Cape Town - A non-profit environmental rights organisation claims that many prominent South African companies not only frequently fail to comply with environmental laws, but often fail to disclose to shareholders those non-compliances, and the risks that they pose to the company.
Blue chip companies count among the 20 JSE-listed entities whose environmental compliance and disclosure were assessed by the Centre for Environmental Rights (CER).
Between 2008 and 2014, authorities found many of the 20 companies in the CER’s study to be in violation of their permits and licences, or regularly to have violated environmental laws.
Typical breaches include toxic spills, unauthorised disposal of hazardous waste, contamination of soil, ground and surface water and air pollution. Yet many of these violations are not reported to shareholders, the CER claims.
“All companies in our study have regularly been listed on the JSE’s Socially Responsible Investment (SRI) Index. Many promote their JSE SRI status and actively lay claim to good governance and full compliance with environmental laws in shareholder reports,” said Tracey Davies, head of the CER’s corporate accountability and transparency programme.
“But we have found that some of the ‘best performers’ on the JSE SRI Index also feature repeatedly in the list of companies facing enforcement action by, amongst others, the Department of Environmental Affairs as reported in its annual National Environmental Compliance and Enforcement Reports.
"To make matters worse, in all but a few cases, firms understate, or neglect to report, significant breaches of South Africa’s environmental laws in reports to shareholders.”
Davies said no-one would expect all of these large industrial concerns to have a perfect compliance track record.
But when violations occur, they must be taken seriously and shareholders and the public must be told about the violations and what the actual or likely consequences of the violations are.
Finally, Davies said the company must also say what it is doing to come into compliance as quickly as possible.
“These violations of environmental laws negatively impact the environment and the lives of South Africans each day, but also pose significant risk to the relevant companies’ business,” said Davies.
“Each company assessed was given a month in which to respond to our findings before we published our report.
"Only three failed to do so and one challenged the CER’s authority to conduct the baseline assessment.
"Other responses contained descriptions of investments in mitigation of impacts, and declarations of commitment to environmental protection.
"One company disputed all findings by the Green Scorpions of unlawful activities at its operations, stating that such findings are 'based on the relevant government departments’ own interpretations and opinions of the relevant legislation … never confirmed by an independent third party as part of subsequent legal proceedings".
Davies said the CER was especially impressed by the responses from Mondi, Illovo Sugar and Tongaat Hulett.
Read the full report here.