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South African firms 'not green enough'

5 November 2009

A large number of South African companies are failing to implement environmentally sustainable business strategies, according to a new survey released on Wednesday.

More than 40% of companies surveyed are not doing so, thereby jeopardising their own long-term sustainability, the Supply Chain Intelligence Report 2009 finds.

The study into the supply chain and logistics practices of business in South Africa was conducted by Terranova Research and based on over 200 interviews with senior company officials.

All major industries in the country were represented, including the automotive, food and beverage, mining, construction, transportation and chemical sectors.

A significant 41.3% of the companies did not have, or had no plans to incorporate, ways to measure their impact on the environment. These impacts included energy consumption from supply chain operations, carbon emissions from supply chain operations, water consumption from manufacturing operations and infrastructure simplification.

Commenting on the results of the study, Graham Terry, head of the office of the executive president at the SA Institute of Chartered Accountants, said that since the automotive industry was a global one, it was likely that international pressure would cause local motor companies to monitor and report the impact their operations had on the environment in future.

From the oil, gas and chemicals sample, 44.6% of respondents reported that the various environmental impacts were not being measured. Despite the poor result from respondents in this industry, 57.1% of this group claimed that environmental issues were an important factor in making decisions for their business.

The fast moving consumer goods (FMCG) sector appeared to be only slightly more in tune with the market's concern about the environment.

According to the study, one-third of the respondents in this sector reported no future plans to incorporate the listed environmental impacts in their management systems, compared to 35.8 percent for the retail sector.

When questioned as to which factors were considered important when making decisions about new products or markets, 55.6% of FMCG respondents said environmental issues were critical in decision-making, compared to a significantly lower 38.1% for the retail sector.

"This could be attributed to many of South Africa's FMCG companies being a part of multi-national groups, and therefore required to adhere to international standards," Terry said.

The unwillingness of more than 40% of the South African companies surveyed to adopt new and important ways of measuring their impact on the environment was "alarming", he said.

Sapa