So often the focus of corporate governance – and the reporting thereon – lies in the processes and committees that have been put in place by companies to ensure good governance. But what of the expectations governance creates and the outcomes it achieves and how are these shared with society?
What I like about the King IV™ Code of Corporate Governance, apart from the fact that it links ethical leadership to effective leadership, is its ultimate objective – sustainable development. King IV™ defines this as “development that meets the needs of the present without compromising the ability of future generations to meet their needs”.
In my view, this statement creates a very clear expectation of organisations applying the Code – that they too will have the same objective at heart, and that they subscribe to a certain will ‘to do good’. As outlined in the Code, the core philosophies on which sustainable development depend echo this sentiment. In fact, they spell out exactly what is required to achieve sustainable development:

• Integrated thinking = Takes account of the connectivity and interdependencies between a range of factors that can affect an organisation’s ability to create value over time.
• The organisation as an integral part of society = Organisations operate in a societal context, which they affect and by which they are affected.
• Stakeholder inclusivity = There is an interdependent relationship between the organisation and its stakeholders, and the organisation’s ability to create value for itself depends on its ability to create value for others. An organisation becomes attuned to the opportunities and challenges posed by the triple context in which it operates by having regard to the needs, interests and expectations of material stakeholders.
• Corporate citizenship = As the organisation is an integral part of society, it has corporate citizenship status. This status confers rights, obligations and responsibilities on the organisation towards society and the natural environment on which society depends.

Many will say that listed entities in South Africa already apply these philosophies, and that this has been practice for many years, given the principles introduced by the first King Code way back in ’94. And, of course, this will be evident if you attend AGMs, read company websites, annual reports, sustainability reports, or integrated reports. Or if you’re a shareholder receiving dividends. Or if you’re an employee, receiving training and other benefits. Or if you’re a charity that has benefitted from donations or corporate sponsorship in some way. I’m not denying this is all good stuff. After all, South Africa has been acknowledged as a global leader in corporate governance for some time now.

However, if listed companies are sincere about their governance efforts, and support the Code’s aspirations to achieve a move away from a ‘box-ticking’ exercise to a mindful application of corporate governance principles, and from a mindset of grudge compliance to an appreciation of the true value-add that they stand to benefit from when applying corporate governance as outlined in the Code, then they really should be considering corporate governance as an ongoing conversation between themselves and their many and varied stakeholders.
After all, in creating an expectation, i.e. “a belief that something will happen or is likely to happen; a feeling or belief about how successful, good, etc., someone or something will be”, is it still good enough to report back to society once or twice a year in a report or via a website on how governance is working?
In my view, in an age of 24/7 instant commentary via social media, and a culture of diminishing trust, organisations ought to be thinking about innovative ways to meaningfully connect to the world in which they operate, and share information on their corporate governance outcomes honestly and openly. After all, aren’t we all stakeholders by the very definition of the Code?

By Deborah Chapman

Owner, All About The Client Communications Pty Ltd