Corporate Governance Index shows improvement

THE 9th edition of the Institute of Internal Auditors South Africa’s (IIASA) Corporate Governance Index (CGI) report has revealed that in the past two years, organisations have been directing efforts to improve corporate governance ratings as part of their strategic priority objectives.

These efforts have given reason for the country’s 2.9 CGI score in 2022, a slight improvement from 2.8 out of 4 in 2020.

“The credibility and importance of CGI is that it can be viewed as a barometer to measure the state of governance in organisations by rating seven governance dimensions. These include ethics, compliance, leadership, performance, operational risk, external risk and assurance,” the report said.

IIASA CEO Julius Mojapelo said in a media statement that in the past two years, their overall view on corporate governance had improved, and local organisations were “indeed focusing their efforts on improving their corporate governance ratings as part of their key strategic priority objectives”.

The report specifically showed improved results in the agriculture, defence, mining, wholesale and retail sectors. “Positively, these sectors have improved their governance ratings in ethics, leadership, risk and performance in 2022, whereas in previous years they have been rated much lower,” Mojapelo said.

The report also focuses on unethical behaviour, corruption and the protection of whistle-blowers, which are focal points in line with the current governance environment of volatility, uncertainty, complexity and ambiguity that organisations are experiencing and exposed to, he said.

The report identified the top three emerging risks organisations should be aware of, namely: cybersecurity, political interference and fraud detection.

Another concern is political interference, which the Auditor-General has flagged to Parliament.