LETTER: From shareholder capitalism to the stakeholder variety
This year at the World Economic Forum (WEF) in Davos (a gathering not known for championing the small guy), a white paper was tabled that could help SA focus some attention in that direction. The paper, titled “Toward Common Metrics and Consistent Reporting of Sustainable Value Creation”, lays out new proposals for the way companies disclose their behaviour in society. The metrics are a gentle attempt to steer the big guys away from shareholder capitalism towards stakeholder capitalism.
While the Small Business Institute and our member constituents object to the burden of unnecessary regulations and the time it takes to comply with them (which inevitably affects small businesses disproportionately), we see an opportunity here. If disclosure guidelines are under review, it’s time that we mirror what is happening in other jurisdictions and ensure that businesses governed by the Companies Act disclose the time it takes them to pay small businesses in their supply chains.
Members of the WEF International Business Council introduced a standardised way to measure sustainability, which for them incorporates governance, prosperity, people and the planet. They hope to see the 22 new metrics disclosed in annual financial statements by 2021. These include the number and nature of incidents of corruption within an organisation, the way companies protect and encourage reporting of unethical behaviour, and land use and ecological sensitivity.
Supporting small businesses, which make up 98.5% of our economy, has to be reflected in an aspirational definition of sustainability. Without successful, job-creating small and medium enterprises, our country could face an economic and social crisis.
SA now has powerful representation at the WEF after the election of Patrice Motsepe to the WEF board of trustees and Sipho Pityana’s appointment as co-chair of the new Africa Regional Stewardship Board. We hope they help us steer the conversation towards this key aspect of stakeholder capitalism vital to our country’s success.
Small Business Institute
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