King's Gambit: The Pioneering Work of Professor Mervyn King on Integrated Reporting (IR) Has Changed Forever How South African Pics Disclose Information to Their Stakeholders. He Reports on the Progress of the Drive to Make IR a Globally Applicable Framework

By Holmes, Lawrie | Financial Management (UK), December 2013 | Go to article overview

King's Gambit: The Pioneering Work of Professor Mervyn King on Integrated Reporting (IR) Has Changed Forever How South African Pics Disclose Information to Their Stakeholders. He Reports on the Progress of the Drive to Make IR a Globally Applicable Framework


Holmes, Lawrie, Financial Management (UK)


The adoption of integrated reporting has continued apace since the formation of the International Integrated Reporting Council (IIRC) in 2010. According to the council, about 1,000 big businesses in 25 countries are following at least some IR principles. But, for its chairman Mervyn King, the ideas that spawned three reports bearing his name predate the IR term by several decades.

"If you go back 20 or 30 years there's always been a part of society calling for a greater understanding of the role of companies," he says. "At the same time the purview of directors has widened to take finance, human, natural, societal, manufactured and intellectual capital into account."

King has had a notable career as an academic, a supreme court judge and a company director in South Africa, yet he rose to wider prominence two decades ago when the Institute of Directors in South Africa asked him to chair a committee to recommend corporate governance principles for businesses in the newly democratised country. The King committee (which he still chairs) published three comprehensive reports--in 1994, 2002 and 2009-endorsing an integrated and inclusive approach to reporting. The significance of the resultant governance blueprint for a nation establishing a new set of values is not lost on those who have seen South Africa become a living model of these values. The 1994 report was the first of its kind in South Africa. King I, as it became known, stressed the need for companies to become responsible members of the societies in which they operated. It advocated an inclusive approach to corporate governance and encouraged the practice of good financial, social, ethical and environmental conduct.

In 2002, when the World Summit on Sustainable Development was held in Johannesburg, King pushed for a revision of the report. The result, King II, added new sections 0n sustainability, risk management and the role of the board.

"By then everyone had realised that the planet was in crisis; that we were using more resources than it was regenerating," he says. "In the report we said that, as a listing requirement, companies must carry out sustainability reporting."

In response, the Johannesburg Stock Exchange (JSE) requested listed companies to comply with these recommendations or to explain their level of non-compliance. King II was quoted regularly in the US Congress in the aftermath of the Enron and WorldCom corporate accounting scandals in the early 2000s. Aspects of the report have been adopted by stock exchanges in the US and several other countries ever since.

In 2006, King was appointed chairman of the committee on governance and oversight that produced a governance code for the United Nations. He also became chairman of the Global Reporting Initiative.

Three's company

The report that was published with further revisions in 2009 as King III became the first ever to call for integrated reporting. The JSE was recognised by the World Federation of Exchanges in 2011 as the best stock-market regulator in the world. Later that year, King received an award of excellence from the World Federation of Exchanges for his work.

"The special thing is that it took into account the interests of all stakeholders," he says of the third report. "It didn't look at the bottom line alone; it looked at the total impact on society, the economy and the environment. We are now at a stage where no collective board thinking can ignore environmental, social and corporate governance issues. This is reflected in the development of sustainability reporting standards."

The IIRC--of which CIMA's CEO, Charles Tilley, is a member and chair of the technical task force--is stepping up its consultation process before it designs a reporting framework that can be applied globally. The committee says that the IR message is spreading through its pilot programme and a process of peer-to-peer learning. …

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