SA FINDS itself with a mix of the attributes of developed and developing countries. It has a proactive environmental affairs department that has been putting a comprehensive framework for environmental protection in place, while at the same time attempting to balance the need for economic development and social upliftment.

The constitution contains a specific right to environmental protection in its bill of rights in section 24.

It deals with sustainable development by advocating the protection of the environment for the benefit of both present and future generations.

In conjunction with the National Environmental Management Act, the constitution forms the foundation for environmental protection in the country. The act follows the trend in the US and Canada by making liability for environmental pollution or damage a reality.

Section 28 places a specific duty of care on every person to prevent, or mitigate and remedy, environmental damage and pollution.

Any person who is or was responsible for, or directly or indirectly contributed to, pollution can be held liable. Directors are required to exercise due diligence with respect to the effects the company may have on the environment or sustainable development. Failure to do so can result in directors facing personal liability for the harm caused by a company's acts or omissions.

Another important piece of the environmental legislative framework is the Environmental Impact Assessment Regulations. They identify activities that may have a substantial detrimental effect on the environment and therefore require the completion of an impact assessment, and government approval, before taking place.

The regulations give a good indication of the type of projects and industry sectors that involve a high potential environmental risk.

Pollution prevention is dealt with in Section 19 of the National Water Act, which states that if pollution of a water resource occurs, the person who owns, controls, occupies or uses the land on which the activities occurred that caused the pollution is responsible for taking measures to prevent such pollution.

The act provides for joint and several liability any person responsible, who directly or indirectly contributed to the pollution, the owner of the land, or their successor in title, or any person that negligently failed to prevent the situation happening , assumes responsibility.

A range of new acts are expected this year, creating stricter regulatory frameworks in the areas of waste management, air pollution, biodiversity management and mining law. This will be coupled with more inspectors being trained to enhance enforcement of all the legislation.

Environmental risk management has become a norm in many jurisdictions, as organisations grapple with the legal, credit and reputational risks associated with failing to take proactive steps in this area.

The financial services sector has paid particular attention following the spread of lender liability legislation from the US to the rest of the world. A number of actions can be taken to ensure that environmental risk does not affect shareholder value. These include detailed policies and procedures for risk assessments of investment targets, projects and lenders in order to mitigate any possible liability.

This is combined with training and awareness among staff, communication with stakeholders and investors, particularly through reporting, and even the development of specialist "green" or environment related products.

The second King report on corporate governance, released in 2002, has set a new global benchmark for advocating regular board oversight of corporate social responsibility.

Every listed company is advised and encouraged to produce annual social and environmental reports using global reporting initiative guidelines. This growth in reporting globally has been fuelled by increasing calls for transparency following a number of well-documented corporate governance failures, leading for instance to legislation requiring non-financial reporting as a prerequisite to a stock-market listing or obtaining investments from pension funds.

The worldwide growth in sustainable and socially responsible investments, especially international indices such as the Dow Jones SAM world index and the FTSE4Good, has made this investment area a viable and a lucrative option for investors.

Certain jurisdictions, such as the UK and Australia, even require fund managers to disclose the extent to which they take social, environmental and ethical considerations into account in investment decisions.

SA is recognising the opportunities involved in creating sustainable products and services, with corporate law advisers Edward Nathan & Friedland launching the first sustainability index in 2002. The JSE Securities Exchange SA is also in the process of developing a socially responsible investment index.

In addition, the investment community of the developed world has repeatedly indicated that it is looking for socially responsible investment opportunities in emerging markets. SA, as an emerging market with a developed financial sector, would be an ideal entry point, provided its companies are shown to be socially responsible.

There has also been an upward swing in shareholder activism, with demands for strict corporate governance and environmental and social responsibility standards from the organisations they invest in.

This has been coupled with the development of so-called "green" markets, particularly in Europe. SA has not reached this stage as yet, but more consumers are making choices based on or taking into account the environmental, social and ethical performance of organisations.

This has led companies to reassess their social and environmental management, recognising that it is not only an area of moral responsibility but also one that affects corporate identity and reputation and the company's bottom line. By providing proof of good performance in these areas, companies can differentiate themselves from their competition, manage their reputational risk and boost their corporate identity.

A wide range of arguments thus can be raised for the incorporation of sustainability and environmental considerations into the way an organisation operates. SA is beginning to take significant strides in recognising the importance of these issues by enshrining them in legislation and creating new initiatives to showcase their importance, at the same time creating a suitable investment avenue for foreign organisations who wish to put their money into sustainable economies.