Trends in corporate responsibility

The Business in Society Virtual Conference 2021 was opened by Trialogue director Cathy Duff, who welcomed delegates and presented the latest trends in corporate responsibility – a growing area of focus as we contemplate a shift to “the new low-carbon world of inclusive capitalism”.

With the 2021 Edelman Trust Barometer indicating that most people now trust businesses more than any other institution, companies cannot afford to miss the opportunity to work towards a more just transition, particularly after the pandemic, which has only accelerated shifts towards more responsible business.

“We have seen movements gain momentum in the past year as business leaders have strongly experienced, often for the first time in this generation, how interdependent business and society truly are,” Duff told conference delegates.

Society is increasingly looking to business to fulfil the roles traditionally assigned to government and civil society, with some 95% of South Africans expecting company CEOs to publicly speak out on societal challenges. For this reason, companies must incorporate material environment, social and governance considerations into every aspect of their business. They can no longer afford to view ESG issues from a mere compliance perspective.

Integrated thinking helps companies prepare for the future

Trialogue’s view is that integrated thinking is necessary to achieve this outcome. The company has developed an integrated thinking gap analysis tool to help private-sector actors identify and navigate gaps and develop transition strategies for what promises to be a very different future.

“Trialogue, in collaboration with CEOs for Corporate Purpose (CECP) in New York and its Global Exchange (GX) Country Partners, released the inaugural Global Impact at Scale report in 18 countries around the world in January this year,” said Duff. “The findings show that there are increasing resources going to environmental and social initiatives, there is increasing ESG reporting, respondents expect management to be more senior, and a high 70% of companies are linking performance and remuneration to ESG issues.”

She pointed out that there are a number of factors driving the momentum towards more integrated thinking.

These include investor pressure (there are currently 1 834 signatories to the UN-supported Principles for Responsible Investment, including 44 South African asset owners and managers), consumer and employee pressure (as many as 90% percent of Generation Z ‘zoomers’ believe companies must act to help social and environmental issues), and local and global regulation (in South Africa, Treasury’s draft National Sustainable Finance Strategy encourages voluntary sustainable finance initiatives, and recently released South Africa’s own Draft National Green Finance Taxonomy for stakeholder input).

The King Codes of Governance has long encouraged integrated thinking and reporting, and the Companies Act of 2008 stipulates that large companies should have a ‘social and ethics committee’ that elevates social issues to board level and to some extent legislate corporate responsibility. In addition, Minister Ebrahim Patel recently announced proposed amendments to South Africa’s Companies Act aimed at tackling ‘the gross injustice of executive pay’, which will require disclosure of the wage gap between a company’s highest and lowest earners. On the environmental side, the G7 has called for Task Force on Climate-related Financial Disclosures (TCFD) reporting recommendations to be mandated.

Tips on how to effect a just transition

With such rapid, sweeping changes likely to change the business landscape unrecognisably, companies will need to adapt. Duff offered the following thoughts on how to aid the transition:

As businesses – embrace your expanded mandate, speak out as leaders on sustainability and social issues and encourage your organisational leaders do the same.
As organisations, consider how to involve and engage your stakeholders more, even in the governance and ownership of the organisation.
As CSI practitioners, align your CSI to the business and your programming to global goals.
As development practitioners, apply gender and environmental lenses to the development work that you do.
As individuals, look after your own mental wellbeing and consider psychosocial support internally within your organisation as well as across your development programming.
Advocate for
- Racial and gender equity and equality of pay in the workplace
- Decent wage gaps
- Better ESG action and information disclosure
- ESG skills at board level
- And for organisational just transition strategies for the net-zero world
- Embrace collective action – none of the huge intractable social and environmental issues can be solved by a single organisation.