South Africa Pioneers Integrated Reporting
When it comes to corporate governance, South Africa sits at the forefront amongst both emerging and developed countries. Regulatory change can go a long way towards making business more transparent, as Shaun Vorster, Partner at Mazars in Johannesburg has experienced in his home country.
Much of this can be attributed to the King Report on Corporate Governance, a revolutionary code of corporate governance for South African companies first introduced in 1992. Globally recognised as a benchmark for organisational integrity and corporate citizenship, the latest policy development confirms the country’s leadership in this space. In 2009, King III was published with the groundbreaking recommendation requiring integrated reporting and third-party assurance of integrated reports. The Johannesburg Stock Exchange went a step further requiring all listed companies to publish an integrated report on an ‘apply or explain’ basis. Here, Shaun talks about integrated reporting and how sharing experiences can encourage greater understanding of the benefits.
CI: What are the key questions clients most frequently ask on integrated reporting?
SV: I spend a lot of time helping clients understand the idea of integrated reporting and how they can benefit from it. The concept of an integrated report is a concise communication by companies comprising their strategy, governance and business model and detailing how they intend to deliver value in the short medium and long-term. This in turn implies the action of integrated thinking which is the active consideration by an organization of the relationships between departments and capitals. I support my clients by helping them understand what an integrated report entails for them, as well as support them on their integrated reporting journey. Both are connected, yet different. The integrated report is an opportunity for a company to reflect on the progress they have made over a defined period of time, but integrated reporting and integrated thinking is an ongoing process.
Secondly, companies often ask for guidance on how to connect the different dots and processes necessitated by an integrated report. Collecting information between different departments and breaking down internal silos is initially very challenging, but the communication that opens up as a result is very powerful.
CI: Are there any additional beneﬁts for companies who publish an integrated report in South Africa?
SV: From my experience with clients and experts in the integrated reporting fi eld, I think that companies who have embarked on the integrated reporting journey with a fi rm commitment to the process actually got a lot more value than they expected. Management is the stakeholder whom most directly benefit from the process, as integrated reporting encourages discussion between different stakeholders on issues that were not previously being considered. Additionally, if a company really commits to the practice, I believe it creates a perfect opportunity for innovation to happen. Additional value comes from the concept of integrated thinking. The more an organization adopts the idea of integrated thinking, the more the integrated report reflects the activity of an organisation that is more connected to its external and internal environment.
CI: What do you see as your role in assisting clients on their integrated reporting journey?
SV: Part of our role is to get the right thought leadership discussions in place. This starts with being able to share with the audit committee and the Board of Directors what best practice is in terms of mobilising an integrated reporting initiative within their organisation. For example, when integrated reporting was introduced in South Africa, a lot of our clients didn’t understand why they had to do it and it was our responsibility to give them insight into what the value of completing an integrated report is. It was important we explained that integrated reporting is more than just following regulation, it is a method of communicating to stakeholders what your organisation is all about.
The fact that Mazars has also started its own integrated reporting journey and published our first integrated report means we have first-hand experience to share with our clients in implementing the Integrated Reporting framework. It’s important to lead by example.
CI: Looking ahead, how can a deeper understanding of integrated reporting be encouraged?
SV: Helping our clients navigate this relatively new terrain of corporate reporting, whether it is in South Africa or a voluntarily adopted practice elsewhere, is something we take seriously. Since we published our first integrated annual report for the fiscal year 2013/2014, we are now able to share our experience with companies embarking on this journey. So, the great benefits that can be reaped from integrated reporting is something we closely understand at Mazars and are eager to share with our clients.
It is part of our duty to influence our clients in a manner that will encourage them to make the right business decisions. As such, integrated reporting and integrated thinking can only further embed this principle, as experienced by South African companies already.
Shaun Vorster. Partner. Mazars in South Africa.
Further reading on this topic: Mazars’ First Integrated Annual Report