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Sustainable firms look past their own walls and help societies around them

Thursday February 23 2017
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A school in Kilifi on Kenya’s Coast. Poverty, conflict, uneducated youth and resource scarcity are strategic issues that businesses can look into as part of their social responsibility to society. PHOTO | FILE

Today’s changing societal context is prompting companies to rethink “value” creation. Businesses’ narrow focus on the bottom line coupled with the annual charitable initiative covered by the media is increasingly being re-shaped by environmental, social and governance factors. While reaching out to the needy is not at all bad, it is time to expand the narrative.

Businesses no longer exist just to make money; the well-being of employees, communities and the planet is inevitably tied to the health of the business. Businesses have an opportunity to create societal value, share emerging and best practices and nurture motivated employees.

Some companies in Kenya have started publishing annual corporate sustainability reports showing their value add-on social and environmental aspects. Safaricom, through KPMG’s True Value methodology, for example, created a total value of Ksh414 billion ($4 billion) in their 2016 sustainability report. While this kind of reporting has not gained much publicity, it influences the consumer’s decision-making process.

Global Compact, the world’s largest corporate sustainability initiative, exists to help businesses meet these goals.

First, we need to have principled businesses, that align their strategies and operations with Global Compact’s Ten Universal Principles on Human Rights, Labour Standards, the Environment and Anti-corruption. The principles provide a universal language for corporate responsibility and a framework to guide all businesses, regardless of size, complexity or location.

A growing number of companies are finding real value in actively addressing social, environmental and governance issues. Kapa Oil Refineries, a signatory to the Global Compact, through the integration of the ten principles set up an anonymous ethics hotline for their employees and recorded 24 cases in the 2015-2016 with disciplinary action taken on the cases.

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In addition, Kapa Oil Refineries also managed to save 20-30 per cent on steam energy, reducing the overall cost of business.

The other crucial aspect of corporate sustainability is taking action and collaborating with others to address global challenges. Sustainable companies look past their own walls and actively support the societies around them. Poverty, conflict, uneducated youth and resource scarcity are examples of strategic issues that business can look into. A business cannot thrive while the world around it is deteriorating.

Partnerships are a major necessity in handling these strategic issues. Companies and stakeholders are now coming together to provide a collective voice and share risks in tackling major challenges that no single player can overcome.

Top among the requirements to be fully engaged is leadership commitment. Effecting change begins with the company’s top leadership. This means calling for action in all areas, from adjustment of policies and practices, training and motivating employees, pushing sustainability into the supply chain and disclosing efforts of embedding sustainability issues into business and outcomes.

Leaders recognise that they cannot achieve sustainability alone; they make it an all-inclusive process to increase the chances of success. Sustainability requires a long-term vision and commitment to ongoing efforts, to ensure progress and keep pace with a rapidly changing world. It is for this reason that Global Compact requires a public commitment by CEOs to participate in all its initiatives and report on progress.

Going beyond profits

Stakeholders — investors, consumers, citizens and civil society groups — usually want to know what a company has been doing beyond pursuing profits. Are they improving the lives of their employees, the communities around them and the planet?

Global Compact provides an avenue for companies to report on their progress, through submission of a Communication On Progress (COP) report that serves as an accountability measure.

A COP is typically included in a company’s main medium of communication, be it an annual report or a sustainability report and is then uploaded on the UN Global Compact website where it is publicly available. Businesses are also encouraged to share the COPs with stakeholders through their normal channels of communication.

Lastly, local action is a major component of corporate sustainability. While the Global Compact principles are universal, companies have a chance to act on the principles at a local level, and engage in policies and strategies unique to their operations and countries.

To assist companies in this journey, there are local networks in approximately 85 countries. The networks exist to support business participants regardless of size or industry sector. They foster learning, reporting, networking, partnerships and advocacy, with the goal of advancing sustainability, understanding and performance.

Global Compact members get the opportunity to share best and emerging practices and mentorship from more established companies.

Businesses actively taking up corporate sustainability have attracted more stakeholders and ultimately thrive.

Lilian Gikandi is the UN Global Compact Network Kenya Network Support Officer and can be reached on [email protected]

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