ArcelorMittal's green claim belies black mark with the law
October 5, 2007
ArcelorMittal South Africa's website boasts that the company's ISO14001 certification is in recognition of its "world-class environmental management systems" - this from the only corporate in the country that faces a criminal investigation by the Green Scorpions for repeatedly ignoring instructions from authorities to stop dumping hazardous waste on an unpermitted site at its Vereeniging plant.
Does this sound like a firm certified under an environmental management standard that requires it to strive for continuous improvement?
There is understood to be ongoing debate about whether the ISO14001 standard should insist that businesses comply fully with environmental regulations - and thereby exclude more companies - or whether it should rather bring on board more companies by encouraging them to move towards compliance.
Yet even the latter approach raises serious questions about whether ArcelorMittal has in place the processes to move it towards environmental compliance.
If these processes were in place, why did the company fail to lodge audit reports? Why did it conduct activities without the required environmental authorisations?
And, most importantly, why did it ignore instructions to stop dumping hazardous waste?
These allegations are among the findings of the Green Scorpions after an inspection at ArcelorMittal's Vereeniging site earlier this year.
ArcelorMittal is one of several companies that are being inspected by the Green Scorpions in what amounts to be the first attempt by the state to enforce compliance with environmental laws.
Serious transgressions have also been uncovered at Highveld Steel & Vanadium, and Assmang - which both also have ISO14001 status.
There is no doubt that further transgressors will be identified as the inspections continue - and there is every chance they too will have ISO14001 certification.
The issue raises questions not only about the effectiveness of ISO14001 but also about the role of bodies that carry out the certification work - and are paid by companies for the work they carry out.
KHULA: It's all well and good for this small business development agency to tell us it disbursed R746 million to small businesses in the 2006/07 financial year, but to allow us to properly assess the efficacy of the financier, it should give statistics on the success or failure of businesses that benefit from its loans.
Khula chose only a few select cases (successes, obviously) to highlight what it calls an immensely "positive" year.
It would help if the lender kept a comprehensive record of the performance of all the small businesses that get its loans. The amounts of the loans do not tell much.
An institution such as Khula should issue a report on how it is transforming the economy.
Indicators that could be used are revenues generated by beneficiary businesses, employment creation, profitability, and the multiplier effect of its loans on the small businesses activities.
It should not avoid talking about its failures as well as its successes. Such a range of data could be helpful for mainstream lending institutions such as banks.
Michael Vacy-Lyle, head of commercial sales at First National Bank, says the lack of such historical information on small entities has been a headache for banks.
Given that Khula's primary goal is development, tracking the success or failure of beneficiary businesses could generate exactly the information the banks are looking for.
Besides, the financier itself has cited the small business sector as the route to engendering entrepreneurial flair. It can develop this sector well if it watches it closely, every step of the way.
CORPORATE DEMOCRACY: News that Charlie McCreevy, the EU's internal market commissioner, has decided to abandon plans to implement a one-share, one-vote system in companies across the region has been greeted with much dismay by institutional investors, not only in the EU but also in the US.
The decision is unlikely to have surprised anybody who attended the International Corporate Governance Network meeting in Cape Town in July. During his address to an audience that included representatives of the most powerful investment institutions from around the globe, McCreevy stated that the results of research showed that shareholder democracy generated no perceptible economic value for companies.
He indicated at that early stage that there was therefore little prospect for action on the shareholder democracy front.
Institutional shareholders at the meeting were evidently disappointed by the commissioner's report. They argued that regardless of the company's perspective, it was important from an investor's perspective that the issue of one share, one vote be aggressively pursued by the authorities.
In the wake of McCreevy's decision, it does now seem that if institutional investors want to see change on this front, they will have to take action themselves.
They are of course in a sufficiently powerful position to do this.
They could use their considerable financial muscle to ensure that shares in "undemocratic" companies trade at a discount.
And presumably this latest development in the EU means there will be little pressure for local companies to adjust their undemocratic voting structures.
With contributions by Ingi Salgado, Tonny Mafu and Ann Crotty
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