Home ›› 19 Nov 2022 ›› Editorial
Sustainability reporting is a voluntary or sometimes mandatory --a business practice which publicly discloses a company or organisation’s economic, social, and environmental governance (ESG) practices to internal and external stakeholders.
The present discussion rotates around a new thought that the private sector should not be only profit-seeking but, at the same time, socially responsible. It can bring confidence among significant national and international stakeholders and thus can help get better policy support. However, there is a need for a step-by-step approach rather than going abruptly.
It is, of course, true that sustainability reporting and SDGs are interrelated. Core activities of the private sector and SDGs such as; decent employment(8), climate change(13), water scarcity(6), food insecurity(2), waste and pollution, inequality(5), human rights and urbanisation (11) are related closely to sustainability reporting.
A recent seminar discussed and shared opinions on how the private sector thinks about sustainability reporting (SR), suggesting that it is a security to help the private sector ensure that short-term profits do not turn into long-term liabilities. However, sustainability reporting still needs to be explored more in countries like Bangladesh.
Direct benefits of SR are not spelt out; the private sector may not be willing to should any new financial burden at the cost of their business benefits. At the same time, the private sector has experienced environmentally compliant, cleaner production, and socially responsible from the point of view of buyers’ requests in securing export orders.
The situation is different in the case of corporate handling domestic markets. There are susceptible environmentally polluted sectors such as leather and plastic that needs to be more responsive to society. In that respect, the regulatory authority has a role; in that respect, institutional structure and incentivising the private sector with proper policies are essential.
Global Reporting Initiative (GRI) is the most commonly used sustainability reporting framework. GRI, in the meantime, has established a partnership with the Dhaka Stock Exchange (DSE), the Bangladesh Institute of Bank Management (BIBM), the United Nations Development Programme (UNDP), and the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
According to the GRI, 49 listed companies (15%) in Bangladesh out of 320 companies listed on the Dhaka Stock Exchange (DSE) submitted sustainability reports in 2019; however, only 11 of the reports followed the GRI reporting framework (3%). Out of the 49 reports, 35 of the reporting organisations were from banks and financial institutions. The proportion of the manufacturing sector is not significant.
BGMEA, through a partnership with UNDP and GRI, published its SDG report titled ‘A pathway to manage private sector impact on Bangladesh National Priority Indicators (NPIs) & Sustainable Development Goals (SDGs)’ in 2021. Under this initiative, 47 BGMEA member factories conducted sustainability self-reporting, translating their impact into the language of NPIs and SDGs.
Usually aggregated sustainability of the sector is communicated to the government, buyers and stakeholders, demonstrating the industry’s overall contribution. SR could be one stage ahead in understanding company-specific contributions.
Bangladesh needs more attention in addressing environmental issues; in respect of the Environment Performance Index (EPI) 2022, Bangladesh has scored 177 out of 180 countries in reducing environmental pollution, declining 15 steps in 2020. The climate change EPI score of BGD is 18.8 among 171 countries. BGD’s score is within 5-15 in almost all categories, such as; solid waste management (5.8), waste management (10.5), projected GHG Emission in 2050(11.4), ocean plastics (14.6), recycling (15.7) out of 100.
An additional $928.48 billion will be required for SDGs in 2017–2030. The annual average cost of SDGs will be $66.32 billion for this period. The public sector will contribute 33.5 per cent, the private sector 42.09 per cent, and from external sources, 14.89 per cent will be met. The estimates show that Bangladesh heavily depends on the private sector’s investment. In that respect, new innovative entrepreneurship has to be developed, which can simultaneously help reduce environmental pollution and give business benefits.
We have seen some business cases, and more examples can be created in that respect. TEL Plastics, a sister concern of RFL producing plastic products, is working to protect the earth. They are taking green initiatives, such as; Energy Conservation and preservation, ETP, The 3Rs (Reduce, Reuse &Recycle) and Tree plantation.
Resource efficiencies and cleaner production(RECP) such as; Good Housekeeping, switching off what is not being used, repairing what needs reparation on time, keeping the workplace organised and clean, minimising and managing inventory, and confirming the right way for all tasks can reduce the cost a lot.
There are some Business Cases to encourage the private sector. Reduction of packing waste in Myanmar, reducing tire building bladders waste by root cause findings and 3Cs approach. About 502 Automotive Industries in Thailand have reduced their expenditure. Seven Waste Elimination Projects in India worked for resource efficiency and waste management and adopted a recycling policy.
Behaviour change and mindset are one of the needs. Cultural change, education from early school years, and skill and capacity development can help a lot.
About 98 per cent of the enterprises are small in the country and thus need help understanding or understanding their supply chain rightly; also, in our country, linkage development between cottage-Micro-Small-Medium and Large has not happened, which is a key to sustaining. Thus Supply Chain cannot be correctly devised. There should be more importance on supply change management.
Germany they have prepared a Supply Chain Management Act. In the future, ESG will become a report like an Audit Report. In future Joint Ventures, Foreign Investment may require a sustainability report. It will help achieve SDG targets also. The EU CMRD (Carcinogens, Mutagens) has taken the initiative to make sustainability reporting mandatory for those companies with more than 250 employees and a turnover of more than USD 40 million. Big companies need to keep their businesses afloat.
Large industries (e.g. Grameen) want to keep their activities within their core competence- no Ad hoc priority. They know their supply chain and prefer to stay within that; however, what is possible for large corporations may be much more difficult for small entrepreneurs.
Engagement of the private sector in implementing SDGs needs to understand the convergence between market priorities and sustainable development. The private sector still is not serious about managing waste, transport accessibility and air quality.
ESG is a priority now. To ensure market access, we need to know how to prepare Sustainability Report. Despite its awareness of the SDG issues, the private sector lacks an institutional framework, unlike the public sector entities.
Skills development, work engagement, accommodating green technology, and quality education for diversified jobs are coming up for the need of business sectors. E-waste is a growing problem. Bangladesh is one of the most severe sufferer countries from plastic waste. Manufacturers believe they are not responsible for plastic pollution, so close collaboration between the public and private sectors is essential to address plastic pollution in the country.
Over and above, technology to transform production structures, adopt new business models and innovate ways will identify new sectors. In contrast, the public sector needs to define tax structure, formulate regulations, and provide incentives to make the private sector competitive.
The writer is CEO of BUILD a Public Private Dialogue Platform. She can be contacted at ceo@buildbd.org
