There is a global standard for corporate bodies to report their social investments. But in Nigeria, many companies shy away from following this standard because it appears they have something to hide. Stakeholders are advising such companies to change their ways and adopt the global standard in preparing their sustainability report. ADEDEJI ADEMIGBUJI reports.
Most corporate organisations in Nigeria are yet to understand how to draft their sustainability reporting, a new buzzword in corporate social responsibility (CSR) practice. Over the years, they have continued to publish their social investment report without following the globally acceptable framework despite the domestication of the international standard on CSR called, NIS: ISO 26000 last year.
The NIS: ISO 26000 was domesticated after many adoption processes sponsored by Etisalat Nigeria; Nigeria Breweries Plc; First Bank of Nigeria Plc; Federal Inland Revenue Service (FIRS) and Standards Organisation of Nigeria (SON). The NIS: ISO was adopted for ensuring that charity and philanthropic activities of many corporate organisations are well documented in their social reporting in line with global sustainability reporting standard.
Many indigenous business concerns are yet to understand what sustainability reporting is except the use of CSR to sustain their relationship with the communities where they operate. However, most of the experts championing the cause of sustainability reporting and CSR have always made efforts to enlighten business concerns on the need to ensure that social investments in their operating environments follow certain framework in other to enhance result.
According to experts, sustainability report of an organisation gives information about its economic, environmental, social and governance performance and not just report collected data, but rather a method to internalise and improve an organisation’s commitment to sustainable development in a way that can be demonstrated to both internal and external stakeholders.
Meanwhile, corporate sustainability reporting has a long history going back to environmental reporting. The first environmental reports were published in the late 1980s by companies in the chemical industry, which had serious image problems. They were followed by another group of committed small and medium-sized businesses with very advanced environmental management systems.
Non-financial reporting, such as sustainability and CSR reporting, is a fairly recent trend, which has spanned the last 20 years. Many companies produce yearly sustainability report and there are many standards and ratings organisations. There are various reasons why companies choose to produce these reports, but primarily, the reports are intended to be “vessels of transparency and accountability.” Often, they are intended to improve internal processes, engage stakeholders and persuade investors.
Organisations can improve their sustainability performance by measuring, monitoring and reporting on it; helping them to have a positive impact on the society, economy, and a sustainable future. The key drivers of quality sustainability reports are the guidelines of the Global Reporting Initiative (GRI), Association of Chartered Certified Accountants (ACCA) award schemes or rankings. The GRI sustainability reporting guidelines enable all organisations worldwide assess their sustainability performance and disclose the results in a similar way to financial reporting. The largest database of corporate sustainability reports can be found on the website of the United Nations (UN) Global Compact initiative.
However, in the light of these, stakeholders have said Nigeria accounts for insignificant two per cent in compliance to standard reporting of their sustainability practice, a situation industry experts regarded as dismal. “Nigeria accounts for a significant two per cent of GRI-based reports with South Africa leading with about 96 per cent and the other two per cent scattered around the rest of the continent. GRI Focal Point South Africa was launched in South Africa on February 26, last year. Though based in South Africa, the focus of its outreach and engagement is the broader Southern Africa region and key priority target markets on the continent namely: Ghana, Nigeria, Kenya and Mauritius,” Head, Focal Point, Douglas Kativu said.
The Lead Consultant/ Chief Executive Officer (CEO), Thistle Praxis Consulting, Ini Onuk, said while the standard reporting is germane to any sector of the economy, it is disheartening to see the country score low despite its huge potential. She noted that social sustainability reporting plays a tripartite role in institutionalising.
Onuk affirmed that the global reporting community takes sustainability reporting serious. “ThistlePraxis has been engaging GRI for about three years now. At the same time, we have watched the increase albeit slow, in the number of organisations who signed on to the GRI framework. While we engaged GRI often; locally, we advocated constantly for not just the GRI framework but main-streaming sustainable development and non-financial reporting.”
The Coordinator, GRI, Tendai Matika also noted that while Nigeria is critical to African economies, the country needs to embrace reporting standard using the new GRI yardstick, G4, which is an improvement on G3 to measure the impact of its social investment as well as enhance ethical corporate behaviour in the operating environment.
“The visit afforded GRI the opportunity to also present sustainability reporting as a tool for the private sector to assess environmental, social, economic and governance impacts and performances to enhance competitiveness, raise awareness and promote better understanding of the GRI (G4) Sustainability Reporting Guidelines. It is also to meet and engage organisations in Nigeria currently signed up to the GRI reporting framework in order to promote GRI support services and operational sustainability (OS) membership program,” he noted.
While urging businesses to adopt G4 approach to CSR management, the new standard urged businesses to disclose grey areas in any category of their businesses in a financial year coded as DMA (Disclosure on Management Approach) in the G4 reporting standard information.
“There are 44 aspects proposed for G4, including procurement practices in the economic category, equal remuneration for women and men in the labour category, and two aspects: screening and assessment, and remediation, in four categories (Environment, Labour, Human Rights and Society),” Matika said.
Although adopting the global guidelines might not appear as easy as it sounds, issues of compliance have continued to prompt discussion among sustainability managers.
Absence of regulation hampers sustainability and CSR development
With slow adoption of global framework, Onuk said the absence of regulatory frameworks hampers the growth and development of sustainability and social reporting as key elements of business accountability. She stressed that compliance serves as a key driver to adopting accountability frameworks, which spurs organisations to become committed and demonstrate leadership in order to stay competitive.
“Compliance is key, yet, integrity and actual integration of sustainability; no matter how unfavourable, is the Holy Grail,” she said. Onuk explained: ‘ThistlePraxis has been engaging GRI for about three years. At the same time, we have watched the increase albeit slow, in the number of organisations which signed on to the GRI framework. While we engaged GRI often; locally, we advocated constantly for not just the GRI framework, but main-streaming sustainable development and non-financial reporting,” she said.
While the road to this milestone may be far and seemingly unwinding, GRI’s organisational stakeholders have been encouraged to demonstrate leadership through competitiveness, leverage on supply chain and impacts from best practices in order to encourage other organisations. According to her, G4 aligns with other recognised frameworks, such as UN Global Compact, ISO 26000, among others, to ensure that business sustainability is the goal and not just compliance.
Using regulatory big-stick to enforce compliance
The urgent need to regulate sustainability reporting in Nigeria was recommended by various experts. This call was made at a sustainability reporting dialogue organised by Global Reporting Initiative (GRI) Africa Focal Point office, South Africa. Meanwhile, Access Bank representative at the dialogue, Mr. Temitayo Ade-Peters, observed that the absence of regulations on sustainability would not foster level playing-grounds, hence making measuring commitment hazardous. However, the Lead, ICE, Shell Petroleum Development Company, Nigeria, Dr. Uwem Ite, described the use of regulatory agencies to drive the sustainability compliance as counteraction. He said using stakeholders to drive it would be a better option than “mandatory stick of government through regulations”.
In the same vein, the Managing Director, Quadrant Company, Mr. Bolaji Okusaga, also argued that the “implementation of sustainability principles should be through voluntary commitment and not enforcement by government regulations.”
The Advisor, Learning and Development, Chevron, Nigeria, Prof Yomi Fawehinmi, maintained that “if companies comply with writing the reports demanded by the different sectoral regulators in their industry, producing the sustainability report would be difficult”.
Fawehinmi, however, noted that “organisations may not need to leapfrog to G4 immediately”.
“With constant reporting annually, a sustainability report will align with global frameworks and standards in 3-4 years,” he added.
