24 April 2002

South Africa: Sustainable Development in Spotlight

Johannesburg — AS SA prepares to host the earth summit later this year, the environment is increasingly taking centre stage as companies seek to move into line with international best practice on sustainable development.

Many of the drivers for new environmental laws and standards have been inspired in part by the forthcoming summit, say legal advisers. In addition, the second King Report on Corporate Governance highlights the need for companies to comply with these standards.

Business is moving towards a triple bottom-line approach to reporting, embracing environmental, social and economic criteria.

Ian Sampson, senior manager: Deloitte & Touche Legal, says that constitutionally and in terms of the National Environmental Management Act the principle of sustainable development is legally binding in SA.

"In effect it says that you should run your business today so that you leave something for the generations that follow tomorrow," says Sampson.

"The triple bottom-line approach calls for the integration of environmental and social issues into the day-to-day operations of a business. Until recently, many companies have not recognised this pinciple at all," says Sampson. Where they have done so, it has often been treated as a peripheral issue with relatively small budgets allocated to a safety, health and environment manager to cover minimum requirements.

He says the second King report has an entire chapter dedicated to sustainability reporting to move the issue into the boardroom rather than down the line to management.

"The law now directs companies to practice sustainable development and King is reinforcing this as good practice.

In SA these issues seem set to remain in the realm of blue chiptype companies, Sampson says, given their exposure to foreign markets.

However, the earth summit, new legislation and the second King report will slowly start forcing a wider range of companies to take cognizance of sustainable development, he says.

There is likely to be a twopronged approach to change, says Sampson.

"One is that business, as a result of King for example, is trying to demonstrate best practice.

"The other is that the laws and the constitution are obviously binding on our government, which now has a legal obligation to produce laws that manage these risks and we are starting to see that."

Enforcement is starting to improve, he says.

The auditor-general has now taken an interest in environmental issues and in terms of the Public Finance Management Act monitors government departments to ensure they are meeting constitutional and regulatory obligations.

In broad terms, the act stipulates that the auditor-general must make sure that government entities comply with all relevant legislation.

The SA Constitution says that citizens have a right to an environment that is not harmful to them, Sampson says.

A second stipulation is that government has an obligation to develop laws that satisfy that right.

"And it specifically says government has an obligation to develop laws that achieve sustainable development."

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