“It is good business to run a company as a responsible corporate citizen,” says King committee on corporate governance chairman Mervyn King.

With the introduction of triple bottom line reporting in the late 1990s, stakeholders found a new way to review an organisation’s economic, environmental and social effects.

King says stakeholders want forward-looking information to help them make more informed decisions on the true economic value of a company . King says the committee’s third report on corporate governance will expand on sustainability issues.

He says companies need to provide information in annual financial statements about the effects of the business on the economic life of the communities in which they operate . This will enable stakeholders to assess a company’s sustainability.

King says companies have become greater agents for change than governments, and directors and senior executives are increasingly aware that a company’s activities have a huge effect on the planet.

Shareholders hold more power than they realise. Shareholders of large groups are no longer wealthy families, but financial institutions and pension funds , making investors in these funds and groups the ultimate shareholders .

Employees as pension fund members hold tremendous sway. They provide capital to the company and consume the product or service produced by the company. “That person can elect to buy a biodegradable detergent rather than one that is not and continues to pollute the waters of the world,” King says.

Groups such as Procter & Gamble are developing consumer products designed to be less harmful to the planet, such as biodegradable disposable nappies. The company also wants a “carbon footprint” from its suppliers as to what they are doing for the environment.

In SA, Tiger Brands, producer of Albany bread, launched biodegradable plastic packaging for all its bread products.

King says that only 14% of the price of Coca-Cola on the New York Stock Exchange is made up of its tangible assets. The rest is made up of intangible assets such as goodwill, brand, quality of management, quality of its governance and reputation.

King says it is vital for financial institutions to support environmentally sustainable business activities.

Governments should think of granting tax concessions to companies involved in sustainability operations, King says.

He will speak on some of these issues at the International Finance Summit in Cape Town at the end of the month.