The extent to which sustainability performance indicators give effect to South Africa's Integrated Environmental Management principles

Abstract

The concept of Integrated Environmental Management (IEM) finds it origins from when environmental impact assessment was a voluntary process and later developed into a legislative and mandatory requirement. The legal framework in South Africa provides that the aim of IEM is to promote sustainable development. Similarly, sustainability reporting was introduced at the same time as environmental impacts assessments. Sustainability reporting on the other hand has always been a voluntary process and is a mechanism for a company to disclose on their sustainability related impacts, to ensure that sustainable development is promoted. In South Africa, IEM is underpinned by various principles that can be realised through the application of several tools, with one of the tools being sustainability reporting (DEAT, 2004). Companies use sustainability reporting to disclose to the public information on sustainable risks and opportunities, and the organisation's environmental, social, and governance impacts. The purpose of sustainability reporting is to improve financial accessibility, increase probability and growth, enhance compliance and risk management, and enhance corporate reputation and stakeholder relationships (JSE, 2022). Sustainability Reporting is conducted by way of performance indicators adopted from various sustainability reporting disclosure standards and frameworks. Hypothetical, for sustainability reporting to have been identified as an IEM tool and be effective in achieving its objective, one would expect sustainability reporting to give effect to the various principles that underpin IEM. The aim of this research was therefore to determine the extent to which sustainability performance indicators give effect to South Africa's IEM principles. To achieve the aforementioned aim, the objectives were to identify the different IEM principles that underpin IEM, determine the sustainability reporting disclosure standards and frameworks used in sustainability reports in South Africa, evaluate the extent to which the sustainability performance indicators adopted in these sustainability reports give effect to South Africa's IEM principles, and to make recommendations towards the adjustments of the sustainability performance indicators to give effect to South Africa's IEM principles. The method followed was to compare the sustainability performance indicators of the identified sustainability reporting disclosure standards and frameworks to the IEM principles. Hereafter the extent to which the sustainability performance indicators give effect to the IEM principles was determined by applying an evaluation protocol. The results indicate that the sustainability performance indicators in all 21 of the standards and frameworks give full effect to only two of the 19 IEM Principles. The sustainability performance indicators in the majority of the standards and frameworks have minimal shortcomings giving effect to 13 of the 19 IEM Principles. Overall, 4 of the 19 IEM Principles showed the weakest performance within the standards and frameworks. The GRI Sustainability Reporting Standards, the ISO 26000 standard, and the OECD Guidelines for Multinational Enterprises are the only three sustainability reporting disclosure standards and frameworks out of the 21 that give full effect to all 19 of the IEM principles. These three sustainability standards and frameworks are therefore recommended to be used when reporting on sustainability in South Africa, as they are the most aligned to the IEM principles. Recommendations were further made for adjustments to the sustainability indicators to consider the IEM principles, in order to ensure that sustainability reports be used as an effective tool for IEM.