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Firms will have to report on HIV/AIDS risks
Liz Clarke. The Mercury. 23 December 2002. Republished courtesy of Independent Newspapers (Pty) Ltd.
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In the light of frightening new evidence that HIV/AIDS deaths and sickness are beginning to bite deep into the commercial heart of the country, listed companies in South Africa will from next year be required to focus on the disclosure of strategies and policies to manage the potential impact of HIV/AIDS on their activities.
In far-reaching attempts to move into a more "transparent" era, it is also likely that companies will have to identify and disclose key business risks on how HIV/AIDS is impacting upon the sustainability of their business.
Deputy CEO of the JSE Securities Exchange, Nicky Newton-King said corporate citizens could no longer afford to ignore the risks that HIV/AIDS raises. "However the response to such risks need to be clear, unalarmist and meaningful."
A "clarifying" letter sent to listed companies this week said while "at this stage" companies would not be asked to disclose the numbers of HIV positive workers or assess financial risks - key markers that could have a negative effect on profits and investment - companies would have to indicate in their annual report the nature and extent of the strategies, plans and policies adopted to address and manage the potential impact of HIV/AIDS on their activities.
At present the JSE listings requirements do not deal with the reporting of HIV/AIDS risks.
Also seen as the first major move towards transparency in business the JSE will invite the top 160 listed companies to participate in a Socially Responsible Investment Index (SRI).
Although not compulsory, many see this as an attempt to promote honest reporting on HIV/AIDS, by example.
Among the initial criteria for joining are likely to be that companies wishing to form part of the SRI Index have policies and practices in place relating to the management of the direct and indirect impact of HIV/AIDS.
One of the major problems companies face is how to audit their books in the light of HIV/AIDS risk management.
Newton-King said the JSE was working together with the South African Institute of Chartered Accountants to investigate ways of assessing HIV/AIDS risks in the future using global reporting models.
Commenting on the new requirements, Wayne Myslik, senior consultant for NMG Levy, one of the country's largest corporate financial consultants, and head of their HIV/AIDS consultant division, said, while it was an "encouraging move" to make business in South Africa more open about HIV/AIDS, the requirements did not go far enough.
"It is our belief that prevalence results linked to financial impact are the two most critical issues. Until those figures are disclosed publicly, there will be a tendency for companies to do the least possible to meet with the new requirements."
He said surveys conducted with the Durban Chamber of Commerce showed that while many companies would be willing to disclose HIV/AIDS prevalence figures when they impacted upon operating costs and employment, this willingness to disclose did not extend to customers markets, suppliers or investors.
Myslik said certain South African companies, particularly foreign owned "have a very good idea" of the HIV/AIDS impact on their business, but these figures are kept strictly behind closed doors.
"Less than 10 percent of listed companies are really doing anything proactive about their HIV positive workforce as for as interventions are concerned," he said, "simply because the true scale of the HIV/AIDS impact on business is not being addressed." |
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