Zim lags behind in sustainable business practice

HARARE - Zimbabwe still lags behind in adhering to sustainable business practices, says the Institute for Sustainability Africa (Insaf).

Its chief executive Rodney Ndamba said sustainability reporting — entailing an organisation presenting its values and governance model, and demonstrating the link between its strategy and its commitment to a sustainable global economy — is increasingly becoming key to attracting responsible investors.

This comes as in recent years, Zimbabwe has experienced a pronounced investor flight due to bad economic policies coupled with serious sustainability challenges with negative effects on society, environment and the economy.

“To date, corporate sustainability reporting as a business approach in

Zimbabwe is still lagging unlike in countries like South Africa, Kenya, Mauritius and Nigeria who are Global Reporting Initiatives (GRI) sustainability reporting countries and destinations of the larger part of foreign direct investment (FDI) in Africa,” he said.

Ndamba added that many companies have collapsed as a result of poor corporate governance, the absence of the code of corporate governance and not abiding by guiding principles for sustainable business practices.

“The effective implementation and monitoring of principles and values of responsible and sustainable investing, and good corporate governance is dependent on the active role of shareholders and other stakeholders of various companies,” he said.

Sustainability reporting requires a company or organisation to publish a report on the economic, environmental and social impacts caused by its everyday activities.

To this end, Insaf in collaboration with the Securities and Exchange Commission of Zimbabwe (SECZ) and other partners will be holding a conference next month aimed at encouraging responsible and sustainable investing in Zimbabwe.

The conference will be highlighting shareholders and investors’ rights and responsibilities, whilst influencing consideration of Environmental, Social and Governance (ESG) issues in investing decisions.

Themed “Shareholders and Investors Forum on Responsible and Sustainable Investing in Zimbabwe”, the conference is expected to address investors on capital markets shareholders’ responsibilities.

It is expected that the convention will complement the sustainability reporting and responsible investing project by encouraging active engagement of shareholders in upholding and promoting good corporate governance, sustainable business practices and responsible investing in many companies in Zimbabwe.

The end result of the project would be a code for responsible and sustainable investing in Zimbabwe.

The conference comes at a time when SECZ plans tighter regulation of listed companies by imposing laws demanding improved financial disclosure, curbing multiple directorships and limiting chief executives’ terms.

The capital markets regulator said it expects the new listing rules to be implemented before year end.

This comes as the current disclosure requirements for listed companies has exposed several shortcomings and allowed abuse of minority shareholders, who often do not have an insight into key details regarding the management of their companies.

Concerns have also been raised that multiple directorships compromise corporate governance while also destroying skills diversity.

“We are not happy as the regulator with the integrity of some of the market players and their level of disclosures,” said SECZ’s board chairperson Willia Bonyongwe recently.

“We are working with other stakeholders like the Zimbabwe Stock Exchange (ZSE) and Public Accountants and Auditors Board (PAAB) to ensure that the level of disclosures is really up to standard,” she said.

Bonyongwe pointed out that SECZ will ensure that there is honest and fair practice within companies adding that some listed companies’ decisions “could be right but without being fair.”

“In the past we have had issues were we have stopped some transactions, were we have intervened to say can you please republish this and that just because we feel that minority shareholders have really not been catered for,” she said.

Comments (3)

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ORIGINAL - 20 May 2014

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ORIGINAL - 20 May 2014

This is noble idea! Its long overdue.

Peter - 2 June 2014

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