Companies coy on eco-management

Dwayne Pretli

The country's top 50 companies are failing to tell shareholders about sustainability performance in environmental, health and safety systems, research shows.

The research, by a branch of BT Financial and to be released this week, found companies ran the risk of missing out on large amounts of money being invested by global pension funds.

Report author and head of BT's governance advisory service in Sydney, Erik Mather, said there was a growing recognition among these investors that a company's sustainability performance determined its long-term performance.

"There is increasing evidence that companies managing sustainability well are also well-managed businesses," he said.

Key sustainability issues were energy and greenhouse emission risk and workplace health and safety.

"Our research found that New Zealand companies lag behind their international counterparts in reporting of management of energy and greenhouse risk, with only 18 companies in the top 50 reporting they had an energy or greenhouse policy," said Mather.

This was in line with a recent survey of KPMG, a global advisory network, that found only 24 per cent of companies reported greenhouse emissions compared with 67 per cent globally.

The BT report is not all bad news, with The Warehouse, Carter Holt Harvey and Ports of Auckland picked out of the top 50 and lauded for the "world's best-practice reporting".

Mather said long-term investors such as superannuation and insurance funds were most exposed to the social and environmental risks embedded in the companies in which they invested. This type of "permanent share ownership" meant sustainability considerations were of particular benefit to long-term investors.

"Investors are actually also buying a lot of sustainability risks, because they are buying social, environmental and corporate governance risks," he said.

"We understand that it may be in some cases companies have got great practices: they're just not disclosing it.

"But in this day and age, you are doing nothing to help your share price to have good practices in these areas and not to tell people."

Geoff Vazey, chief executive of Ports of Auckland, said this kind of reporting was being stepped up at the company, despite it being no longer being listed on the New Zealand Stock Exchange.

He said it was not driven by any attempt to gain favour with investors but by customers.

The company also had an obligation to the community that it operated in and it had to earn the right to operate in such a "wonderful geographical location".

Its customers were large, global operations who took notice of the way the port was operated, paying close attention to more than just its financial performance.

Dwayne Pretli, team leader of sustainability services at the Auckland division of GHD, an international firm of engineers, architects, planners and consultants, said the BT report was a good one and he agreed with much of it.

He said the first step of looking at existing activities for an inventory or analysis was commendable, but companies were sometimes guilty of trying to find ways of making existing actions sound sustainable.

The next and more important step, however, was to actually adopt new environmental management systems.

"Far too often, apart from the top corporates, companies have been taking the approach of looking at their actions and saying, 'How can we make this sound sustainable?' - rather than changing and making sustainability an issue that you can report upon."

However, he did not agree that sustainability reporting was somehow an addition or something extra that needed to be adopted by a company.

Pretli said companies already reported revenues and profits, so reporting on sustainability should be a natural extension of that.

Top 50 firms
* 18 reported an energy or greenhouse policy.
* 12 reported energy use data.
* 11 reported greenhouse gas emissions.
* 26 reported the existence of a workplace health and safety policy.