ESG And Sustainability Reporting In Zimbabawe – Climate Change

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It is common cause that the chief aim of any company or
enterprise is to make a profit. Global consciousness has however
moved on from this profit-centric approach and stakeholder pressure
has seen the rise to prominence of ESG- Environment, Social and
Governance- standards that seek to measure sustainability and
impacts of businesses. Globally the utility of these set of
standards has proved popular with an emerging class of
institutional investors; aptly named ESG investors, coming to the
fore and a general will for corporations/companies to be considered
good corporate citizens. In the Zimbabwean context ESG or
Sustainability reporting in not a new phenomenon particularly to
listed companies who have been obligated to commission such report
in terms of the Securities and Exchange (ZSE Listing Requirements)
Rules 2019. Notwithstanding the stated statutory provisions, it is
opined that the culture fro sustainability reporting is yet to
cascade throughout Zimbabwe’s corporate world. This article
seeks to explain the nature, utility and growing importance of
ESG’s to Zimbabwe’s corporate landscape.

As stated above, ESG is an acronym that stands for Environment,
Social and Governance. This is collection of standards that assist
companies to identify gaps between internal frameworks and
international best practice. Invariably focus on particular aspects
of ESG are more pronounced if due consideration is given to the
industry in question, e.g. it would be expected that Environmental
factors vis-à-vis long term risk of a mining company are the
primary consideration, without derogating from the social and
governance factors. Such effects confirm the reason why ESG has
been characterised as a stakeholder focused approach to doing
business. Whereas the sustainability reporting obligation is
prescribed only in respect of listed companies in Zimbabwe, the
drive towards ethical and sustainable business supersedes arguments
that would hamper this objective. It follows that reporting,
benchmarking and tracking is imperative for the success of ESG in
Zimbabwe’s corporate landscape. Indeed metrics from said
reports are the basis upon which ESG investors are motivated
towards investing, moreover it promotes transparency with the
stakeholders that contribute to such business.

Below is a sample ESG rubric including factors which may be
considered under each standard. These factors will inform internal
company policy management ethos and practices.


Preservation of our natural world

Climate change, Carbon emission reduction, Water pollution and water scarcity, Air
pollution, Deforestation and Greenhouse gas emissions


Consideration of humans and our interdependencies

Customer success, Data security, Gender diversity, Community
relations, Mental health


Logistics and defined process for running a business or

Board of directors and its makeup, Compensation, Recruitment
best practices

The utility of such tools lies in the accuracy and integrity of
ESG or sustainability reports. Companies and company directors in
particular should be wary of corporate greenwashing – which a
practice of falsifying sustainability reports. It is this author
considered view that company director’s in Zimbabwean context
must view ESG as being analogous with the duty of care and business
judgment rule that is required of every director, and prescribed in
terms of s54 of the Companies and Other Business Entities Act [
Chapter 24:31]. While it is common cause the foremost objective of
any business or enterprise is to garner profits, ESG seeks o temper
unconscionable profiteering. it follows that it should be incumbent
upon every company director to be alive to the benefits, and
utility of compiling sustainability reports as their statutory
duties of duty of care and business judgment rule, may infer
sustainable and ethical business. With the rise in prominence of
ESG investors the legislature may also look into further
entrenching sustainability reporting by extending the requirement
beyond listed companies, notwithstanding various pressures from
stakeholders and societies to hold all business enterprises
accountable and the same being transparent in respect on the impact
upon their stakeholders.

ESG is not an entirely novel concept, however it is apparent
from its rise in popularity that various stakeholders across
varying industries deem it necessary for businesses within those to
conduct such businesses in an ethical and transparent manner. While
sustainability reporting is required of listed companies in
Zimbabwe, there is a case for extending the same to private
companies. The need for sustainability reporting is arguably
inferred as part of any company director’s fundamental duty of
care and business judgment.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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