Some startling revelations for the reward fraternity and the future of business in SA – an expert comments

Some startling revelations for the reward fraternity and the future of business in SA – an expert comments
21st Century CEO, Chris Blair

SA businesses could be greenwashing away their futures

At the recent South African Reward Association (SARA) conference at the Indaba Hotel, Spa and Conference Centre in Johannesburg, 21st Century CEO, Chris Blair was able to unpack the recently released GECN study which contained some startling revelations for the reward fraternity and the future of business in South Africa.

Backed by the study, Blair illustrated how, pre-pandemic companies were most concerned with shareholder returns, and financial reimbursement, but how three years later the picture had changed dramatically and with good reason. He also addressed the trends in the Global Environmental, Social and Governance field and analysed concerns, trends and challenges that companies will face as they move from being principally shareholder concerned, to stakeholder concerned and the “balance between people, planet and profit” (the 3 Ps).

The GECN study (of which 21st Century represents Africa) that Blair referenced was conducted over six continents and was a comprehensive study of ESG across the major corporations in each of those countries.

Blair revealed how, around the world, 72% of companies now factored in “social concerns” among their non-financial ESG measures, and how 50% actively factor in environmental concerns, with 37% and 34% factoring in customer and governance measures respectively. More importantly, he showed how these are increasing. Of the social measures, “Diversity, Equity and Inclusion” was showing massive growth with Blair saying, “it’s entered into boardrooms in a big way”.

Unpacking the study, Blair revealed how in the short term these ESG measures are playing off against total Shareholder returns.

“The more ESG measures your company has got, the worse your total shareholder returns, but this is only in the short term,” said Blair. “This makes sense. In order to invest in ESG things, like climate, your people, or on social conditions, for the future, it costs money, and you have to get the money from somewhere. So where do you get it from? The return to your shareholders.”

But as Blair explained, “this is the long game and ultimately for those companies that prepare and invest, the wheel will turn.”

According to Blair, companies that invest in ESG now are positioning themselves for a future where investors and shareholders are increasingly concerned about ESG goal success and project viability, and investment will depend on ESG measures being in place. He therefore recommends the reward fraternity begin building in greater reward strategy for executives who achieve those ESG goals.

This is bad news for a high percentage of companies in South Africa, who are not transforming, but who are rather greenwashing figures to claim greater ESG increases than they truly have. Blair explained how the study found that only 8% (STI) and 14% (LTI) of companies around the world disclose targets upfront (ex-ante). This means that many companies only report what they actually achieved and not what they hoped to achieve, thereby greenwashing their results.

It was insights such as Blair’s which made the SARA conference essential, particularly in South Africa, the market the study revealed to be the world’s biggest offender when it came to blurring and misreporting ex-post ESG responses.

Over the course of the two-day conference, speakers ranging from CEO for WorldatWork, Scott Cawood to Partner and co-lead of PwC Reward practice, Leila Ebrahimi and Reward and Policy Manager at Stonehage Fleming, Candice Mncwabe guided attendees through a series of speeches, panels and workshops leaving them more equipped to deal with reward in the modern, post-pandemic era.

Apart from Blair’s speech, other speakers included, CEO of Hesed Consulting Vumile Msweli who guided attendees through the value of culture in a corporation. Manager at PWC (SARA Reward Specialist), Marike Jacobs spoke to the importance for companies of pursuing a living wage and Scott Cawood discussed a “Great Reimagination” in the way companies view reward.

“Instead of worrying about what you need to do to keep people, the real focus needs to be creating the right environment where people want to stay,” Cawood explained. “The truth is that how we work has changed and so has our relationship to work. It is time for a refresh to make It count.”

If the SARA conference, and the refreshingly honest analysis of the South African context of Chris Blair’s speech are anything to go by, the rewards fraternity is in good hands.