In fact my favourite comment on transparency of all time was from Telkom, which responded to the Promotion of Access to Information Act by saying: “We believe in the need to know, not the right to know.” Honest, I was there.

But what about investors? They care about transparency, right? Their capital is at risk, so surely they have skin in the game. But they apparently do not care enough about the bottom line to ensure the information they get is in fact true.

So look at the recent report by the Centre for Environmental Rights (CER) on what information companies are providing shareholders on their level of compliance with environmental law. It’s a baseline assessment of 20 listed South African companies with significant environmental impacts that have regularly appeared on the Johannesburg Stock Exchange’s Socially Responsible Investment Index. One of them is Anglo American Platinum

So you will know that recently , Sibanye, a South African mining company, agreed to will pay R1.5-billion up front in cash or shares for the Rustenburg operations owned by Anglo American Platinum (Amplats), an Anglo subsidiary focused on platinum production. Sibanye will also pay Anglo 35% of the mines’ free cash flow over a six-year period, with a minimum amount set at R3-billion,according to the Financial Times.

If you look at the CER report, in 2010 and 2012, Amplats reported in its sustainable development reports on the outcomes of legal reviews and audits, and compliance with conditions applicable to its operations. The 2012 audit of compliance with environmental management programmes at five Amplats’ mines identified that 30% of the conditions of these programmes were not being complied with. The non-compliances involve serious environmental harms, including:

• Failure to adequately separate clean and dirty water systems;
• Incorrect waste management;
• Failure to strip and stockpile topsoil;
• Failure to report to authorities as required by conditions of environmental authorisations;
• Groundwater and surface water around waste rock dumps and tailings dams indicating high concentrations of nitrates, chlorides and sulphates;
• Failure to implement biodiversity and rehabilitation plans at tailings facilities; and
• Failure to carry out concurrent rehabilitation.

The figures reported do show improvement in compliance over the period covered by the audits. But authorisation sets conditions around how an activity must be undertaken, and contraventions of those conditions are criminal offences. So compliance is not a nice to have – it’s a go to jail card, if you don’t get it right. (Well, that raises policing of these conditions – a topic for another day.)

So I guess Sibanye’s shareholders are cool with both a risky move into labour-intensive platinum mines, plus a dodgy compliance record.

In another example, African Rainbow Minerals (ARM) paid fines over a four-year period for commencing listed activities without environmental authorisation on at least seven occasions. The purpose of environmental authorisation is to ensure that impacts are assessed, avoided or mitigated, before the activities are undertaken. Authorisation also sets conditions on how an activity must be undertaken, and contraventions of those conditions are criminal offences. Commencing with a listed activity without environmental authorisation is, again, a criminal offence.

So who are the shareholders, who own this reprehensible lot? Well, in part, you. The Public Investment Corporation (PIC) is one of the top 20 shareholder in ARM. The PIC, a registered financial services provider, is wholly owned by the South African government, with the finance minister as shareholder representative. They invest funds on behalf of public sector entities, based on investment mandates set by each of these clients and approved by the Financial Services Board.

So I guess those people who don’t care about transparency are … you? Well, that’s okay, if you work for the government, it’s just your pension at stake. So, do you care yet? Well, your asset manager is supposed to be making these investments in your behalf, in a rational way. They are maximising shareholder value. So maybe if the returns are good, you shouldn’t worry too much. Right?

Yes and no. It’s one thing if your asset manager is making these decisions in the full knowledge that there is a lack of compliance with environmental laws. The rule then is ‘caveat emptor’ – the one who buys, has to look out for himself. Of course it’s your money, but you get the idea. But what if the reports from the company play down the actual state of compliance? As in Amplats suggesting that it is doing better, but not in fact saying that is breaking the law?

Surely you are being taken for a ride? Now, if you are a Sibanye shareholder, I reckon you have an appetite for risk. But what if you work for local government and have your pension funds invested by the PIC? Shouldn’t the PIC get clear information on regulatory non-compliance by businesses that they invest in? So here’s another question – what is the government doing to ensure transparency in this area? Is it implementing promises around a data portal which will release real time information on environmental law compliance? You know I’m going to say no, right?

But that’s okay. Because apparently, for South African business, battered and on the ropes, transparency is a nice to have, not a need to have. You would think some voluntary proactive commitments around this stuff would be a good idea, and for example, an open data portal which would release information on environmental law compliance would be a good idea? Such an idea has been floating about as an international commitment for South Africa in the so called Open Government Partnership. I have not yet heard business say anything about this. But I also haven’t heard shareholders or asset managers say anything. Because, after all it just your investment, right?

I’m not holding my breath. But if there is an asset manager out there who wants to know how his client’s money is really being managed, start by reading the report. DM