Three finance experts share how they have successfully implemented ESG initiatives, despite challenges.
During CFO South Africa’s recent ESG Summit, CFOs learned that when it comes to starting on the ESG journey, there is no right or wrong – the most successful projects are an extension of the business’s current DNA.
The first panel discussion of the evening brought together a collection of finance leaders who each spoke from their own experiences at very different stages of their ESG journey.
Starting your ESG journey
FEM CFO Yusuf Bodiat explained that getting started was his greatest challenge,
“We didn't know where to start. There’s no standardised data point ESG or sustainability policy available online.”
He decided to start working from the bottom up, evaluating the business’s purpose and intention, and focusing on the things that make a difference. “We looked at what we’re currently doing and linked it back to an SDG in some shape or form.”
Yusuf has just recently presented his inaugural ESG strategy to his social and ethics committee, which he said went very well.
Driving your ESG strategy
Group financial manager Trevor Wentworth, who has been establishing guidelines for carbon reporting within the organisation, said his biggest challenge was predominantly around the amount of packaging that the pharmaceutical business uses. “Being a pharmaceutical company, we have a lot of plastic medicine bottles in the market as well as glass, cardboard and paper,” he said.
Trevor emphasised how a larger impact was seen when ESG initiatives were added to senior managers’ goals and performance indicators. “This has given ESG a great level of importance throughout the organisation.”
He explained how Adcock Ingram has managed to significantly reduce its landfill waste by improving its recycling initiatives. One of the most creative initiatives is donating used blood bags and tube feeds which are being recycled into high-quality school shoes that can be bought by businesses at R35 per pair and donated to learners across the country. To date, 250,000 pairs have been manufactured.
Focusing your ESG intentions
Yusuf warned that simply looking at the environmental aspects restricts the scope of what ESG has been created to achieve – a more sustainable future for generations to come.
“Often when you speak about ESG, you focus on the environment and we sometimes forget that, especially in South Africa, the focus on social programmes should not be ignored.”
Adcock Ingram shares Yusuf’s philosophy about the importance of social development, Trevor said. He explained that the company makes donations to organisations like Food & Trees for Africa regularly.
He explained that the business also takes on training and development with equal determination. “Our mantra is to grow and learn. We spend four percent of our parallel spend on training and development.”
The company has recently completed a programme that offered 118 internships, which was followed by a few hires.
Meeting your ESG targets
But the ESG journey is a trade-off between meeting targets, keeping the business profitable and looking at development opportunities that meet a community’s immediate requirements.
Standard Bank of South Africa CFO Preshanta Govender said it’s a balance that has been challenging. “While there is a massive push towards renewable energy, you have to remember that more than 600 million Africans are still without electricity. This has been a priority for Standard Bank to solve.”
On the other hand, R83 million in financing has been raised to assist businesses and individuals to invest in renewable energy solutions. The goal is that by 2026, this amount will have reached R250 million.
Preshanta added that sometimes the trade-off between renewable energy and investing in projects that provide immediate socio-economic assistance to communities on the continent has come under fire, referring to Standards Bank’s involvement in the oil and gas projects in East Africa.
“It’s a tricky balancing act,” she said, “but sometimes you need to consider the immediate benefits.”
She explained that in Uganda and Tanzania, where gas and oil drilling has taken place, the financial opportunity for uplifting the local communities is evident with an increased quality of living. “These projects will increase the relevant country’s GDP by between 20 and 25 percent.”
Preshanta emphasised that, while ESG needs to be a priority, “we do not live in a perfect world where this is always possible”.
The panel concluded that the hardest part of the ESG journey is starting, and then deciding which trade-offs you’re willing to make according to the purpose and intentions of your business.