The CEO of Spaanda stresses on the need for industries to create awareness on sustainability and climate change issues to understand the challenges facing companies in building resilience against external shocks. Manjula Basant Rai will be organizing a two-day conference on October 26 and 27, to explain how environmental, social, and governance (ESG) is leading the change.

The conference you are organizing at the end of this month aims at shedding light and helping businesses to understand what the true essence of sustainability is and how it connects to them. Does it imply that all issues related to sustainability and climate change have not been sufficiently canvassed and understood within the business and corporate world?

We tend to think that sustainability is all about ‘doing good’ and tends to be confused with Corporate Social Responsibility (CSR). An important feature of sustainability is the ability to create ‘sustainable’ businesses, which means ‘able to be maintained at a certain rate or level’. The new accounting reporting standard, IFRS S1, which is ‘General Requirements for Disclosure of Sustainability-related Financial Information’ underpins this aspect and allows a better understanding of what sustainability truly means from a business perspective. It requires businesses to assess their sustainability-related risks and opportunities across their value chains. These risks and opportunities are key in understanding the various challenges and new business avenues that can build resilience in the face of external shocks.

Businesses and climate change have a two-way relationship. They impact the environment through the release of carbon emissions into the atmosphere, create various types of pollution and can also lead to damage to ecosystems and loss of biodiversity. The other aspect of the climate change relationship that is less explored and not clearly understood is the impact that climate change has on businesses. Extreme weather events and chronic climate change can cause damage to assets and supply chain/production disruptions leading to reductions in revenues and increase in capital and operating costs. In addition, the introduction of climate change policies and mitigation measures can also bring along regulatory, reputational, market and technological risks. These are what we term as ‘transition’ risks of climate change, as opposed to physical risks. They are the risks associated with transitioning to a low-carbon economy and businesses should start assessing these risks as part of their risk management framework.

Through presentations and panel discussions by resource persons and experts, Spaanda, as the sustainability consultancy firm, wants to fill in this gap. How?

We fully acknowledge this gap and Spaanda will soon be opening a branch in Mauritius to accompany businesses along their sustainability journeys. The conference is the first step at attempting to fill this gap by providing opportunities for knowledge sharing and capacity building. The conference will have two aspects to it – there will be four teaching sessions covering important topics. The first teaching session will be geared towards demystifying ESG as a concept and giving an overview of the current international landscape. The new accounting standards such as IFRS S1 and IFRS S2 will be explored. The second session will provide tools on designing an ESG strategy, for example, how material topics are identified and the development and monitoring of KPIs to assess and report on these material topics. The third session will analyse carbon reporting frameworks, science-based targets as well as performing climate risk assessments as per the TCFD (Task Force on Climate Financial Disclosures). The last session will introduce the concept of green financing, explore the various financing instruments, analyse the gaps between the demand and supply sides whilst suggesting solutions to bridge these gaps.

In addition to these teaching sessions, we will also have panel discussions with subject matter experts and CEOs. The first panel, ‘Role of Government and Shaping of Public Policy’ will focus on the current and future plans of the government on ESG, views on how we collaborate to promote public and private partnership. It will include various ministries as well as the Bank of Mauritius and the Tourism Authority.

In the second panel, ‘The Voice of Business’, companies will share with us their experiences and the challenges they have encountered in their ESG implementation. It will also provide opportunities for knowledge sharing across the various industries. It will include companies such as Rogers, Harel Mallac, Medine, Mont Choisy Group as well as Business Mauritius and Mexa. We will also have the responsible sourcing director of Tesco speak to us about Tesco’s (UK’s largest supermarket chain) sustainability journey as well as the company’s need for its supply chain to embrace sustainable business practices.

The third panel is titled – ‘Meet the CEOs – the leaders of change’. The CEOs are the ones who set the tone and are the vision of the business. It will be chaired by Aruna Radhakeesoon (Chairperson of the National Committee on Corporate Governance and we will hear from those inspirational CEOs, like Phillipe Espitalier Noel (Rogers) Jyoti Jeetun (Mont Choisy), Ravin Dajee (Absa) and Jacques d’Unienville (Omnicane)

The fourth panel – ‘Meet the Banks, the providers of Finance’ – will include representatives from Care Edge Ratings (Africa), MCB, Absa, Afrasia as well as the CEO of the Mauritius Banking Association, Daniel Essoo. We will discuss the opportunities and the challenges in accessing green financing.

The big challenge of sustainability among all the stakeholders, be it the regulators, government, and economic operators, is how to extend this concept beyond just environmental issues. Your comments?

The concept of sustainability goes well beyond environmental issues. A useful framework to look at sustainability is through the lens of ‘ESG’ where E stands for Environmental, S- Social and G- Governance. ESG has evolved from other frameworks such as Environmental Health & Safety (EHS) and Corporate Social Responsibility (CSR) – a shift from the philanthropic ‘right thing to do’ to ‘has to be done’. It is a framework designed for businesses to make informed decisions about investments, strategy, and operations. This includes both risks and opportunities to the business. Europe is leading the way on ESG, with regulatory pressure from both individual governments and the EU.

The ‘S’ aspect looks at factors such as health and safety, employee development and benefits, diversity and inclusion, labour practices, impact on local communities, etc. Child labour and forced labour practices within the supply chain can cause reputational damage as well as revenue loss in the long term. The procurement of unsustainable goods from suppliers could put business at risk due to shifts in procurement and changing legislations.

The ‘G’ aspect spans the spectrum of ethical standards, board diversity and succession planning, compliance etc. This is an area that Mauritius is taking very seriously, especially with the laudable initiative of launching the Diversity, Equity, and Inclusion (DEI) charter by the NCCG. They are also working to incorporate additional ‘E’ and ‘S’ dimensions into the National Code of Corporate Governance for Mauritius.

Sustainable development is certainly a key priority today for all governments which are working to achieve the SDGs. At the same time, in the corporate sector, companies have started to prepare sustainability reports at the end of their financial year. How sustainability and climate change relate to their bottom-line given that at the end of the day the aim their aim is to maximize profit.

This is a very interesting concept. As you rightly said, companies are here for a purpose and that is to maximise value for their shareholders. Sustainability has to be explained in a language that somehow relates to the bottom line. Once you start seeing sustainability in this light, that is when it starts featuring on the agenda of boardroom discussions. It then features on company’s risk registers and becomes part of risk management and resource allocation processes. Sustainability reporting is very useful in helping businesses assess and report their ESG risks and opportunities. Some companies also go as far as quantifying these impacts to their bottom line. Once reporting happens at corporate levels, it becomes much easier for governments to compile and collate this data to then measure progress against SDGs at national levels.