Hi everyone and welcome to my blog. Here, you will find thoughts and opinions on sustainability, training, product news and whatever else seems apposite at the time.
The big recent event in the sustainability world in South Africa is the release of King III, the timing of which seems appropriate against the backdrop of business failures resulting from the global economic meltdown. In essence, the poor risk management leading to the subprime crises is really just an excellent example of poor corporate governance. It begs the question – what does sustainability really mean?
In this country, sustainability reporting tends to focus a great deal on transformation, the long term success of which is, needless to say, vital for the economic and social future of our country, however, companies seem to shy away from a risk based approach to sustainability, asking and answering fundamental questions around the sustainable future of the business – just for example, does it rely on non-renewable resources? Does it rely on the availability of water? And, for that matter, do its suppliers and customers? What economic or regulatory risks does it face? It would be interesting to follow the effect of the intended National Health Insurance on the Medical Aid Business.
Back to King III, I have summarised, very briefly, for this blog, King III’s chapter on Integrated Sustainability reporting.
King III Principles for Sustainability Reporting
King III contains a short chapter on Integrated Sustainability Reporting. The principles it expound are:
1. Effective communication with stakeholders is essential.
2. Sustainability reporting should be focused on substance over form and should transparently disclose information that is material, relevant, accessible, understandable and comparable with past performance of the company.
3. Sustainability reporting and disclosure should be formalised as part of the Company’s reporting process.
4. Effective reporting should take place at least once a year.
5. Sustainability reporting and disclosure should have independent assurance.
Sustainability management
King III makes the point that sustainability needs to be integral to the management of the company, is central to corporate governance and is therefore a process to be embedded formally in the company. King III’s recognition that governance, sustainability and performance have become inseparable results in the phrase “integrated performance and reporting” being a theme throughout the King III report. Sustainability reporting needs to be a formalised process and not an event in which information is collated and reported on at the end of a financial year. Accordingly, sustainability indicators will need to be regarded as key performance measures to be integrated into strategic planning.
A full discussion paper on the effects of King III on Sustainability Reporting is available, for free, on request. Click here to request it.
Kind regards
Paul Ellis-Smith