The importance of ESG and the non-alignment of reporting requirements are resulting in companies resources having to spend a large portion of their time gathering and calculating ESG metrics and generating reports for various external stakeholders.
There is no doubting that ESG is now one of the top risks that organisations need to manage, but the relatively rapid rise of these risks has led to inefficiencies in managing and reporting on ESG data.
The reporting burden has also been underpinned by there not being a uniform ESG ratings standard as well as the dynamic nature of ESG and new aspects that continually need to be reported on.
The reporting burden
It came as a surprise when, through discussion with various Sustainability Managers, it emerged how much effort and time it was taking to meet the numerous ESG reporting requirements. IsoMetrix discussed this concept with Mr Stiaan Wandrag, the Sustainability and External Reporting Director at Tiger Brands, to get a first hand knowledge of what Sustainability departments are facing.
ROBIN BOLTON: How big is your organisation in term of employees?
STIAAN WANDRAG: We employ about 11 200 permanent employees, and a large number of seasonal workers depending on the product.
RB: What does your company do?
SW: We are one of Africa’s largest, listed manufacturers of fast-moving consumer goods (FMCG). Our core business is manufacturing, marketing and distributing everyday branded food products to middle-income consumers. We also distribute leading brands in the home, personal care and baby sectors.
RB: How many in your Sustainability team?
Is it considered sufficient? I am the Sustainability and External Reporting Director at corporate level. There are various people in the different functions with sustainability as part of their job description, for example in HR, Supply Chain, etc. Data is managed by HR and Supply Chain, as all our operations report into the Supply Chain Chief Officer. None of the people report to me, typically we work in a matrix system, like in many other companies. The role I am in is still fairly new in the company, and as functions are more centralized, more people will be needed to manage the workload, including centralized data management of all non-financial data.
RB: What portion of your time is spent on ESG / sustainability reporting?
SW: And who is this generally for? Up to 70 % of my time is spend on ESG/sustainability reporting. The annual sustainable development report is aimed at all stakeholders having an interest in non-financial data, though we cannot answer in one report to everybody’s needs (an approach of what is most material to our stakeholders is followed). ESG reporting is done to rating agencies and investors, the FTSE Russell is for example mandatory as part of the listing requirements on the JSE.
RB: What aspect of ESG reporting seems to take the most time?
SW: Making sure that everything reported in terms of ESG questionnaires is in the public domain, and that selective reporting doesn’t happen (i.e. disclosure of something to one analyst and not to everyone).
RB: What necessary functions could these resources be doing if not reporting?
SW: Implementation of the sustainability strategy, working hands-on with the functions and operations. Identifying opportunities for improvement at ground level.
RB: How do you see technology and a management system helping?
SW: In the ideal world, a centralized data platform will enable “pulling” data/information into questionnaires, by tagging the data/information almost in the same way as BXRL in the financial world.
RB: Do you envisage the demand for ESG information increasing or decreasing?
SW: It is increasing at a rapid rate, and will continue to do so.
RB: Is there an increase in information related to Supply Chain, Water and Forestry in particular? Or which other aspects are on the rise?
SW: The increase is across the board, from governance, labor issues, human rights, ethics, environmental performance, resource efficiency, etc. When there is a specific “new” risk (such as the current pandemic, or a few years ago the Marikana event), we tend to see an immediate rise in questions around how the company is dealing with that risk in terms of mitigation and adaptation.
ESG transparency and the adequate identifying and managing of ESG risks is no doubt a practice that companies now need to adopt. Although there is a significant alignment on the ESG metrics that interested stakeholders are requesting, the range of these metrics as well as “new” risks that emerge creates a reporting burden on organisations. This reduces the time that Sustainability Managers can spend on implementing strategies and improvements aimed at managing and reducing the ESG related risks. There is certainly space for technology to assist in this regard.
Stiaan is a qualified veterinary surgeon and specialized in Toxicology. He worked in research toxicology before joining the Dow Chemical Company, where he served as the Responsible Care Leader for South Africa, with responsibilities for Environmental, Health and Safety and Responsible Care. He was responsible for the sustainability reporting of Sasol for twelve years and also served for six years until December 2017 on the GRI’s Global Sustainability Standards Board (GSSB) as business and Africa representative. He is still a member of Integrating Reporting Committee of South Africa’s working group.
Stiaan joined Tiger Brands in January 2018 as Sustainability and External Reporting Director.