Chartered Governance Institute of Southern Africa Integrated Reporting Awards 2022

INSIGHTS

CGISA INTEGRATED REPORTING AWARDS

Integrated reporting winners a cut above

Judges commend report improvements

Companies that take integrated reporting seriously have significantly improved their integrated reports over the past few years. The panel of judges for this year s Integrated Reporting Awards commented that the JSE Top 40 category remains an increasingly competitive category with reports of outstanding quality, revealing that the short- to long-term sustainability and value creation was the focus of these integrated reports. The best integrated reporters, said the judges, explained how their integrated thinking process encompasses all the capitals, therefore covering the environment, societal and governance (ESG) elements. They also commented that the quality of the top integrated reports in the mid-cap category is on par with that of the Top 40 category. Within the mid-cap category, the governance sections incorporated value creation discussions, and diversity targets were well addressed. This category, advised the judges, should continue to focus on providing a balanced perspective within the integrated report: discussing both positive and negative news

The small-cap reporters, they said, presented good integration of information and the value creation story and the judges remarked this category impressed them this year. The judges encouraged state-owned entities to consider the fundamentals of integrated thinking and ensure their reports, in turn, include information that stakeholders would like to see, including both their challenges and successes. The fledgling/AltX category reported well on their risks and strategy, although there remains

room for improvement

The regional category s integrated reports have made a concerted effort to ensure the golden thread of value creation is woven into the narrative and framed in the context of the SDGs. The judges also noted an increase in the overall quality of reports within the unlisted category, which is impressive From a public sector perspective, the judges particularly complemented the reporting on strategic objectives and how they’ve been achieved. Within the NGO category, they encouraged reporters to enhance disclosures regarding risks and opportunities. There is consensus reports have become more concise and user-friendly, aligning more closely with the requirements of integrated reporting and improving the integration of sustainability issues. There is a growing expectation, not only from investors but other stakeholders such as employees and clients, for companies to provide transparent reporting on material issues aligned to international standards as well as the Johannesburg Stock Exchange s guidance on sustainability and climate

disclosures says Mike Davis, CFO at Nedbank Group. Ben Jager, group executive: Financial Control at Implats, says the quality of most integrated reports improves each year as preparers adapt to the new requirements and

Latest reports ‘have evolved for the better’

• Companies show how they create a positive impact

Mhas traditionally put the integrated report together. However, a growing recognition that the integrated report is the future of corporate reporting and that more comprehensive and meaningful information about all aspects of an organisation s performance, rather than only purely financial information, delivers benefits for both internal and external stakeholders resulted in the firm recruiting an integrated reporting specialist in 2017.

and also to communicate the plans and projects we are implementing on the journey to reach carbon neutrality as well as our interim targets.

ost of this year’s Integrated Reporting Award winners would agree that their integrated reports have evolved over time for the better. Each year, Nedbank builds on the previous year’s integrated report and continuously looks for new ways to enhance its disclosure in line with the principles and requirements of the integrated reporting framework and emerging disclosure requirements, best practice from other companies that excel in key components of integrated reporting, as well as the key discussions the bank has with its shareholders and other stakeholders on their evolving information needs, explains Nedbank Group CFO, Mike Davis. In its 2021 integrated report Nedbank embraced the shift towards digital by designing its report with enhanced digital functionality and readability in mind. It has also made good progress on integrating governance and executive remuneration, demonstrating clear linkages to performance, strategy and the outlook. In addition, it has introduced commitments to the environmental and social aspects of ESG as corporate performance targets for longterm incentive awards. Its latest integrated report includes progress on key sustainability measures such as the bank s energy policy commitments, the sustainabledevelopment actions and investments it has made in support of purpose-led business and its contribution to the United Nations (UN) Sustainable Development Goals (SDGs), employee and client net promoter scores, as well as transformation and diversity metrics, says Davis.

purpose as a strong thread throughout the report, communicating on how we are creating positive impacts for stakeholders and linking it up with the UN s SDGs.

Our integrated report demonstrates how the Nedbank Group is delivering on its purpose which is to use our financial expertise to do good We have incorporated our

Implats group executive for financial control, Ben Jager, says that in earlier years it was challenging for preparers in general to report concisely on the capitals, the trade-offs and the outcomes resulting from the use of these capitals. Understandable, he says, given that many integrated reports are geared towards reporting operational performance and the group structure rather than the capitals.

Implats integrated report has evolved over time, he says. “Connectivity between the various content elements has

improved, specifically the focus on strategy, the business model, risk, governance and stakeholder reporting in the context of the group s purpose of creating a better future.

More recently, he adds, in line with the implementation of the group s emerging sustainability framework, which is informed by and linked to SDGs, there have been positive developments related to disclosures around sustainability and ESG metrics and their impact on valuecreation, including risks and opportunities, strategy, internal key performance indicators, governance and risk.

Jager believes this development is likely to expand in future when the International Sustainability Standards Board exposure drafts on sustainability become effective and local entities more widely adopt voluntary JSE sustainability and disclosure guidance.

For the first time this year

Implats included a climate change report. Jager says the business recognises that climate change is a global challenge requiring businesses to reduce their carbon emissions across the value chain, while ensuring transparent communication and engagement with stakeholders.

The group has made a commitment to reach carbon neutrality by 2050. The climate change report gives us an opportunity to disclose our carbon emissions

Implats operating regions are increasingly exposed to extreme weather events brought on by climate change, he says. At the same time, the auto catalyst market which is related to internal combustion engines for the platinum group metals we produce, faces uncertainty due to the adoption of the electrified drive trains.

“We communicate our understanding of these physical and transition risks in our climate change report, as well as any opportunities associated with these changes. In addition, where applicable, the financial impacts of climate change adaptations and mitigations are disclosed in the report.

At AfroCentric Investment Corporation the finance team

This meant we then had someone with an in-depth knowledge of the trends in the market and the integrated reporting framework which could be applied to our business, says Bongiwe Ncube, GM: Group Financial Reporting at the AfroCentric Group. He says that over the years the business has monitored the Integrated Reporting Awards and analysed the judges report to improve its own reporting. It has also engaged with Deloitte to go through its report and identify areas for improvement.

The biggest challenge in compiling AfroCentric s integrated report, he says, was the time factor involved in collecting all the information to provide a complete picture of the company s performance. Providing a balanced and frank assessment can be a balancing act; you need to showcase success but not be afraid of being frank about areas of concern in terms of performance.”

host of reporting frameworks are consolidating and merging so that we may have one final reporting set of standards. This range of range of reporting standards and bodies has become known as the alphabet soup, he says. South African companies were early movers globally in integrated reporting largely thanks to the drive and perseverance of Mervyn King. However, Sadie says we need to work hard to retain our position, which is why these reporting awards are so important.

Exactly why are the integrated reports of companies so important? One only has to look at the integrated reports of Steinhoff and Tongaat Hulett, to mention two examples, when these companies crashed and lost billions in value. The issues came to a head in the nonrelease of their integrated reports, says Sadie. Integrated reporting and