Mervyn King SC, current Visiting Professor at Rhodes Investec Business School, took to the podium at this year’s Think!fest to remind the audience that our beautiful planet is voiceless. We have a responsibility to look after it and this responsibility starts with sustainable organisations – his topic for the presentation. “Take Standard Bank, who is one of the sponsors of the National Arts festival, for example. This company has over eight million accounts with over 1 000 branches. It reaches into all of our lives, yet it is still considered small in global terms,” King said.
Prof King reminded the audience that their children and their children’s children are at risk of seeing our earth’s demise. “There is an ‘ecological overshoot’ because more people are moving out of rural areas and into urban areas to find work. The planets resources are being used up faster than they can be replenished,” he warned.
Approximately 50% of the largest economies in the world are companies and that is why the collapse of Enron had such an enormous effect. King noted. As a result, we cannot underestimate the impact of unsustainable companies.
According to Prof King, there are three main crises – the financial crises, which is spilling over into the economy, the climate crisis and the ecosystem or natural resources crisis – used beyond nature’s capacity to regenerate them.
“Yesterday’s economic model was based on two false presumptions: that there were limitless resources in nature and that nature had an infinite capacity to absorb waste,” he noted. The solution, therefore, is to promote and implement proper governance and a commitment to sustainability.
King believes that our new economy is “business as UNusual” – we have to relearn everything we have learnt from the past. That means making more from less and also ensuring that governance, strategy and sustainability are inseparable.
He also believes in the “Inclusive Approach”, which nurtures responsibility, accountability, transparency, fairness and intellectual honesty within a business. It looks at the purpose of the business and the value drivers – how you do business when no one is watching – and is guided by the best interests of the company.
King also believes that it is the board’s duty to identify the stakeholder groupings and their interests and expectations. Are these relevant to the company’s long-term goals? The board then needs to delegate to management to communicate with these stakeholders and build relationships with them.
“There is a real need for effective, strategic communication in plain, understandable language,” he said. A sustainable company also needs integrated reporting that is holistic. An integrated report must include the company’s performance – financially, socially and environmentally. It must also disclose the stakeholder policy, groupings and relationships.
Examples of sustainable companies include American Electricity Power, Philips, Rabobank, Natura and Siemens. “Siemens’ customers have saved 210m tons of CO2 – which equals the total emissions of the Netherlands,” said Prof King.
“We need to fulfil our duty to those who come after us. Always do the right thing!” King concluded.
Recognised internationally as an expert on corporate governance and sustainability, Professor Mervyn King has consulted, advised and spoken on legal, business, advertising, sustainability and corporate governance issues in 43 countries and has received many awards.