Keeping sustainability on track – transportation is a key focus area
Johannesburg, Monday, 9 November 2009 – With consumer awareness of sustainability issues on the rise, both government and business are feeling the pressure to take responsibility for their environmental impact beyond the balance sheet.
As a major contributor to domestic carbon emissions, the transportation sector will have a big part to play in sustainable development trends around the world. And as one of the world’s top 20 carbon emitters, South Africa is no exception.
It is estimated that as much as 60% of South Africa’s total carbon emissions are created by transportation, which means that in the light of increasing pressure by consumers and government’s drive for carbon reduction, transportation is likely to be a key focus area in the fight against climate change.
“We are entering a period of change for local business. This new era will be filled with both risk and opportunity, depending on the level of pro-active strategic planning of business leaders,” said Graham Terry, Head of the Office of the Executive President at the South African Institute of Chartered Accountants (SAICA) and author of the recently launched book: Green – why corporate leaders need to embrace sustainability to ensure future profitability.
“It is evident that those businesses that can adapt to consumer demand for reduced impact on the environment are more likely to thrive, while those that don’t might very well experience the exact opposite. Seeing that transportation is such a large contributor to South Africa’s carbon emission levels, I believe it is one of the areas that will attract the attention of business leaders as they strive to reduce their environmental impact and find positions of competitive advantage.”
According to Dr Vaughan Mostert, Senior Lecturer of Transport Economics at the University of Johannesburg and a Chartered Accountant, the answer to reducing the impact of the transportation of goods in South Africa might very well be found in the ‘orphan’ of the South African transport network – our railway system.
“The railway has played an integral part in our country’s development. In recent decades, road transport has undermined the railway’s status as the goods carrier of choice. Under current circumstances this is understandable – road transportation provides a safe, efficient and more cost effective alternative to rail transport. From a sustainability point of view, however, the fuel consumed by the massive amount of goods vehicles on our roads, as well as their high emission levels, does not bode well for business leaders attempting to reduce their carbon footprint,” he says.
“Too much emphasis is placed on the financial performance of the railway system. South Africa requires a multi-modal transport network and the railway should form an integral part thereof, regardless of its activities being profitable in the accounting sense of the word. At the moment, the focus on the railway’s year-to-year financial performance is over emphasised, which results in knee-jerk restructuring strategies and a lack of long- term strategic planning.”
In Dr Mostert’s view, capital intensive transport modes, such as the railway, should be protected in order to create an optimised transportation system that will develop our economy, rather than weaken it.
“This will require a significant paradigm shift from the powers that be, as they will have to commit to protection measures such as guaranteed minimum levels of service. If we aim to create and sustain high levels of rail traffic it will require an unwavering commitment to not only improving the level of service our railways provide, but sustaining those improvements. This should be a matter of national policy, even though it is almost certain that traffic levels will fluctuate. If this can be done, the business community once again has an incentive to make use of the railway and in so doing play a huge role in improving sustainable business practises in South Africa.”
Mostert also believes that more emphasis should be placed on the effective co-ordination and operation of public passenger transport in South Africa. “This will go a long way towards preparing the country to meet sustainability objectives in the future”.
Given that sustainable business practises are sure to become a pressure point for creating competitive advantage, it seems that business will inevitably reform transportation activities, in order to remain competitive. The fact that this pressure will be driven by consumers is self evident. However, not far behind them will be the lawmakers and those responsible for good governance.
“We believe that Chartered Accountants [CAs(SA)] find themselves in an ideal position to address the changing business environment,” notes Terry. “CAs(SA) already play an important role in all spheres of the South African corporate landscape.”
He draws attention to recent research conducted by SAICA which revealed that more than 25% of chief executive officers and directors of the JSE’s top 200 listed companies are CAs(SA). “Likewise, more than 70% of chief financial officers in those same companies also hold the designation. This proves that CAs(SA) are business leaders and therefore they have a responsibility towards sustainable development.”
Terry says CAs(SA) not only possess the necessary skills to deliver non-financial information to stakeholders, but are in the unique position to lead discussions around sustainability within businesses. “It’s an essential contribution when considering the uncertainty of a changing business arena where those companies that adapt best will thrive, while those that shy away from their responsibilities will likely face the wrath of the consumer.”
A key resource for both CAs(SA) and other business leaders is SAICA’s sustainability website (www.sustainabilitysa.org) where business leaders can stay up to date with the latest relevant sustainability news and initiatives.
Green can be ordered through the online shopping section of the SAICA website (www.saica.co.za).
