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Jeffrey Gogo Climate Story
THE Zimbabwe Stock Exchange (ZSE) needs to start showing greater commitment towards the environment to satisfy emerging requirements for green growth and keep up with expectations of responsible investors. In their current form, the stock market’s listing regulations – as contained in a 209-page downloadable document from the ZSE website – are broadly vague, where environmental sustainability is concerned.

The regulations neither compel companies to meet certain environmental standards prior to listing nor expect operations to prove, on a continuous basis that they are environmentally sustainable post-listing.

This state of affairs is evident on most stock markets across Africa. But, that’s not an excuse for the ZSE to side-step responsibility for implementing and enforcing regulations that cut corporate pollution.

Climate change demands that the ZSE strengthens its framework of policy and regulation, and deliver improved environmental, economic and social outcomes from well-managed companies.

Some listed firms like those in minerals – Bindura, Falgold, RioZim, Hwange and Lafarge etc – are required by national law (not ZSE) to show that their operations are environmentally sustainable for as long as they are in operation.

They are also open to sporadic, unannounced eco-control assessments by the Environmental Management Agency (EMA), the environment regulator.
A certificate of competence is issued to companies that demonstrate their operations will not harm the environment. What we would like to see is a situation where the ZSE listing rules are reorganised to bound companies, say those in agriculture and food, to take on sophisticated steps to avoid sourcing from suppliers whose produce is not grown sustainably.
Environmental disclosure

The same rules that guide and obligate publicly listed companies to disclose their finances every six months should now be expanded to include environmental disclosure.
Corporates may not need to publish separate statements on the environment.

That can appear on the financials, but with significantly sufficient information highlighting the financial, social and environmental costs and profits of a company’s operations.
Companies should reveal publicly the actions that they are undertaking to minimise environmental damage and build community resilience during a time of changing climates.
As economies around the world turn green, this kind of disclosure is crucial for investment decisions.

Responsible investors are keen to find out what it is that companies are doing to ensure their work does not leave negative impacts in the societies in which they operate.
They are looking for investments that are environmentally, socially and financially sustainable, as equal goals that ought to be achieved simultaneously. Generally, a company’s operations are considered to be environmentally sustainable when its carbon footprint is low; when it prioritises resource use efficiency and when it commits finances to tackling pressing environmental ills among others issues.

Most companies listed on the Zimbabwe Stock Exchange are some of the top polluting industries such as manufacturing, agriculture, property and retail, but do not have concrete plans for controlling environmental degradation. The country’s biggest company by market value, Delta Corporation was fined $5 000 by EMA a few years ago for discharging harmful waste into Harare’s water ways.

In May, Government threatened to shut down dozens of polluting corporates, including quoted entities.
The firms are currently on a reprieve after industry representative body, the Confederation of Zimbabwe Industries asked for more time for its members to put their houses in order.
However, ensuring that the whole private sector has the capacity to adapt to climate change can support the resilience of communities across the country.

By implementing plans that support low-carbon development, listed companies will not only be helping themselves, but also contribute to the development of country-specific strategies and policies in reducing emissions from industrial and economic activity.

There are also other financial benefits for corporates, including higher prices for products originating from a certified eco-friendly firm, access to certified markets and improved access to funding.

Trending theme
Harare stock market analyst, Mr Patrick Serere said that investing in a green future is certainly a trending theme, which has been missing here.
“In Zimbabwe, the investment community has not yet quite embraced this theme practically,” Mr Serere said by email.

“It is paramount that the ZSE authorities or other authoritative bodies set up what is known as an ESG index that only lists and includes companies that satisfy a minimum score with regard to their efforts in Environment, Social and Governance (ESG indicators).

“Then responsible investment funds will allocate more capital to such companies and reward those who go green.”
Zimbabwe Stock Exchange chief executive Mr Alban Chirume failed to respond to questions sent early August, despite his assurances to do so.

In the absence of ZSE regulation, some listed firms have taken on initiatives that promote environmental integrity, but only because it’s for their own good.
“It seems that most listed companies’ approach to environmental awareness/responsibility is aimed at achieving sustainability,” Carla Simleit, equity analyst at IH Securities told me in an interview.

She cited the example of BAT’s afforestation programme, Hippo Valley’s cane re-plantation programme and Border Timbers’ re-plantation programme.
“These programmes are run largely out of necessity for the on-going operations of the respective companies,” Simleit noted.

“As such, companies in the tourism, agriculture and resources sectors tend to pay the most attention to environmental matters and run efficient environmental rehabilitation programmes.”

The STOXX Global ESG Leaders index that Mr Serere spoke of “offers a representation of the leading global companies in terms of environmental, social and governance criteria, based on ESG indicators.”

Making the index are three sub-indices: the STOXX Global ESG Environmental Leaders, the STOXX Global ESG Social Leaders and the STOXX Global ESG Governance Leaders indices.

Admission criteria is guided principally by the UN Global Compact Principles, which encourage businesses to respect a wide range of issues from human rights to corruption and child labour.

However, the Principles place special emphasis on environmental protection.
God is faithful.

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