SUSTAINABLE BUSINESSES SHAPING THE FUTURE OF SOUTH AFRICA

The mandate for businesses to operate responsibly is nothing new. What is new is a sustainability focus which is linked to realising tangible environmental, social and governance (ESG) goals. The 2023 Sunday Times Directors Event, sponsored by BCX for the fifth consecutive year, unpacked how South African businesses are really preforming when it comes to sustainability and where we go from here.

An annual event, dubbed SA’s biggest board meeting, The Directors Event puts the spotlight on burning issues facing the business sector and suggests possible solutions to the country’s most pressing problems.

Welcoming delegates to the ninth edition of The Directors Event, Sunday Times editor S’thembisizo Msomi said that in a country gripped by energy and infrastructure issues and a governing party pervaded by corruption, it is up to the private sector to navigate the political potholes and work to keep the lights on.

In his opening remarks, Jonas Bogoshi, CEO of BCX said that while most companies had adopted and implemented an ESG framework, there remain vocal critics of ESG who argue that, amongst others, ESG is nothing more than a woke movement out of control, that ESG measurement encourages greenwashing and that a focus on ESG has a tendency to distort markets and results in a misallocation of capital. Critics of ESG also point to the fact that ESG does not take into account the development status of districts, regions and countries and has a disproportionately negative impact on emerging economics.

Conceding that none of these criticisms are entirely incorrect, Bogoshi pointed out that the key focus of business is to meet customer requirements, generate profits and create value for shareholders. However, in emerging economies in particular, businesses have the added responsibility of lifting people out of poverty. Sustainability and ESG, he said, are not an either/or decision but is about ethical imperatives and ensuring a long-term future for the business, communities and stakeholders.

The actions that we take today will create either positive or negative results for future generations. Ultimately, we need to decide what kind of legacy we want to leave,”.

Future proofing SA with econometric modelling

The keynote address was delivered by Dr Pali Lehohla, the former statistician-general of SA and currently a director at Economic Modelling Academy, an organisation that teaches high-level skills in economic modelling.

Lehohla discussed a number of issues including the skills gap, the high rate of unemployment, the role of small and mediumsized businesses to address the unemployment crisis, why young people hold the key to unlocking SA’s potential and the importance of adopting sustainable and responsible business models.

SA’s problems, he said, can be tracked back to a number of macroeconomic issues which in turn rely on statistics and data. The country’s long-term performance when it comes to educational outcomes suggests that high unemployment, particularly amongst the youth, is an irreversible trend. Data also suggests that closing the skills gap will not be possible. Both metrics have been worsening in recent years. Poor educational outcomes add to high youth unemployment. By all indications SA is a failing state, he said. In the belly of the looting state machinery reside the poor who eke out an honest living, expecting ironically, that they are protected. But sadly, their supposed protector is accused number one.

The government’s policies - which typically follow a macroeconomic populism - are not sustainable, he argued, adding that government does not act decisively and appears increasingly incapacitated.

Explaining why econometric modelling matters, Lehohla said that since the dawn of democracy, SA has applied a range of evolutionary approaches, all of which have had major material defects. Government, however, does not have the tools to predict the country’s future.

Inclusive development requires a capability approach. Key to resolving high inequality in SA is increasing GDP growth levels

To grow GDP requires micro reforms, trade and industry reforms, macro reforms and social policy reforms – which, he said, combined could grow GDP above 5%. Lehohla urged SA to deploy econometric modelling and to implement the proposals made by businesses to reignite growth and future-proof the economy and get SA out of its current rut.

If we don’t implement the right tools SA will continue to be fighting fires, he said, concluding his address by saying that there is currently an absence of intellect in how we do business in SA because we are not using foresight sufficiently.