Listed firms to adopt IRS

HARARE - Zimbabwe Stock Exchange (ZSE)-listed companies are expected to adopt the Global Reporting Initiative (Griguidelines as a way of attracting foreign investors and increase transparency.

The Gri sustainability reporting guidelines are widely adopted by multinational firms, providing a template for their corporate social responsibility and environmental disclosure reports that help to make reports from different companies comparable.

In an interview with businessdaily on the sidelines of a Sustainability and Integrated Reporting Seminar, Rodney Ndamba, founder of the Institute for Sustainability Africa, said plans are underway for the country to adopt Gri’s reporting guidelines.

“We are advocating for the adoption of the Gri formula and we hope in the coming year, it should be formally adopted on the local stock exchange,” he said.

“We are working together with Securities Commission of Zimbabwe on the formulation of the Act.
 
‘‘After that it will be taken to government for consideration before being implemented.”

Sustainability reporting, as defined by Gri, links the three aspects of sustainable business practices — economic, social and environmental — in a standardised format reflective of financial reporting standards that have been common practice for decades.

Ndamba said companies that adopt the Gri guidelines have the potential of attracting potential foreign investors.

“If you look at countries that have adopted the Gri guidelines such as South Africa, Nigeria and Kenya in Africa and Brazil in South America they are favourites for foreign investors because of the accountability and transparency given by the guidelines,” he said.

Julia Wakeling, a consultant for Sustainability Services South Africa said local companies are set to benefit from adopting the Gri guidelines.

“Most companies in the region are moving to adopt Gri guidelines for them to become competitive in the market because companies have a wide range of stakeholders that have an interest in their activities,” she said.

Wakeling said organisations also have to think about integrated reporting — which integrates financial and sustainability information into one report.

The aim is to provide a single report telling stakeholders how the organisation impacts on the environment and community in which it operates, and how the environment and community impact the organisation’s business.

A KPMG international survey published in 2011 shows 95 percent of the 250 largest companies in the world now report on their corporate responsibility (CR) activities. This represents a jump of 14 percent when compared with the 2008 survey.

The traditional CR reporting nations in Europe continue to see the highest reporting rates whereas two-thirds of the non-reporting countries are in the United States.

South Africa has shown a significant increase with 97 of the top 100 JSE listed companies report on CR activities.

The Securities Commission of Zimbabwe (SecZim) is currently spearheading wholesale reform of the country’s capital markets to help protect investors and limit corruption.

The call by SecZim to reform the local markets follows an investigation into most local companies which revealed that public quoted firms’ financial results were deficient in terms of their application of fair value standards and they had an overreliance on the uncorroborated work of experts. - John Kachembere

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