Some of SA’s top companies are quietly breaking the law

Some of the top companies on the Johannesburg Stock Exchange are flouting environmental laws and not telling their shareholders, according to a study by the Centre for Environmental Rights.
The CER assessed 20 companies listed on the JSE and found that between 2008 and 2014 many of them violated their permits and licences or flouted the law. Examples of violations included toxic spills, unauthorised disposal of hazardous waste, contamination of soil or of ground and surface water, and air pollution.
Yet all the companies had regularly been listed on the JSEās Socially Responsible Investment (SRI) index.
This index, launched in 2004, was intended to identify companies which āintegrate the principles of the triple bottom lineā - environmental, social and economic sustainability. It was designed as a tool for investors, including retirement funds and asset management companies, looking for āsocially responsibleā investments.
But the CER research shows that many of these listed companies also feature on another list - the list of companies against whom the Department of Environmental Affairs has had to take action.
The CER study, Full Disclosure, is based on the departmentās annual National Environmental Compliance and Enforcement Reports, and also on other information published by authorities and reported to parliament, on material from affected communities and civil society and on the companiesā own annual reports. Information on the mining companies is incomplete, the CER warns, because the Department of Mineral Resources and the Department of Water and Sanitation, which are responsible for compliance monitoring and enforcement of environmental and water laws by mining companies, do not publish the results of their work.
The companies assessed are: AECI, African Rainbow Minerals, Anglo American, Anglo American Platinum, Anglo Gold Ashanti, ArcelorMittal South Africa, DRDGold, Exxaro, Goldfields, Harmony Gold, Illovo, Impala, Platinum Mining, Lonmin, Merafe, Mondi, Nampak, PPC, Sappi, Sasol, and Tongaat Hulett. Each company was given a month to respond to the CER findings and all but three - Exxaro, Merafe Resources and Harmony Gold - responded.
Tracey Davies, head of the CERās corporate accountability and transparency programme, said in āall but a few casesā the companies had understated or failed to report breaches of the law in their reports to shareholders. Some were actively misrepresenting levels of compliance to shareholders. Examples included:
Lonmin, one of the best performers in the index in 2014, was guilty of a āsignificantā number of failures to comply with environmental laws and permits. These included a failure to meet air quality permit requirements, repeated violations of dust emission limits, poor water management systems and non-functional sewage systems.
Arcelor Mittal failed to tell shareholders about criminal investigations reported by the Department into its Vanderbijlpark plant and Vereeniging plants.
African Rainbow Minerals failed to respond to questions from the CER about the high number of applications made for authorisation of activities which it had already started. Over four years, says the CER, ARM paid fines for starting activities without environmental authorisation āon at least 7 occasionsā. This is a criminal offence. The Environmental Management inspectors found āsignificant uncontrolled dust emissions, containing heavy metal manganeseā, āserious non-compliance with a hazardous waste site permitā, and āat least one unpermitted waste siteā at ARMās Assmang plant in Cato Ridge - findings which according to ARM CEO Mike Schmidt ādo not, in and of themselves, reveal environmental non-performanceā.
Anglo American Platinum was commended by the CER for the disclosure of environmental issues in its annual reports, but the study found problems at several mines, including incorrect waste management, high concentrations of nitrates, chlorides and sulphates in ground water and surface water, and failure to separate clean and dirty water systems.
DRDGold was found to have been guilty of frequent breaches of environmental laws and permits, including: spills and water pollution caused by burst pipes and breaches and overflows of tailings dams; violation of dust emission levels; conducting of operations without water use licences; failures to rehabilitate environmental damage in accordance with legal obligations.
Harmony Gold was found to have been guilty of āmultipleā unlawful discharges and overflows, and ongoing excessive dust emissions. In addition, Harmony Gold, the CER said, was still denying liability for the costs of dealing with acid mine drainage at an operation it sold to a company which had since gone into liquidation, in spite of the fact that the North Gauteng High Court and the Supreme Court of Appeal found against Harmony Gold, and the Constitutional Court had denied Harmonyās application for leave to appeal. AECIās 2009, 2010 and 2011 company reports disclose several spillages or leakages of chemicals, the CER found, but no serious environmental incidents were reported in the 2012, 2013 or 2014 annual reports. However, the CER notes that an AECI subsidiary, AEL Mining, applied to be allowed to postpone compliance with the new minimum emission standards under the Air Quality Act. The application was submitted on 31 March 2015, almost a year after the deadline - and just before the new standards came into effect in April 2015.
Pretoria Portland Cementās annual reports from 2008 to 2012 failed to mention a number of incidents (55 in 2009) where inspectors found the company to have failed to comply with its permit, or with the law. In early 2015, the Department of Environmental Affairs granted PPCās application for postponement of its obligation to comply with new minimum emission standards under the National Environmental Management: Air Quality Act. The new standards would have been applicable from 1 April 2015, but PPCās exemption enables it to delay compliance until 2020.
Davies said no-one would expect all these companies to have a perfect record, but shareholders and the public should be told about violations; about the consequences of those violations, including the risks for the business; and about what the company was doing to correct the situation.
Major shareholders like asset managers and institutional investors (such as retirement funds) had a responsibility to āgo beyond lip serviceā in enforcing environmental and social criteria, she said. Investors were āfailing to recognise red flagsā in company reports and were not asking enough questions or the right questions.
The way JSE-listed companies were rated as good targets for āsocially responsibleā investment was āwholly inadequateā, Davies said. The bare minimum for qualification on an SRI index should be compliance with the law.
But Corli le Roux, head of SRI index and sustainability at the JSE, said that would be difficult to police.
She said it was not the role of the JSE to enforce environmental or other standards, though it was a concern that some companies did not appear to be transparent with shareholders. āWe will consider meeting with those companies and we will look at the role of the JSE in thatā, she said.
The intention of the index was to āreinforce positive behaviourā, Le Roux said. The JSE did not have the resources to monitor companiesā compliance. When problems were brought to the JSEās attention the JSE would take an āengagement approachā and meet the companies concerned. Where the outcome was not satisfactory companies were downgraded or excluded from the index, she said. She would not say to which companies this had happened. The engagement was confidential, Le Roux said.
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