Judges commend report improvements
Companies that take integrated reporting seriously have significantly improved their integrated reports over the past few years.
The panel of judges for this year’s Integrated Reporting Awards commented that the JSE Top 40 category remains an increasingly competitive category with reports of outstanding quality, revealing that the short- to long-term sustainability and value creation was the focus of these integrated reports. The best integrated reporters, said the judges, explained how their integrated thinking process encompasses all the capitals, therefore covering the environment, societal and governance (ESG) elements.
They also commented that the quality of the top integrated reports in the mid-cap category is on par with that of the Top 40 category. Within the mid-cap category, the governance sections incorporated value creation discussions, and diversity targets were well addressed. This category, advised the judges, should continue to focus on providing a balanced perspective within the integrated report: discussing both positive and negative news.
The small-cap reporters, they said, presented good integration of information and the value creation story and the judges remarked this category impressed them this year.
The judges encouraged state-owned entities to consider the fundamentals of integrated thinking and ensure their reports, in turn, include information that stakeholders would like to see, including both their challenges and successes.
The fledgling/AltX category reported well on their risks and strategy, although there remains room for improvement.
The regional category’s integrated reports have made a concerted effort to ensure the golden thread of value creation is woven into the narrative and framed in the context of the SDGs. The judges also noted an increase in the overall quality of reports within the unlisted category, which is impressive. From a public sector perspective, the judges particularly complemented the reporting on strategic objectives and how they’ve been achieved.
Within the NGO category, they encouraged reporters to enhance disclosures regarding risks and opportunities.
There is consensus reports have become more concise and user-friendly, aligning more closely with the requirements of integrated reporting and improving the integration of sustainability issues.
“There is a growing expectation, not only from investors but other stakeholders such as employees and clients, for companies to provide transparent reporting on material issues aligned to international standards as well as the Johannesburg Stock Exchange’s guidance on sustainability and climate disclosures,” says Mike Davis, CFO at Nedbank Group.
Ben Jager, group executive: Financial Control at Implats, says the quality of most integrated reports improves each year as preparers adapt to the new requirements and developments in the integrated reporting arena.
“Companies are doing better at identifying their relevant stakeholders and reporting on the medium- and longer-term impacts, outlooks and strategy when explaining how value is created, preserved or eroded,” he says.
One of the biggest shifts in recent years has been the inclusion of sustainability, ESG and climate change in integrated reports.
Davis explains that ESG information should be linked to the business model and future value creation rather than just added as a separate section in the report. He expects the focus on ESG to increase in the future.
Implats, which is widely regarded as a leader in ESG in the mining and metals industry, has incorporated ESG sustainability metrics and targets into its remunerations strategy. The group has a comprehensive ESG framework in place to guide the development and integration of sustainability principles into its functional strategies, which is, in turn, aligned to its purpose which is to “create a better future” and its vision which is “to be the most valued and responsible metals producer, creating a better future for our stakeholders”.
Jager says the group also has comprehensive people and environmental strategies and mature governance and risk management practices. It’s in the process of developing a social performance strategy.