
Greenhouse Gas Protocol
(GHG Protocol)
The Greenhouse Gas Protocol (GHG Protocol)
is the most widely-used international accounting
tool for government and business leaders to
understand, quantify, and manage greenhouse
gas emissions. The GHG Protocol, a decadelong partnership between the World Resources
Institute and the World Business Council for
Sustainable Development, is working with businesses, governments, and
environmental groups around the world to build a new generation of
credible and effective programmes for tackling climate change.
It provides the accounting framework for nearly every GHG standard and
programme in the world – from the International Standards Organisation to
The Climate Registry – as well as hundreds of GHG inventories prepared by
individual companies.
The GHG Protocol also offers developing countries an internationallyaccepted management tool, to help their businesses to compete in the
global marketplace, and their governments to make informed decisions
about climate change.
The GHG Protocol Corporate Standard provides standards and guidance for
companies and other organisations preparing a GHG emissions inventory. It
covers the accounting and reporting of the six greenhouse gases covered
by the Kyoto Protocol – carbon dioxide (CO2), methane (CH4), nitrous oxide
(N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulphur
hexafluoride (SF6).
For accounting purposes, greenhouse gas emissions are broken into three
categories. The separation of these three scope categories is key to managing
emissions reporting and the calculation of a carbon footprint. Each scope
is described and illustrated on the left.
•
Scope 1: Emissions over which a company has direct control via
ownership of activities;
•
Scope 2: Emissions from purchased electricity, heat or steam; and
•
Scope 3: All indirect emissions that occur as a result of facility or
business activities that use goods or resources with potential greenhouse
gas emissions.
CDP is a global initiative
to collect and distribute
information about
greenhouse gas emissions
and water usage in an
attempt to mitigate
climate change.
The GHG Protocol is generally used in association with other reporting
frameworks as one of the elements that needs to be reported on.
For more information visit www.ghgprotocol.org
Carbon Disclosure Project (CDP)
Carbon disclosure project
The Carbon Disclosure Project (CDP) is a global initiative to collect and
distribute high-quality information that motivates investors, corporations
and governments to take action in an attempt to mitigate climate change.
It was founded as an independent not-for-profit organisation. They seek
information annually on the business risks and opportunities presented by
climate change, greenhouse gas (GHG) emissions and water usage data
from the world’s largest companies.
The CDP provides a transformative global system for thousands of companies
and cities around the world to measure, disclose, manage and share
environmental information. Consequently, the CDP remains the global
standard for measurement and reporting of climate change information,
and the biggest repository of GHG emission information from the
business sector.
The South African sample includes the JSE Top 100 listed companies, and
also features a special case study each year on best practice. The type of
information generated by the CDP attracts various stakeholders, including
the media, government, universities, and international and local investors.
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UNGC is an international
initiative for businesses
that are committed to
aligning their operations
and strategies with ten
universally accepted
principles.
Companies are requested to complete annual questionnaires, which are
rated and presented in the ‘Climate Leadership Disclosure Index’.
Some of the information the CDP request is:
•
disclosure of the company’s carbon footprint (additional points are
awarded if verification has taken place);
•
whether climate change is incorporated into the company’s strategy,
and for the highest level of responsibility for climate change within
the company; and
•
to provide insight into the risks and opportunities identified within the
company with regard to climate change.
For more information visit: www.cdproject.net
UN Global Compact (UNGC)
The United National Global Compact (UNGC)
is a strategic policy initiative for businesses
that are committed to aligning their operations
and strategies with ten universally accepted
principles in the areas of human rights, labour,
the environment and anti-corruption. By doing so,
business (as a primary driver of globalisation) can
help ensure that markets, commerce, technology
and finance advance in ways that benefit economies
and societies everywhere.
As social, political and economic challenges (and opportunities) affect business
more than ever before, many companies recognise the need to collaborate
and partner with governments and civil society. Global Compact aims to
mainstream their ten principles and catalyse actions in support of broader UN
goals such as the Millennium Development Goals (MDGs).
Corporate Social Responsibility (CSR)
business behaviour, the Johannesburg Stock Exchange (JSE) has for many
years embarked upon programmes that uphold and support sustainable
development. They launched the first Socially Responsible Investment (SRI)
Index in May 2004, recognising the strides listed companies are making in
this regard. Reviews take place annually during the second half of each year,
with results usually announced at the end of November each year.
The JSE has worked for several years on ways to prompt businesses and business
analysts to increase their focus on environmental, social and governance factors.
It is one of the first stock exchanges worldwide to become a signatory to the
United Nations Principles of Responsible Investment, which guide investors
in taking environmental, social and corporate governance issues into account
when investing.
Commitment to
corporate social
responsibility
is another key
ingredient for
sustainability.
The JSE has contributed to the cause of responsible investment through
developing the Socially Responsible Investment Index (SRI Index), which
was launched in 2004 as the first of its kind in an emerging economy. Its
constituents are companies who attain required levels in an annual review
of their policies, practices and reporting.
Social Performance Indicators
The GRI has a range of social performance indicators that could be reported
on. This helps to avoid simply focusing on the economic or environmental
aspects, by including a broad range of social aspects:
Human Rights:
•
Investment and procurement practices;
•
Freedom of Association and collective bargaining;
•
Child labour;
•
Security practices.
Labour practice and decent work:
Commitment to corporate social responsibility (CSR) is another key ingredient
for sustainability. CSR means that a company is responsible for social impacts
related to its business activities. A company can invest in CSR projects or
donate to charities as part of their CSR programme, but it must also take
responsibility for its own production chain. It is about promoting fair labour
practices and safe working conditions. Staff members need to be treated
with respect and have appropriate methods for raising concerns.
•
Occupational Health and Safety;
•
Training and education;
•
Equal remuneration for men and women.
•
Society:
•
Corruption;
•
Anti-competitive behaviour;
Socially Responsible Investment (SRI)
•
Legal compliance.
In recognition of the growing importance of responsible and sustainable
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Resources
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Global Reporting Initiative: www.globalreporting.org
•
Greenhouse Gas Protocol: www.ghgprotocol.org
•
Carbon Disclosure Project: www.cdproject.net
•
United Nations Global Compact: www.unglobalcompact.org
•
National Business Initiative: www.nbi.org.za
•
King III Corporate Governance Report: www.saica.co.za