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Reporting of Black Economic Empowerment initiatives by public companies is slowly becoming a reality that needs to be faced.

Why is it important to report on BEE? In the current economic climate in South Africa any company that does not contribute in a substantive manner to BEE will have its sustainability under question. This sustainability issue arose due to the leverage which has a trickle down effect that government has through preferential procurement, licensing and other incentives. When you forecast the future cash flows of a company that does not contribute to BEE, they would be diminishing because the underlying business of the company would be dependant on the level of contribution to BEE relative to the dti or charter targets and also how far ahead of its competitors the company is. Therefore the stakeholders need to be informed on the level of BEE contribution by the company because this would affect the returns on their investment in the company. When one explores the trends on BEE reporting with annual reports there has been great improvement from the early 90s. The initial trend was to put all BEE-related initiatives to the Corporate Social Responsibility (CSR) section of the annual report. During this period BEE was equated with CSR and was not really seen as a business imperative. However in recent times we have seen BEE being dealt with in the main body of the annual report and also getting a prominent positioning with the report. The other trend that is good is the separate sustainability report which highlights the key sustainability issues that a company faces and BEE is one of the issues that gets covered within the report. What is interesting to note is the correlation of the BEE stages (based on Elisabeth Kubler-Ross theory) that the company is in to the quality of the reports that the company produces. The first stage that companies go through when they first encounter BEE is denial. They genuinely do not believe that BEE is applicable to them and therefore do nothing to contribute to BEE. At this stage there is no reporting on BEE. Once the heat of the trickle down effect of BEE descends upon the company they move to the seething stage of anger. Within this stage companies feel a lot of resentment and rage which leads them to believe that BEE is reverse discrimination and that it is an unfair process that is being imposed on them. The level of reporting in this stage is confined to the basic one liners that are required by King II on employment equity and they never venture any further information because in reality not much is done to contribute to BEE. Once the storm in a teacup stage of anger settles the bargaining stage set in with its principle of, What contribution can we make to BEE that will gain us the maximum points on the BEE scorecard with minimum effort? This stage sees companies taking actions such engineering unsustainable BEE deals, appointing more black directors in non-executive positions on their boards, creating BEE subsidiary/joint venture structures that may be fronts, amongst other actions. The key reporting features of this stage is to describe the legal form of the deals but not necessarily the economic substance of the deal and also outline the policies and intentions that will be implemented in the future. There is little information on the actual state of BEE within the company at a particular point in time.

When the stage of bargaining fizzles because the strategies and plans lack substance, the depression stage clouds the company. This usually occurs after the companies have gone through a broad-based rating that evaluates the substance of their initiatives. This is a period where the lessons of sustainable BEE slowly filter to the marrow of the company. The company is in a reporting limbo when as they rehash their intentions to BEE contributions but still no BEE progress gets reported, sometimes the level of reporting on BEE may even be decreased. The final stage is the one of acceptance. This occurs when the company finally gets it and embraces BEE wholeheartedly. The level of reporting reflects congruence between the companys intention, the policies that are articulated internally and externally and the action that is taken to make the companys BEE intention and policy a living reality. The reports at this stage reflect a refreshing honesty and transparency which in turn give the stakeholders an indication of the BEE direction the company is taking. This is a stage where the companys BEE report becomes a record of the footprints it is making in its BEE journey over time.