Integrated reporting: how JSE listed companies are meeting the corporate reporting transitional challenge in South Africa
Date
2014-01-21
Authors
Gina, Kelebogile
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Abstract
Integrated reporting is a relatively new phenomenon in corporate reporting which
is expected to address the gap between sustainability reporting and financial
reporting. The King Code of Governance for South Africa 2009 (King III)
recommends that a company’s sustainability report and financial report should be
integrated. JSE listed companies are required to either comply with the
recommendations of King III or explain why there are not complying.
The objective of the study was to identify how JSE listed companies apply the
IIRC guiding principles of connectivity of information and conciseness, materiality
and reliability in a manner which elucidates the link between the environmental,
social and governance (ESG) performance and financial performance in their
integrated report. Fourteen in-depth interviews were conducted with a mix of
experts in integrated reporting and preparers of integrated reports. The results
reveal that most preparers of integrated reports find connectivity of information to
be the more challenging of the two principles to apply. Experts in integrated
reporting suggest that the key reason for this difficulty is that the underlying
decision-making processes within companies are not yet integrated because
companies are still operating in silos. It then becomes difficult to force an
integrated report onto a process that is not integrated.
There was consensus among the respondents that an integrated report should
have a strong focus on material issues in order to ensure that the report is
concise. Furthermore, the information contained in the integrated report should be
reliable. There was general concern over the reliability of non-financial data due to
a lack of robust data gathering, processing and monitoring systems over nonfinancial
information. Lastly, most respondents agreed that the Board should
consider both material financial and non-financial factors when making decisions.
Description
MBA thesis
Keywords
Corporate reporting, Integrated reporting