By Dela Ahiawor
Sustainable development is the pathway to the future we want for all. It offers a framework to generate economic growth, achieve social justice, exercise environmental stewardship and strengthen governance ——- Ban Ki-Moon
“The deterioration of good corporate governance in public institutions is unhealthy to the development of Ghana,” said Vice President, Kwesi Bekoe Amissah – Arthur. He made this weighty remark at a workshop themed “ Improving governance in the public sector ” in Accra, recently. Accordingly, Mr. Amissah- Arthur tasked internal auditors across the country to ensure good governance in their various organizations by complying with laid down procedures.
This assertion by the Vice President follows hot on the heels of the UN Global Compact, CEO roundtable on corporate sustainability in Ghana – that discussed the complex issue of responsible business practices vis-à-vis sustainability reporting, which also took place earlier this year, in Accra. The compact seeks to re-orient the interest of corporate institutions from profit to sustainability through corporate governance.
Secondly, the compact which is a principle-based framework for companies with regards to human rights, labour, environment and anti-corruption, further demands that companies also report on their sustainability initiatives; a practice called ‘sustainability reporting.’ Undoubtedly, the fact remains that, there can be no sustainability without strict adherence to good corporate governance principles in business lately. In fact, in contemporary global corporate practice, good governance is often touted as the cornerstone of sustainability.
It therefore stands to reason that, for corporate Ghana to be able to earn its sustainability credentials in the near future, then governance is of the essence. Stating it aptly, the chairman of the Internal Audit Board, Nii Anumansa- Baddoo also speaking at the workshop called upon public organizations to set high standards that would translate into transparency and accountability. In addition he said “Improving governance in the public sector requires a robust and effective internal auditing practice that would provide the appropriate platform for proper financial management and help to prevent corrupt practices, as well as the abuse of national resources.”
Of course, in our current dwindling resource world, preventing the abuse of national resources must take precedence over all other interests of an organization, and this cannot happen without ensuring that corporate entities report on their sustainability initiatives or environmental, social and governance performance often referred to as ESG – which has long term performance advantages. The conclusion then follows that a key challenge for corporate leaders in Ghana is to rethink their business strategies by enhancing transparency and accountability in their operations; because ‘sustainability reporting’ is the
way to go for Ghanaian firms in our quest for a sustainable society.
Furthermore, current ethical concepts in business also emphasize the significance of sustainability reporting. So countries are now mandating companies to report on their economic, environmental and social performance in earnest. It is therefore necessary to understand the concept of sustainability reporting, how it’s evolving and also how it helps to strengthen governance in business.
To start with I would like to state that sustainability reporting is a latter-day corporate reporting trend rooted in environmental reporting which started in the late 1980s. It’s also an evolution of ‘corporate reporting’ which encompasses: sustainability reporting, financial reporting, corporate governance, executive remuneration, corporate responsibility and narrative reporting.
In days of yore, the interest of companies was only oriented towards profit making, without any concern for their negative impacts on the economy, environment and the society, also called the triple bottom line. The only form of corporate reporting for companies in the past was book-keeping. This involved keeping a record of a company’s accounts accurately. Book-keeping transformed into financial reporting, then came financial accounting, which uses internationally accepted standards to help compare one company to the other. Later, financial accounting also evolved into the rather newfangled non-financial reporting concept, called ‘corporate sustainability reporting’ or simply ‘sustainability reporting.’
But whiles sustainability reporting encourages companies to be earth conscious by showing concern for the economy, environment and the community or society in which we live, with regards to improving the health of our planet; book-keeping, financial reporting and financial accounting does not. The idea of sustainability reporting therefore seeks to help companies to show their economic, environmental and social performance in addition to their financial performance.
In brief a sustainability report defined by the Global Reporting Initiative, GRI states that “ a sustainability report is a report published by a company or organization about the economic, environmental and social impacts caused by its everyday activities.” The GRI again states that “a sustainability report also presents the organization’s values and governance model, and demonstrates the link between its strategy and its commitment to a sustainable global economy.” Obviously, the sustainability report becomes a powerful tool in strategic decision making which also helps to communicate an organization’s corporate policy and
Thus if well implemented over time a company’s sustainability report is capable of increasing productivity, efficiency and transparency which leads to better economic returns, cost saving , improvement in environmental and social performance and increased long term value. Again it improves investor confidence, management quality, builds trust, motivates staff, ensures better access to capital and ultimately also impacts organizational reputation positively.
As a result, governments and corporate brands the world over ( private and public) are keen on sustainability reporting for varied reasons, which essentially includes the efficient use of scarce resources, but the main essence of reporting is the role it plays in improving transparency and accountability, which are key determinants of good corporate governance in the body corporate. With a view to this, one can conclude that incorporating, implementing and reporting on an organization’s sustainable development strategies bears high relevance to corporate Ghana.
This is in light of the manifest truth that corporate Ghana has become a petri dish of corporate malfeasance which immensely engenders poor and corrupt business practices leading to losses that impacts national development negatively in the long term. Embracing sustainability reporting has the potential to help provide the needed management tool to enhance good corporate governance in Ghana towards a more sustainable future.
But the cue here is that, if sustainable development is really the pathway to the future we all desire, then the time to act is now, because sustainability reporting has long evolved into a more knotty catch-all concept called ‘Integrated Reporting’ that corporate Ghana must endeavour to catch up on.
This article first appeared on www.sustainabilityactive.com