THE WAR FOR SUSTAINABLE BUSINESS PRACTICES
By BRIGHT EWULU
For the last three years Global Reporting Initiative (GRI), Earnest and Young(NY) and the Nigerian Stock Exchange (NSE) have been waging a subtle war to improve sustainable business practices and good corporate governance in the country. That is not a simple thing when we remember what happened to former Financial Reporting Council (FRC) boss Obazee in the battle to institute International financial reporting standards in the country.
The job the above named trio has embarked on is not really financial. Even though their belief is that sustainable business practices enable business to endure even in the financial tuff.
In the yearly seminar, the third of which was held in Lagos recently, to synergize and re-strategize operational modalities in the on-going assault against bad corporate governance. Almost all the vital war generals and major institutions that have been conscripted were available.
Opening the strategic meeting, regional Managing Partner, EY (West Africa) Henry Egbiki warned on the need for Africa to fastrack its adoption of sustainable business practices and good corporate governance so that the world does not leave her behind.
He thanked all those gathered for their belief in good corporate governance but pointed out the need to spread the gospel to all sectors of the economy.
NSE’s General Counsel, Tinuade Awe took the floor and praised his organization to high heavens and pointed that it was not until 2013 that it delved into sustainability very seriously and recounted all the good that have happened to her organization (NSE).
She pointed out that NSE is not the only institution that have been enjoying the goodies since sustainability became- the- name- of -the -game but companies that are quoted on the exchange, saying that her supervision capacities has been enhanced since it adopted universally accepted good corporate governance structures etc. She accepted that sustainability comes at a cost but that its profits are too germain to be overlooked, citing Brazil’s Nova Makado exchange, Unilever, Du point, seimens and recent NBC “acid controversies” as clear examples.
According to her, in order to enhance good corporate governance in Nigeria’s capital market the NSE would be rolling out new disclosure requirements to enhance openness and accountability. And expressed the hope that this would lead to more sustainable investment and operation on every level.
GRI Director Africa, Douglas Kativu in his contributions maintained that “you can only manage what you measure and change what you can manage”. He said the GRI’s job is to build reporting standards for non-financial issues which could range from economic ,environmental, social to governance e.t.c.
According to him, the world already has the international financial reporting standards “which although is not financial but can determine the sustainability of a business. He disclosed that GRI has introduced the GRI standards with a deadline of July 2018 which is an improvement on its G4 guidelines.
As he said the benefit of the new standard is its flexible structure which is aimed “at helping companies that want to use our standards to oversea their policies on water, energy, gender etc. He explained that companies and institutions are not expected to adopt the entire 33 topics but should only adopt the sections that are material to their operation(s). Said he :”focus only on the topics that are material to you.”
Globally speaking, he disclosed that countries and regional organizations are adopting the standard, saying that its not limited to private or public sector managers or governments. He revealed that “ European Union directives mandates that companies employing up to 1000 should disclose their policies as regards to how they manage carbon, water, anti-corruption, gender etc”
Joseph Owolabi, West African head, climate change and sustainability services EY, reminded Nigerian companies that “you are reporting and there are no third party providing assurance it doesn’t look good”. Hence apart from the financial assurance in annual financial reports, what about assurance on good corporate governance and sustainability issues-gender, carbon, environment, etc.
As Owolabi opened “sustainability standards are usually fluid unlike financial data or reports. Reports are not just the issue but how trustworthy is the report?” that’s where assurance comes in.
Speaking at the event Chinyere Almona, Africa Corporate Governance program Manager, IFC Nigeria threw her weight behind the sustainability drive saying “good corporate governance is important. It’s a way to build trust and confidence.
“If you have the right good corporate governance policies your staff will tend to work better as well as suppliers, customers” she maintained.
NSE’s Godstime Iwenekchai was of the view that disclosures is good for both private companies and public institutions. “It makes you marketable. Your disclosure levels increase investment: as disclosure enables investors to know your unique selling point (USP)”.
Nechi Ezeako, Executive Director, Institute of Directors (IOD) Center for Corporate Governance agreed that disclosure is a veritable part of good governance but stated that there is need to answer a few questions on disclosure rightly to be successful. For instance she queries. “Disclosure by who? Disclosure of what? When do we disclose?”
Good Governance Africa Executive Director, Dr Ola Bello on the issue of whether the market is over regulated in Nigeria may Africa posited that he would rather prefer an over regulation of our situation rather than the other way round.
He posited that “we are not doing enough on disclosure, we need to incent ivy companies to do so.” Even as he campaigned for fair compensation of all and sundry to equitably drive the economy.
Almona also called for the training `of the board of directors of Nigeria Companies as the economy is changing speedily these days so that they could adequately drive their establishments based on good corporate governance. She charged that the roles of chairmen and board members can not be over emphasized.
How do we go about moving our nation to the part of sustainability and what are the road blocks in the bath for change?
For Dr. Ijeoma Nwangwu, Head Sustainability Centre, Lagos Business School “culture causes a major block in the issues of sustainability. The other hitch is what ?(financial) value – how does this pay my bills? Another to address is attitude and values. Another area is knowledge and expertise. Environment should be receptive for progress…. Another is access to information. And its hard: Just like if there is no demand for democracy there will be no dividends of democracy. So also for sustainability” and good corporate governance.
Owolabi opened up that “Our strategy is to reach the CEO’s and ensure their buy-in. I always tell sustainability managers to see ways they could create value for their companies. Because at the end it’s a business or profit making enterprise”
Executive Director, CSR in Action Bekene Mesade reveals that “Things are changing- more companies are reporting. We are getting more requests for help but many are not still meeting the minimum requirement.”
Senior Consultant, strategy and External Relation, Thistle praxis Consulting, Emilia Asim- Ita was of the view that to deepen the change that regulatory agencies mentation may be needed. As she put it “we are coming from a culture of secrecy. What the driver of good corporate culture needs is transformational leadership from the top. Not executive promises that is not executed. CBN forced banks to report and through that banks saw the benefit and continued in that direction”.
Other contributors at the event stated that “Disclosure has a cost element. People don’t disclose because they want to survive.”
Others pointed out that the suspension of the code of good corporate governance in Nigeria is a hindrance. Although “ISA 701 had not been suspended” and deals on the surrounding issues of sustainability” .A participant was of the view that “to change Nigeria the Judiciary, maybe police, press need to change. And may be there should be a takeovers” .The funny thing about the proposition is that the participants forget about the impact of politics and politicians and the military in all the things he was talking about.
But like Dr. Ezeako told those who gathered of the end of event” lets go from here and take action”. It all begins with us.