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Make corporate sustainability drive public sector operations

The COVID-19 Pandemic has taught many African governments great lessons on sustainability and long term thinking. The resilience of our public health system was tested and proved vulnerable.

Rodney Ndamba
independent analyst

For developed economies, corporate sustainability helped absorb economic impacts of the Covid-19 pandemic. However, countries like Denmark, Finland, Sweden, Singapore, Switzerland, Norway, Australia, Germany, The Netherlands, South Korea and Japan, with deep rooted sustainability policies in their economic governance philosophy, continue to be resilient.

Over the past decades, these countries have continued to offer sustainable service delivery, hence offering a high quality of life to their citizens. It is no secret that embedding economic, environmental, social and governance (ESG) aspects was their great secret to economic resilience.

To date, some of these countries are moving fast to mandate sustainability by law. Their public sector practices are aligned to sustainability reporting and sustainable development,which require government departments, state owned entities and local authorities to identify, manage and be accountable onsustainability impacts and opportunities.

Consequently, Zimbabwe needs to strengthen and drive corporate sustainability to recalibrate its public sector operations for sustainability and economic competitiveness contributions. Interestingly, Zimbabwe already has good legal instruments for implementing corporate sustainability.

The country has the Public Entities Corporate Governance Act (Chapter 10:31) which requires public sector entities to manage and account for their economic, environmental, social and governance (ESG) impacts and opportunities.

For example, TelOne has been producing sustainability reports despite majority of public sector entities and local authorities lagging behind.

Corporate Sustainability is linked to an organisation’s business strategy and model. In Zimbabwe, the Public Entities Corporate Governance Act (10:31), National Code on Corporate Governance Zimbabwe (2015) and S.I.134 of 2019 Securities and Exchange (Zimbabwe Stock Exchange listing requirements) Rulescontains provisions for using the Global Reporting Initiatives (GRI) standards for corporate sustainability.

According to KPMG (2020), the GRI Standards are the leading corporate sustainability standards globally and provide comprehensive sustainability performance indicators that help organisations to consistently manage their ESG impacts. While the pace for implementing sustainability reporting using GRI Standards has been gathering momentum among public listed companies, the public sector is lagging behind.In this regard, this article explores how corporate sustainability could be instrumental for the public sector to drive economic competitiveness.

Corporate sustainability

Corporate sustainability is a practice of embedding ESG aspects into operational practices and decisions. To date, it has become a business and economic strategy. For example, global brands like Unilever, Coca Cola, Standard Bank (South Africa), Standard Chartered Bank and many others anchor on sustainability. Furthermore, emerging economies have started capitalising on corporate sustainability to build sustainable economies that compete in global markets.

However, corporate sustainability is fast finding its way into the public sector to drive sustainable service delivery. For example, the City of Munich (Germany) and West Sussex County Council to name a few (Hopwood et al, 2010).

Corporate sustainability has been a strategy of competitive and leading economies. It allows nations and organisations to build shared values with their stakeholders, improve management systems, identify weaknesses, connect departments, encourage innovations, attract investors and build competitive advantages (GRI, 2008).

Corporate sustainability is underpinned by stakeholder inclusivity, materiality and responsiveness (AA1000, 2018). It allows identifying potential risks and opportunities in advance.Furthermore, corporate sustainability requires mind-set change (IUCN et al, 1991).

Corporate sustainability using GRI Standards covers some of the following:

Economic Indicators (value generated and distributed, markets, indirect economic impacts, supply chain, anti-corruption, anti-competitive behaviours and tax);

Environmental indicators (materials, energy, waste, climate change, effluent, biodiversity, environmental compliance, environmental screening of suppliers etc.);

Social indicators (employees, labour relations, human rights,  communities, gender, occupational health and safety, Child Labour, Diversity and equal opportunity, socioeconomic compliance with law and regulations etc.); and

Governance (board responsibility, composition, balance of skills, remuneration, ESG responsibility etc.). So organisations are expected to identify, manage and be accountable to stakeholders on their performance and impacts. Corporate sustainability centres around transforming organisational behaviours, culture and mind-set toward sustainable practices geared towards long term success and impacts.

Corporate sustainability and the public sector

While corporate sustainability started with the private sector, it has significantly made its way into public sector operations in many progressive economies and governments. For example, the Nordic countries and East Asian countries have been incorporating sustainability into public sector operations to create sustainable and competitive advantages in service delivery and economic resilience. Government operations have a huge impact on sustainability (Blackburn, 2007). As such, this makes it critical that the public sector in Zimbabwe takes thelead in implementing corporate sustainability. Corporate sustainability can be used for infrastructure projects risk management strategy.

Sustainability has been an anchor to public sector entities in most of the highly regarded cities and countries. For example, Watercare Services (New Zealand), City of Chicago (US), Franfurt (Germany) and Kigali (Rwanda). These countries mastered the strategy of making sustainability a business model for sustainable service delivery.

It is evident that emerging economies have been greening the public sector, hence this is an opportunity for Zimbabwe during the implementation of the National Development Strategy 1(NDS1).

It is vital that transformation starts with the public sector to ensure that corporate sustainability is embedded as a business model in each government ministry, department and state owned entities and parastatals in day-to-day operations.

Corporate sustainability using GRI Standards is aligned with Sustainable Development Goals ((SDG) outcomes, hence being adopted by many governments. Internationally, developmentWA (Australia), Canada Post (Canada), Maritime and Port Authority (Singapore), Auditor General (South Africa) and Dubai Customs (United Arab Emirates) provide typical examples of public sector organisations that have embraced corporate sustainability to provide sustainable service delivery.

Risks and opportunities

Corporate sustainability provides the greatest opportunities for public sector in Zimbabwe to managed costs, innovate, improve stakeholder relations and drive sustainable practices. The biggest risk the country faces comes from international lending institutions, which have now prioritised sustainability in lending and infrastructure development projects funding.

For example, the International Finance Corporation (IFC), World Bank (WB) and International Monetary Fund (IMF) have sustainability or ESG criteria for evaluating countries before lending. In most cases, government departments, ministries and parastatals become target for this evaluation. If they fall short in how they manage ESG issues aspects, the country will be considered high risk to lend.

In many cases, countries in Africa have ended up borrowing at high cost or interest. Corporate sustainability lowers cost of capital.

As such, Zimbabwe needs to capitalise on its existing statutory instruments to drive the public sector to implement corporate sustainability in their operations.

Finally, public sector operations have significant impacts on society and national competitiveness.

Failing to provide social services has potential ramification on investors. In addition, public sector ESG issues come with costs which end up on private sector businesses through utility.

In this regard, because of failings most products end up being expensive through absorbing inefficiencies in managing sustainability costs. The success in implementing sustainability in the public sector depends on mind set change, sustainability policy implementation and monitoring.

Ndamba is the chief executive/founder of the Institute for Sustainability Africa, an independent think tank and research institute “advancing sustainability initiatives for Africa”.These weekly New Perspectives articles are coordinated by Lovemore Kadenge, independent consultant, past president of the Zimbabwe Economics Society and past president of the Institute of Chartered Secretaries & Administrators in Zimbabwe. — kadenge.zes@gmail.com and mobile:+263 772 382 852.

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