Large industrial businesses abuse South Africa’s unemployment crisis to manipulate government when it comes to non-compliance with environmental laws, the Centre for Environmental Rights (CER) claims.
“As soon as compliance issues arise, businesses scream poverty and claim they will have to retrench people if they are forced to comply. The mining sector does that all the time,” says Tracey Davies, head of corporate accountability and transparency at the CER.
“We’re talking about toxic spillages into freshwater systems, sewerage spillages, general ground water pollutions and ongoing serious air pollutions exceeding regulations,” Davies tells Business. “While nobody is denying the benefits these industries bring to the country, that does not mean they should, as a result, be let off the hook,” she says, arguing the cost of environmental compliance is not extreme in the context of company profits.
Investigating the degree to which 20 listed companies complied with environmental legislation between 2008 and 2014, the CER found chronic breaches by the likes of Sasol, ArcelorMittal and African Rainbow Minerals (ARM). Other companies included AECI, Anglo American, Anglo American Platinum, Anglo Gold Ashanti, DRDGold, Exxaro, Goldfields, Harmony Gold, Illovo, Impala Platinum Mining, Lonmin, Merafe, Mondi, Nampak, PPC, Sappi and Tongaat Hulett.
David Constable, CEO of Sasol, denied the synth-fuels giant did not take its environmental obligations seriously. Whenever “a leak or equipment failure” occurred, it is immediately addressed, he said. “Of course we are in close contact with all government authorities and make them aware of it – as we do to our shareholders through annual reports,” Constable said.
Earlier this year, Sasol was granted postponements for compliance regarding several air quality standards. “What this means is that Sasol can continue for at least another five years – and in some cases for at least another 10 years – to emit highly toxic pollutants,” says the CER.
ArcelorMittal CEO Paul O’Flaherty says the department od environmental affairs (DEA’s) findings are based on their own “interpretations and opinions of the relevant legislation, which was never confirmed by an independent third party”.
The CER, however, refutes this: “There is no environmental regulatory system in the world in terms of which a finding by an enforcement official must be confirmed by an independent third party.”
The report says institutional shareholders are not asking enough questions about the environmental compliance of companies they invest in. Davies proposes heftier administrative penalties upfront – as is the case in the US – rather than endless engagement with regulators that pushes out enforcement action indefinitely.
“There’s this crazy idea in the private sector that compliance is a matter of negotiation,” Davies says.
On the up side, she acknowledges for the most part, companies gave very comprehensive responses to the issues raised by the CER. Only Exxaro, Merafe Resources and Harmony Gold failed to respond. Head of the Socially Responsible Investment (SRI) Index at the JSE Corli le Roux said the JSE would consider further discussions with companies mentioned in the report “with the aim to form a view on the role the JSE can play in alleviating stakeholder concerns on corporate transparency”.
Source: Hanna Barry for www.citizen.co.za