Under the listing rules of the Johannesburg Stock Exchange (JSA), South African companies listed on the exchange have for a number of years been required to produce, on a 'comply or explain' basis, an integrated report following the King Report on Governance for South Africa and the King Code of Governance Principles ('King III') developed by the Integrated Reporting Committee (IRC) of South Africa. In March 2014, the IRC also endorsed the International Integrated Reporting Framework, issued in December 2013 by the International Integrated Reporting Council (IIRC), as guidance on good practice on how to prepare an integrated report. The purpose of the survey now published by SAICA was to distil a perspective on the current state of integrated thinking practice in South Africa. At the same time it offers insights into how integrated thinking gains traction in a jurisdiction that has been practising integrated reporting for several years.
The survey shows that:
- more than 70% of respondents believe that integrated reporting has been a driver of integrated thinking;
- more than 70% are convinced that integrated thinking has improved decision-making at the management as well as at the board level;
- more than 65% state that integrated thinking has helped organisations to develop a more cohesive approach to reporting;
- more than 70% see that integrated thinking has increased the quality of organisations' dialogue with providers of financial capital and other stakeholders; and
- more than 70% expect that organisations will derive further benefits in the short, medium and long term from integrated thinking.
However, the survey results also show that to date few organisations seem to be using the capitals model outlined in the IIRC Framework to identify and manage their capitals and do not use special tools to measure or manage the impact that capitals have on the business, or on each other, or to enhance integrated thinking, even though there does seem to be an awareness of the six capitals and that these contribute to the value creation process. The authors conclude:
This project has highlighted that many aspects of integrated thinking are not yet understood. Much research and development is needed to guide organisations on the road they must travel to integrated thinking and its consequent reporting. Looking to the future, we believe that organisations will increasingly recognise the significant benefits of integrated thinking to enhance their competitiveness and support their sustainability from all perspectives.
Please click to access the full report on the SAICA website.