Photo by: Sheeren Widjaja/Moores Rowland Indonesia
This time of year individuals and corporations in Indonesia are enjoying the pleasure of filing their annual taxes. For many larger companies that often includes filing a Sustainability Report on how their business activities affect the environment, and the communities in which they work. Now! Jakarta caught up by email with James Kallman, the CEO of Moores Rowland Indonesia, a company that specialises in tax audits and sustainability reports for individuals and companies large and small, to ask him for some background on corporate sustainability, and the United Nations’ Sustainable Development Goals (SDGs). Adopted by the United Nations in 2015, SDGs are, “a universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity.” What are the relationships between sustainability reports, and the UN’s SDGs?
The UN 2030 Agenda for Sustainable Development has been endorsed to by all Member States and the 17 Sustainable Development Goals are an articulation of that Agenda. It is now well recognized that the Purpose of the Corporation goes well beyond the sole pursuit of profit. In fact, in 2019 the Business Roundtable adopted a new Statement of Purpose of the Corporation declaring that, “…companies should serve not only their shareholders, but also deliver value to their customers, invest in employees, deal fairly with suppliers and support the communities in which they operate.”
This seismic shift makes it all the more important for companies to not only pursue profit and cause no harm (the previous priorities), but instead to also be a source of good. And given this emphasis on “supporting the communities in which they operate”, implied is the responsibility to support the countries in which they and their supply chains operate to meet their responsibilities under the UN SDGs. A well-meaning sustainability agenda, evidenced by a well-articulated Sustainability Report is the minimum expected of companies to “know and show” their care and diligence.
NJ.Why do some companies file sustainability reports and some don’t?
JK. Cost. Doing good and knowing and showing is hard, and many companies just don’t have the embedded systems to understand their impacts and generate this type of comprehensive reporting. Yet what does it mean to be sustainable? Webster’s defines sustainable as “capable of being sustained”. Since its founding in 1955, only around 10% of the Fortune 500 companies maintain that ranking. Could we say that the other 90% were not sustainable? If they do not meet the expectations of their stakeholders, I’d say yes, those 90% were not “capable of being sustained”. I’ve been in this business for over 40 years now and I’ve got to say, show a young person a financial report and a sustainability report that talks about a company’s environmental, social and governance standards and I’d presume to guess that more than 50% of the time, they’d peek through the sustainability report first and as a priority. And young people would prefer to buy products derived from a company that cares about their SDG impacts. I’d say the case is made for sustainability reporting as being essential reporting now and into the future and any company that ignores that, does so at its own peril and continued ability to be sustained!
NJ.How might sustainability reports in Indonesia differ from those say, in the USA?
JK. The simple answer is they shouldn’t. Comparability in reporting ensures that readers of those reports and other stakeholders can look at peer and industry benchmarking. Cream rises to the top, but only if you can see it. For us it is essential that comparable reporting and therefore clear standards are articulated and benchmarked against. This creates a virtuous “race to the top” and it is these types of companies, these competitive organizations that care about their place in the market that we look for, and more and more that investors look for.
NJ.How can the Indonesian government contribute to the implementation of the UN 2030 Agenda for the sustainable development of every country?
JK. Indonesia is so rich in diversity, both natural and human. We have among the largest natural forests and coral reefs, the lungs of the World. The 4th largest human population and among the greatest diversity of plants and animals. The 2030 Agenda is about People and the Planet. How could Indonesia not have a significant role, maybe the most significant? The Government knows this and in my 30+ years in this country that I love, I have seen a sea change in understanding and in global leadership.
NJ. What is a green company, and a green job, and what does the future hold for them?
JK. Our future is a decarbonized future or we have no future to leave our children. As a consequence, more and more, there will be a price to pay for carbon. In the past, going green was a prohibitive cost and not good business. But the cost of renewables has come down and the cost of carbon has and will continue to go up. So you can say, we’ve turned the corner and green is good business.
JK.Corporate sustainability and corporate social responsibility, are they the same?
JK. For me, Corporate Responsibility was an important step along the way to get us to where we are today. While definitions can be debated, there was more of a charitable element to CSR. However, without it, companies would not have the resources that they now have, to address the greater challenges of Corporate Sustainability systems implementation and reporting. CSR gave us a multitude of passionate do gooders that understood the expanding needs of the communities in which their companies operate, and the expectations of all of their various stakeholders. Once maybe a corporate communications outpost, today they have become the rock stars of their companies, vital to make them and keep them sustainable now and long into the future. The ones that will make them and keep them in the top tier of their peer group (and not the 90% that fall by the wayside – see second question above)!
NJ.What is the best way for a company to file a sustainability report?
JK. A couple of important points here. First, in order to prepare a sustainability report, a company needs to understand the environmental, social and governance impacts that it has. Only by understanding their potential impacts, both positive and negative, can a company design a system to manage and report on those impacts. Second, verification. I do believe that 3rd Party assurance on a Company’s Sustainability Report adds value to the company and credibility to the Report. And third, just as there are serious consequences to filing misleading financial reports, more and more regulators will police the veracity of claims made in Sustainability Reporting. In this regard, Exxon is an example and their environmental reporting has been questioned by regulators and the subject of litigation. IDX and OJK are serious about Sustainability Reporting. Expect no less from them!
For more information go to: www.mooresrowland.comalis