News in South Africa


News in South Africa

Does Wealth = Health?

Written by: Wessel van den Berg, Sustainability Research and Development Officer

Does being wealthy mean being healthy?

This question led to an important shift in thinking about development in South Africa. It ultimately, I believe, moved us closer to becoming sustainable, as a country.  It was reflected in an important policy document about corporate governance in South Africa, the King II report (King 2002). The latest version of this report, King III,   carried on the trend of encouraging sustainability. I would like to offer a viewpoint on the previous report’s implications, focused on the above question.

 

The question can be asked on various levels. Let’s think about it at the personal level first. It might be assumed that if you have more money you are able to improve the quality of your life and thereby support your own health better. Reflect back on your life and think about times when money was scarce, or times when you had plenty. How did your health compare to your wealth? When you received a pay increase, did you smoke less and eat healthier? If one has an increase in your income it becomes more affordable to contract medical aid or save for unexpected medical costs. It takes willpower to decide to save your money instead of spending on an appliance, for example. It becomes clear that how you spend your money is more important to the overall quality of your health than how much you have. There is an old saying that you can’t eat money.  How you spend it is important for your health. But then the fact can also be recognized that there are more things than money that affect your health, even if you spend it on staying healthy. If your house is next to a factory that blasts out smoke every day your health will be affected. There are many factors beyond our immediate control that impact how healthy we stay. In short, to maintain your health it becomes useful to think about the whole range of relationships you depend on. In addition to your relationship with money your relationship with other people, and with your environment is important.

 

This question can now be taken from the personal to the organizational level. Mervyn King published a report in 2002 that had significant implications for how companies run their business in South Africa. This report is now known as ‘King II’ (King 2002). Amongst other things it engaged with the same question we are considering. On a corporate level the question was phrased in terms of the financial income and expenditure of a company. Did the value of the company, or the health of the company only rest in financial value? The King II report concluded emphatically that it did not.

King II listed three bottom lines on which companies that wish to be listed on the Johannesburg Stock Exchange have to report  . It added two areas of value to the traditional financial bottom line. In addition to being financially healthy, companies now have to show that they add value to the natural environment in the areas in which they are active, and the communities in which they are active. A soft drinks manufacturer, for example, would invest in research and development of ways to save water, to reduce the environmental impact of their operations. They could also sponsor an HIV prevention campaign in the communities from which their staff are drawn, and surrounding their factories. This social investment is often referred to as corporate social investment or CSI. The King II report declared that a company or organization is not healthy, or sustainable, unless it adds value to all three areas: financial, social and environmental. This became known as the ‘Triple Bottom Line’.

A diagram is often used to describe this argument, where three circles overlap, and the triangle, where all three overlap, is then seen as the anchor of sustainability.

See figure 1.

Sustainable Development Figure 2

Figure 1: The triple bottom line of sustainability

The impact these measures had was massive. Companies employed cadres of social investment and environmental impact mitigation managers. Major developments could not go ahead unless an environmental impact assessment had been completed by the developer, and approved by the government as having a minimal or beneficial impact on the environment. It became harder to perpetrate ruthless development that harms the environment and the communities around the developments. Many NGO’s also began to depend on grants disbursed by the CSI department of major corporations, and social investment became one of the pillars of Broad Based Black Economic Empowerment in South Africa. (This has since been named Socio – Economic Development compliance.)

 

As I mentioned I believe this measure moved the corporate governance in South Africa closer to sustainability. It was an important step to get companies to consider the natural environments and the communities their operations impact upon. An unexpected pitfall was however contained in the perspective on sustainability provided by the triple bottom line.

The national strategic framework on sustainable development (Republic of South Africa: Department of Environment and Tourism 2006) highlighted the fact that there is no economy which does not depend on people. There might be very complex transactions happening over electronic and internet based platforms without the direct involvement of people, but ultimately money is a tool used by people. In the triple bottom line, a segment of the financial aspect is seen as separate from the social and environmental aspects. A diagram that might represent reality better would be one where the economy is a smaller circle, completely contained within the social aspect.

The same argument holds for the fact that our complete social system, in other words all of humanity, presently live on this planet. Regardless of our economic or social activity we are dependent on our natural environment. Once again the social system is dependent on the larger natural environment, as opposed to overlapping it. See figure 2.

Sustainable Development Fig.2

Figure 2: Embedded model of dimensions of sustainability

It’s useful to view these circles as dimensions of sustainability. When the word ‘sustainability’ is used, you can immediately place it in the broad categorization of these three areas. Each dimension obviously has specific and more detailed aspects, such as the sustainability of a water resource or a forest in the natural dimension, or the sustainability of a family, or organization in the social dimension, or the sustainability of a company’s income in the financial dimension.

 

Let’s return to the personal. When you think about the future of your household and family, do you invest in the centre, the middle circle or the outer circle of your home? Consider the economic circle in your home. What are the different parts? And the social circle. How sustainable is your family life? Think about the things that reassure you that your family will survive and thrive. There is an important relationship between all three areas, and the sustainability of the whole system depends on this relationship.

 

I believe that the outer circle is often missed in favour of focus on the inner circle. The effects of this focus are now beginning to show. Water is running out. Food is becoming more expensive. Our oil will soon be either finished or unaffordable.

Enabling sustainable community development means in this case that we slowly begin to shift our focus to a wider view of our investments, to include ourselves, the people around us, and the environment we live in.

To return to the question we started with, whether wealth equates to health: I would contend that a healthy environment, a healthy social life and a healthy economy all interact and contribute to wealth and prosperity which is sustainable and would outlast our current narrow focus on money.

 

Join a discussion on this article on  http://olfsd.wordpress.com

 

 

 

 

References

King, M. 2002, King Report on Corporate Governance for South Africa - 2002, Institute of Directors in Southern  Africa, Parktown, South Africa.

Republic of South Africa: Department of Environment and Tourism 2006, Strategic Framework for Sustainable Development in SA, First edn, Government Printer, Pretoria.


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