PHILLIMON MHLANGA IN VICTORIA FALLS
Zimbabwe’s companies should align their business strategies to sustainability, a critical move that fosters business longevity.
Speaking at Institute of Chartered Accountants of Zimbabwe (ICAZ) Winter School in resort town of Victoria Falls, Rodney Ndamba, the CEO of the Institute of Sustainability Africa, an independent think-tank and research institute, said many local companies are in survival mode due to a very difficult operating environment characterised by liquidity constraints, inflationary pressures, and rising operating costs.
The adverse elements linked to currency, exchange rate volatilities and foreign currency shortages, are also a cause of concern.
Consequently, many companies are struggling to put in place strategies to mitigate the impact of the associated risks.
However, Ndamba said local companies should embrace sustainability, meaning they should pay attention to environmental, social and governance issues, which is now a critical metric that is influencing investment decisions.
Apparently, key stakeholders such as investors, financiers, government, and the Zimbabwe Stock Exchange (ZSE) are exerting pressure on companies to adopt integrated sustainability reporting.
“Many companies, given the current context, we are preoccupied with the survival mode.
But, the longer companies stay in the survival mode, they are likely to sink or fail,” Ndamba said.
He added: “So, companies should thrive to move away from the survival mode to sustainability, which pushes them to look into the long-term thinking, long term successes and it starts as a journey.
“They should start with small steps, doing the small things well and then move into the bigger picture on how to manage sustainability and become a sustainable business.”
There are several laws that compel companies to adopt sustainability reporting such as 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.
The ZSE requires listed companies to disclose, in the chairman’s statement, the relevance of sustainability to the organization and the organization’s strategy to address sustainability issues.
The compliance is measures on two fronts, that is the environmental, social and governance (ESG) and compliance with the ZSE Listing Requirements on sustainability disclosures.
However, few companies in Zimbabwe are compliant.
Ndamba said companies need to develop ESG model.
“So, the two aspects are that ESG focuses on environmental, social and governance and we also got the second part which looks at economic, environmental, social and governance.
These practices are anchored by evidence that need to come out from what companies are doing.”
