Embrace corporate sustainability business model for long-term success

Local companies should embrace the corporate sustainability business model, which is a strategy  for long-term success, value creation and competitiveness as part of their financial disclosures.

Apparently,  the Zimbabwe Stock Exchange (ZSE) has  modified its listing requirements to require listed companies  to implement policies addressing environmental, social, and governance (ESG) concerns.

Recent studies show that over 90% of listed entities have been defying the reporting requirements, which means that non-financial information makes up less than 10% of annual reports for listed companies.

Since the majority of investors are now socially conscious and use environmental, social, and governance (ESG) standard criteria to screen potential investments, it is imperative to embrace ESG issues because it is here to stay in one form or another.

It’s already beginning to take center stage in other regions of the world, which means that investors are beginning to recognize the value of sustainability reporting and are choosing to take environmental concerns and other values into account when choosing investments, rather than only focusing on an opportunity’s potential for profit or risk.

The main issue is that ZSE now mandates that public companies reveal in the chairman’s statement how important sustainability is to the company and how it plans to address sustainability concerns.

The two dimensions of compliance that need to be evaluated are the ZSE Listings Requirements on Sustainability Disclosures and the ESG requirements.

In addition to the ZSE listing requirements, businesses are required by other law to implement sustainability reporting.

These include Statutory Instrument 113 of 2019 (Securities and Exchange (ZSE Listing Requirements) (Section 399-404: Sustainability information and disclosure), Companies and other business Entities Act (24:31) Section 220, and Public Entities Corporate Governance Act which was enacted in 2018.