SA companies lead the way
Corporate governance, integrated reporting are too important to leave to chance, writes Alf James
The Chartered Secretaries Southern Africa (CSSA)/ Johannesburg Stock Exchange (JSE) Integrated Reporting Awards, which took place at Montecasino on November 15, are an integral part of the CSSA’s commitment to promoting good corporate governance and reporting excellence in southern Africa, according to Stephen Sadie, CEO of CSSA.
The awards are the longeststanding reporting awards in SA and have recognised the importance of good corporate reporting since as far back as 1956, when JL Hulett & Sons won the first award. The JSE has been a co-host of the awards for the past 22 years.
The awards contribute to the integrated reporting learning process and offer entrant companies an opportunity for peer-on-peer comparison of their reports, which is important because although strides have been made from a reporting perspective, the International Integrated Reporting Framework is barely four years old.
“The best way for organisations to become skilled at integrated reporting is to be compared with and learn from their peers,” says Sadie.
“One of the hallmarks of the Integrated Reporting Awards is that they cover 10 categories from the Top 40 to NGOs. This means that companies compete against their equals and learn from them, because apples are compared with apples.
“All the judges are from credible institutions and are chosen because of their ability to make the necessary assessments,” says Sadie.
A plus factor in the success of SA’s integrated reporting development, according to Sadie, is the impact of the King 3 and King 4 Reports, which have contributed to local companies being among the global leaders in the integrated reporting process, as well as the JSE being the first stock exchange in the world to require listed companies to produce integrated reports.
“Although King 3 introduced integrated reporting, it has become much more embedded in King 4,” says Sadie. “King 4 endorses the International Framework and promotes integrated thinking and an outcomes-based approach to corporate governance, which emphasises that corporate reporting and corporate governance are intertwined.
“Integrated reporting is a critical aspect of good corporate governance. The governing body has ultimate responsibility for how it reports to stakeholders. A good corporate governance process leads to a good integrated reporting process. King 4’s focus on integrated reporting shows what an essential part of corporate governance it is.
“With the number of governance lapses we seem to be experiencing daily, it is vital that corporate reporting remains at a high level.”
He says with the current downward spiral of corporate governance in state-owned enterprises (SOEs) such as Eskom, SAA, Transnet, Prasa and Denel, it is difficult for such organisations to produce a good integrated report due to a lack of transparency in terms of the issues and problems within the company and how they affect the stakeholders.
“There is a growing need for company secretaries and governance professionals to push back against these trends. The tide seems to be turning as more people speak out against state capture, corruption and poor governance.
“This is why CSSA has launched a public sector governance module, which is our small contribution to improving the training of public sector officials in corporate governance matters. Obviously those who are corrupt know full well what they are doing. But for many other good public servants, there is a need for better training.”
He adds: “Company secretaries, accountants, lawyers, engineers and auditors, are all exposed to suspicious dealings. The ongoing fallout around KPMG illustrates what can happen to companies which neglect their professionalism.
“Corporate governance no longer belongs only to company secretaries but others such as legal counsel, risk managers, compliance officers and financial directors are becoming involved. That is why we have taken the initiative to create a second designation, called the chartered governance professional, to cater for this broader grouping.”
Sadie says there was an overwhelming vote by members worldwide in favour of a second designation at the international Institute’s AGM held in London on October 4.
“However, some companies mistakenly appoint a person as company secretary although they are only tangentially involved in corporate governance instead of it being their core role in the business as a trained professional.
“We have many graduates coming to CSSA to add an extra layer onto their existing qualifications and become fit for purpose in terms of the corporate governance role. Corporate governance and integrated reporting are too important to leave to chance.”