The King III Report on Governance in South Africa includes the following statement:
“Sustainability is the primary moral and economic imperative for the 21st century, and it is one of the most important sources of both opportunities and risks for business. Nature, society and business are interconnected in complex ways that need to be understood by decision-makers. Most importantly, current, incremental changes towards sustainability are not sufficient – we need a fundamental shift in the way companies and directors act and organize themselves”.
Do you agree with this statement? Please provide a clear justification of your answer. In doing so, please ensure that you identify and respond to the main implications of this statement.
UCT GSB MBA Modular 2011/2012
Exam Number: 746
The Risks and Opportunities Associated with Integrated Reporting and Sustainability7
Sustainability from a Societal Perspective10
Sustainability from an Environmental Perspective12
References for Figures15
“Never before in history has there been a greater alignment between the objectives of the international community and those of the business world. Common goals, such as building markets, combating corruption, safeguarding the environment and ensuring social inclusion, have resulted in unprecedented partnerships and openness between business, government, civil society, labour and the United Nations”(United Nations Global Compact, 2008) Introduction
Sustainability is by no means a new concept in the business world, and it has been at the heart of corporate governance from the first inception of the King Report in 1994. This report introduced the institutionalisation of corporate governance principles into South African corporations, and differentiated itself from its counterparts in other countries by going beyond just the financial facets of corporate governance to encourage the practice of good financial, social and environmental practices. The report coincided with the social and political transformational changes within South Africa and therefore made specific recommendations to the context of South Africa (Institute of Directors in Southern Africa, March 2002).
In 2000 South Africa ranked among the top 25 emerging markets in terms of corporate governance, however, “it rated poorly in terms of disclosure and transparency” (CLSA Emerging Markets, October 2000 as cited in Institute of Directors in Southern Africa, March 2002, p. 9). In light of this, The King Committee introduced the Code of Corporate Practices and Conduct in King II, the second King Report on Corporate Governance which addressed the seven characteristics of good corporate governance. King II, was published in 2002.
The King III report, also known as the King Report on Governance for South Africa 2009, came into effect on 1 March 2010 and was established in anticipation of the new Companies Act 2008 and to address the changing landscape in international governance (PWC, 2009). There is a strong focus on sustainability within King III and this is evidenced by its appearance in almost every section of the report. King III, re-confirms the fundamental principle of sustainability which states that businesses do not operate in a vacuum but shape, and are shaped by, the communities and environments in which they operate (All Hail the King III, 2010). King III focuses on specific principles such as corporate citizenship, ethics, sustainability leadership and integration, stakeholder engagement and integrated reporting. Integrated Reporting
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