Excellence in Sustainability Reporting

Excellence in Sustainability Reporting: two in a row for Sasol!
But sustainable development needs to become better embedded into companies' business strategy

Oil and petrochemical group Sasol, dual listed on the JSE Securities Exchange and the New York Stock Exchange, has taken the top honours in the 2007 Ernst & Young Excellence in Sustainability Reporting Survey for a second consecutive year.

Second place was awarded to Anglo Platinum, maintaining the same position as last year. Third, fourth and fifth place were awarded to Nedbank Group, Standard Bank Group and AngloGold Ashanti, respectively.

It's very pleasing to see that environmental and sustainability reporting is no longer just seen as a responsibility of the resources sector, and that companies outside of this industry such as the financial services sector are beginning to take sustainability reporting seriously," says Jayne Mammatt senior manager for Governance & Sustainability at Ernst & Young, commenting directly to Nedbank and Standard Banks third and fourth and place rankings.

In selecting Sasol as the leader in Sustainability Reporting, Mammatt says the company had conducted a comprehensive stakeholder engagement which had clearly impacted the format of the sustainability report. The report disclosed the outcomes of the process and set out a detailed response to the issues raised by stakeholders.

"The report also provided comprehensive data on performance, both throughout the report and in consolidated data tables. The report provided a table that highlighted the key sustainability risks and outlined measures the company had taken to manage these risks. Sasol also reported on the progress of previously identified targets and challenges," says Mammatt.

Mammatt adds that the adjudicators Accounting Professors Alex van der Watt and Ben Marx from the University of Johannesburg - are of the opinion that there is a general improvement this year in reporting from the organisations rated as 'Excellent' and 'Good'.

"The adjudicators were especially encouraged by the attempts of those organisations to improve on stakeholder engagement. It is clear that more and more companies in these two categories have identified their target audiences. For them, stakeholder engagement has evolved from the mere publication of a list of stakeholders and the methods of engagement, to a situation where it has impacted meaningfully on the format of the report," Mammatt adds.

Professor van der Watt notes that one major area of improvement of the reports ranked as "Excellent" was the user-friendliness of the reports. "The content in most of these reports was reduced and unnecessary detail removed. One of the major criticisms against organisations ranked in the "Adequate" or "Perfunctory" categories is the fact that insufficient information is provided regarding the sustainability performance of the organisation. In certain instances the information is insufficient and does not address the information needs of the users of the report," he says.

"What's encouraging to note is that over the past three years, approximately half the companies assessed have kept pace with developments in sustainability reporting and the tougher mark plan, Mammatt adds.   "Unfortunately, the remaining companies seem to do no more than report in a 'check list' manner and show little evidence of actively embedding sustainability practices into core business strategy."

The sustainability reports are marked and ranked according to a mark plan which was originally developed specifically for this purpose and is continually updated to keep abreast of market trends. Professor Alex van der Watt, an independent adjudicator, from University of Johannesburg says that best practice was taken into account during the development of the mark plan. In this regard, he says, the adjudicators acknowledge the acceptance which the Sustainability Reporting Guidelines of the Global Reporting Initiative (GRI) currently enjoys as leading guidance on sustainability reporting.

"The adjudicators are confident that the mark plan gives credit to companies that, through their reporting, prove that they are keeping up with developments regarding sustainability reporting. The mark plan was also designed in such a way that the results sufficiently differentiate between companies that exhibit a high level of excellence regarding sustainability reporting and those that do not," he adds.

"As in previous years, the companies included in this year's award are those listed on the JSE Limited's (JSE) Socially Responsible Investment (SRI) Index," says Mammatt. "The process for the inclusion in this Index has been revisited and revamped by the JSE during the year. As a result the same 58 companies that were included last year have been marked this year, with the exception of Edgars Consolidated Stores and Alexander Forbes who had de-listed at our cut off date of 31 July 2007," she adds.

Mammatt concludes: "Like in the past, it must again be emphasised that this survey is all about determining the level and quality of sustainability reporting. The results are therefore not necessarily a reflection of companies future sustainability or their track record regarding social, economical and environmental performance."