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Gender and sustainability

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The mining industry in Africa is attracting more and more women. Organisations with higher levels of diversity, and with more female employees, particularly in executive teams, are generally better able to innovate, attract top talent, improve their customer orientation, enhance employee satisfaction, access more wide-ranging networks, and secure their licence to operate. Image credit: Leon Louw for WhyAfrica

Gender and sustainability 

Before we delve into the importance of ESG Gender standards, it is useful to understand the legal framework in South Africa (as an example) on gender.   

By Lili Nupen, Minnette Le Roux and Dominic Varrie from NSDV

The South African constitution’s over-arching mandate is to achieve equality and the advancement of human rights and freedom.

So how does South African legislation achieve equality?

One of the pivotal Acts which regulates gender diversity in the workplace in South Africa is the Employment Equity Act, 1998. The Act provides for several measures that encourage and enforce the promotion of gender diversity in the workplace. One important feature of the Act is the requirement for employers to prepare and implement an employment equity plan.

This plan is informed by an analysis conducted with a view to identifying employment barriers which adversely affect people from designated groups, one being women.

Employers are held accountable as the Act requires that designated employers must report to the Director General of the Department of Labour on progress made in implementing its employment equity plan. The Act further requires “every designated employer to implement affirmative action measures, including measures designed to further diversity in the work­place based on equal dignity and respect of all people.”

Corporate governance in South Africa has a gender framework (Gender and sustainability)

The King IV Report on Corporate Governance for South Africa and the Johannesburg Stock Exchange listing requirements form the basis of the South African corporate governance framework for the promotion of gender diversity at Board level.

The JSE listing requirements require listed entities to have a policy in place on the promotion of broader diversity at Board level, focusing on, amongst other things, the promotion of gender diversity. Listed entities are held accountable for the implementation of these policies as they are required to report to shareholders in their annual report how this diversity policy has been considered and applied in the nomination and appointment of directors.

Although parts of it have been declared only policy by the High Court, the Mining Charter, 2018, also refers to various requirements for the inclusion of women at various management levels within a mining company, as well as certain points being allocated in the procurement chain for services provided by women-owned companies.

Where do ESG standards fit in? (Gender and sustainability)

In June 2022, the JSE released a document titled “JSE Sustainability Disclosure Guidance” and is intended to be used as a guide for JSE listed companies on the best practice with respect to ESG disclosures.

The JSE Guidance Document highlights that gender in ESG standards is prominent, especially in the Social Disclosure Metrices, where labour standards and community development factors are reported on.

The JSE Guidance Document’s rationale for the inclusion of gender in the Social Disclosure Metrices is mentioned under the:

  • ‘diversity and inclusion’ requirements as: “[o]rganisations with higher levels of diversity, particularly within executive teams, are generally better able to innovate, attract top talent, improve their customer orientation, enhance employee satisfaction, access more wide ranging networks, and secure their licence to operate”;
  • ‘wage level and living wage’ requirements as: “[a] wide gap between the highest-paid individual and the median reinforces inequality and could impede long-term value creation. Disclosure provides greater insight into how organisations are spending on top-management, their basis for doing so, and the opportunity costs that might impact their performance”;
  • ‘characteristics of employees and workers in workforce’ requirements as: “[t]his provides insight into the organisation’s approach to employment, including the nature of impacts arising from its employment practices, to provide contextual information that aids an understanding of the information reported in other disclosures” and
  • ‘employment and wealth creation’ requirements as: “[e]mployment and job creation are key drivers of economic growth, dignity and prosperity. The metrics provide a basic indication of an organisation’s capacity to attract diverse talent, which is key to innovate new products and services. Employee turnover may serve as an indication of employee satisfaction or dissatisfaction and potential unfairness in the workplace.”

Gender further appears in the Governance Disclosure Metrics related to Board composition. The JSE Guidance Document specifies that the rationale for including gender in Board composition is that “[t]he capabilities and perspectives of board members are important for making robust decisions. This disclosure captures a variety of important dimensions relating to composition, going beyond a single metric, and emphasises competencies relating to economic, environmental, and social topics.”

Why companies should not overlook gender in ESG (Gender and sustainability) 

Research conducted by, Morgan Stanley Capital International’s World Women’s Leadership Index in October 2022, shows that companies with at least one female director had higher human-capital-management performance than those without any female directors (4.34 vs. 3.67 on a 0-10 scale). The difference was even greater at companies that had at least three female directors or 30% women on the board reaching a scale of 4.66.

S&P Global Market Intelligence’s study called “When Women Lead, Firms Win” published in 2019 found that “firms with female Chief Financial Officers are more profitable and have produced superior stock price performance compared to the market average. The research also showed that firms with high gender diversity on their board of directors have been more profitable and larger than firms with less gender diversity”.

According to the Institutional Shareholder Services ESG research from 2021 “Countries with a higher share of women participating in politics also tend to have a higher ESG rating score”.

A report dated 2022 by McKinsey & Company called “Women in the Workplace 2022” found that research shows a link between diversity and company financial performance and that a greater proportion of women and a more mixed ethnic and cultural composition in the leadership of large companies, is linked to profitability.

Similarly, Natural HR Limited’s “10 reasons why the world needs more women in leadership roles” study indicate that “the companies that boast a higher representation of women on their boards outperform the organisations that don’t by a notable degree” and “companies with greater gender diversity, not just within their workforce but directly among senior leaders, are significantly more profitable than those without”.

Lili Nupen is the Director and Co-Founder of the boutique law firm NSDV, Minnette Le Roux is an Environmental Specialist at NSDV and Dominic Varrie is a candidate attorney at NSDV

Gender and sustainability

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Gender and sustainability

 

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