The Directors Event 2023: how sustainable are SA businesses?

The mandate for businesses to operate responsibly is nothing new. What is new is a on focus sustainability, which is linked to realising tangible environmental, social and governance (ESG) goals. The recent 2023 Sunday Times Directors Event, sponsored by BCX for the fifth consecutive year, discussed how SA businesses are performing when it comes to sustainability and where we go from here. 

Known as SA’s biggest board meeting, the annual Directors Event puts the spotlight on burning issues facing the business sector and suggests possible solutions to the country’s most pressing problems. 

BCX CEO Jonas Bogoshi said that though most companies have adopted and implemented an ESG framework, there remain vocal critics of the policy. Some critics of ESG argue that it’s nothing more than a “woke” movement out of control; that ESG measurement encourages greenwashing; and that a focus on ESG has a tendency to distort markets and results in a misallocation of capital. They also say ESG does not take into account the development status of regions and has a disproportionately negative affect on emerging economies. 

The main focus of business is to meet customer requirements, generate profits and create value for shareholders. In emerging economies, businesses have the added responsibility of lifting people out of poverty. Sustainability and ESG are not an either/or decision, said Bogoshi, but areabout ethical imperatives and ensuring a long-term future for the business, communities and stakeholders. 

“The actions we take today will create either positive or negative results for future generations. We need to decide what kind of legacy we want to leave,” he said. 

The keynote address was delivered by SA’s former statistician-general, Pali Lehohla, the co-director of the Economic Modelling Academy, an organisation that teaches high-level skills in economic modelling. 

Lehohla discussed a number of issues including the skills gap; the high rate of unemployment; the role of small- and medium-sized businesses to address the unemployment crisis, why young people hold the key to unlocking SA’s potential; and the importance of adopting sustainable and responsible business models. He said closing the skills gap and addressing the high rate of unemployment will not be possible in the current environment. 

Calling SA a failing state, he drew attention to the plight of the poor. “In the belly of the looting state machinery reside the poor, who eke out an honest living, expecting that they are protected. But sadly, their supposed protector is accused number one.” 

Government policies in their present guise are not sustainable, he said. The only way to grow SA’s GDP is to implement reforms. He urged SA to deploy econometric modelling and to implement the proposals made by businesses to reignite growth, future-proof the economy and get SA out of its rut. A failure to implement these reforms will doom SA to continue fighting fires, he said. 

Social impact

The first panel discussion focused on social impact — a frequently forgotten aspect of ESG — and what it means for business. The big takeouts were that there are pockets of excellence in all levels of society, and we need to be highlighting these areas. The government needs to make better use of its leverage points, including the skills development levy, and we need to make it easier for the youth to access skills development initiatives. 

Most businesses do care about making a positive social impact, want to make a meaningful difference, and recognise that doing good is good for business. NGOs, for example, are doing a huge amount of good work for disadvantaged communities.

However, for impact to occur at scale, we need to prioritise public-private partnerships. Many of these existing partnerships are proving to be highly successful.

SA's energy and infrastructure crisis 

The second panel discussion analysed the dynamics that shape SA’s energy and infrastructure crisis and discussed possible solutions. 

The South African Institution of Civil Engineering rated the condition of SA’s public infrastructure a D, which means it is at risk of failure in its most recent infrastructure report. 

The unwieldy nature of the energy sector is best illustrated by the fact that Eskom reports to seven different ministries, begging the question of how much time its executives have to focus on fixing the power utility.

To date, there is no clear mandate or plan to resolve the energy crisis. While the new minister of electricity has suggested a number of quick-fix solutions, the panel said the issues are more nuanced and complex than they appear, particularly given that crime and corruption continue to cripple the state-owned power utility. Whether Eskom can be salvaged and if there is the political will to fix it remains to be seen. 

Watch the full discussion below: 

The challenge is that amid deteriorating business confidence metrics, a growing risk profile and a failure to implement the necessary economic and policy reforms, SA will struggle to attract investment. Large energy projects typically require public-private partnerships, they need to be bankable and investors need to be assured of getting a return. 

SA cannot afford to abandon Eskom, which means that it needs to do what it can to improve the performance of each power station. It can also not afford to transition away from coal too quickly. 

Smart technologies 

The topic of the final panel discussion was the use of smart technologies to shape the future sustainability of SA, focusing specifically on how home-grown innovation enables economic resilience.

Despite a number of private sector initiatives, the panel agreed that resolving the digital skills gap won’t be easy. However, it’s critical that every effort is made to reduce this gap because the fourth industrial revolution (4IR) has the potential to resolve some of Africa’s biggest challenges. 

Addressing the gap will require private sector and civil society organisations to work closely so that initiatives and projects can be scaled for maximum affect. 

The government needs to create a more enabling space to implement digital technologies. At the same time, the misperception that the 4IR will destroy jobs needs to be addressed. 

The high penetration of mobile phones in SA — many of them smartphones — and an extensive fixed network provides an excellent opportunity for small business owners to access the cloud and digital technologies, removing many of the barriers to entry for small businesses. 

Concluding the Directors Event, master of ceremonies Gugulethu Mfuphi said this year’s event raised a number of “P’s” needed to drive change: policy, partnerships, profits and people with skills. While many of SA’s challenges appear insurmountable, there are resolutions to many of the pressing problems we face.

This article was sponsored by BCX.