Chartered Governance Institute of Southern Africa Integrated Reporting Awards 2022

BusinessDay www.businessday.co.za Thursday 24 November 2022

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INSIGHTS

CGISA INTEGRATED REPORTING AWARDS Sponsored content

Integrated reporting winners a cut above • Awards encourage excellence, writes Lynette Dicey We are proud to lead in corporate reporting and communicate our purpose to all our stakeholders –

to use our fnancial expertise to do good.

Nedbank Group was recognised as the overall winner at the 2022 CGISA Integrated Reporting Awards.

Nedbank Ltd Reg No 1951/000009/06. Licensed nancial services and registered credit provider (NCRCP16).

Creating a better future through the way we do business

edbank is the overall winner of the 2022 Chartered Governance Institute of Southern Africa (CGISA) Integrated Reporting Awards, which recognises and celebrates excellence in integrated reporting.

This has been Nedbank’s year on the integrated reporting front with the bank named the number one company among all JSE-listed companies in various prestigious reporting awards in Southern Africa. The bank also achieved first place at the 2022 EY Excellence in Integrated Reporting Awards and, on the international stage, it was named the global winner for best sustainability reporting in the banking category and runner-up in the best climaterelated reporting (large cap) at the 2022 ESG Investing Reporting Awards.

“These awards demonstrate our ongoing commitment to transparent and high-quality standards of corporate reporting,” says Mike Davis, CFO at Nedbank Group. “Our intention is to inspire the highest quality of corporate reporting industry-wide. In the process we will be playing our part through reporting on delivering our purpose.”

Stephen Sadie, CEO of CGISA, says congratulations must go to Nedbank Group as overall winner. “They have won various categories, such as overall winner, Top 40 and banking sector, 11 times since the inception of these awards in 1956 and have consistently led the pack in integrated reporting.”

Impala Platinum won the Top 40 category. The business is making strides in terms of its

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CGISA CEO Stephen Sadie.

ESG performance and has managed to retain and, in some cases, improve several important external rankings by leading international agencies.

The objective of the CGISA’s Integrated Reporting Awards is to encourage innovation and excellence in integrated reporting across the board and not only in the top-JSE listed companies as more and more organisations adopt an integrated approach to their financial and nonfinancial reporting in order to provide a clearer perspective of their business performance, prospects and impact on stakeholders. Interest in the awards has grown in recent years as more organisations realise that their integrated report is an important and valuable communication tool to key stakeholders.

Property companies are upping their game when it comes to integrated reporting.

This year Redefine Properties took top honours in the mid-cap category, while Attacq won the small-cap category. Pan African Resources won the merit award in the small-cap category.

AfroCentric Investments won the fledgling AltX category with Sea Harvest Group winning the merit award.

Vodacom and Transaction Capital were awarded merit awards in the Top 40 and midcap categories respectively.

The Development Bank of Southern Africa wins the stateowned companies category while the Industrial Development Corporation wins the merit award.

The Auditor General SA wins the public sector category and GEMS receives a merit award.

In the unlisted company category, Fidelity Services takes top honours.

The Institute of Directors wins the NPO category while Cotlands receives a merit award.

The National Social Security Fund of Uganda wins the Regional category while Safaricom wins a merit award.

Established 66 years ago, the awards aim to encourage solid financial and nonfinancial reporting and full disclosure of information to all stakeholders.

They allow organisations to be measured against their peers and offers entities the opportunity to develop and instil sound reporting practices through the valuable feedback provided by a panel of experienced judges.

Sadie says the awards have come a long way since 1956 when they first started.

“The name changed from the Annual Report Awards to the Integrated Reporting Awards in 2012, which reflected the new focus of integrated reporting at the time. We are in the midst of another major upheaval as a CONTINUED ON PAGE 2

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

Mike Davis … expectation. 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 developments in the integrated reporting arena.

“Companies are doing better at identifying their relevant stakeholders and reporting on the medium- and longer-term impacts, outlooks and strategy when explaining how value is created, preserved or eroded,” he says.

One of the biggest shifts in recent years has been the inclusion of sustainability, ESG and climate change in integrated reports.

Davis explains that ESG information should be linked to the business model and future value creation rather than just added as a separate section in the report. He expects the focus on ESG to increase in the future.

Implats, which is widely regarded as a leader in ESG in the mining and metals industry, has incorporated ESG sustainability metrics and targets into its remunerations strategy. The group has a comprehensive ESG framework in place to guide the development and integration of sustainability principles into its functional strategies, which is, in turn, aligned to its purpose which is to “create a better future” and its vision which is “to be the most valued and responsible metals producer, creating a better future for our stakeholders”.

Jager says the group also has comprehensive people and environmental strategies and mature governance and risk management practices. It’s in the process of developing a social performance strategy.

BusinessDay www.businessday.co.za Thursday 24 November 2022

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INSIGHTS: CGISA INTEGRATED REPORTING AWARDS

Latest reports ‘have evolved for the better’ • Companies show how they create a positive impact 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

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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.

“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

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.” 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

Fledgling/AltX winner: AfroCentric Investment Corporation.

Overall Winner: Nedbank Group. 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

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

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

has 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.

“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.”

Top 40 winner: Impala Platinum Holdings.

CONTINUED FROM PAGE 4 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 corporate governance, he adds, go hand in hand. “That is why for 66 years our institute, as a corporate governance professional body, has been running these reporting awards.

At the same time our global body, The Chartered Governance Institute, also serves on the Value Reporting Foundation so we are also involved at a global level.”

He points out these integrated reporting awards took place against the backdrop of COP27, which recently met in Egypt. Speaking at COP27, Antonio Guitterez, secretarygeneral of the United Nations, said: “We are on the highway to hell with our foot on the accelerator.”

That one sentence captures it all, says Sadie. “Our judges have kept up with the times. The judges’ score sheet was updated to include criteria focusing on an entity’s ability to articulate how it integrates environmental, societal and governance (ESG)

elements into its integrated thinking processes and integrated report. It seems that ESG is here to stay and will only increase in importance in the next few years.”

The Integrated Reporting Awards gala dinner was held at the Wanderers Club in Johannesburg. CGISA President Sonia Giuricich welcomed guests to the gala evening and requested companies to take heed of the findings of the Zondo Commission so that the country would never again return to that dark place.

Cas Coovadia, Busa CEO, was the keynote speaker at the gala dinner. Coovadia stressed that companies should claim their space not only because it was morally correct, and not only because the current political architecture was failing to deliver, but because uplifting the society around which business operates was also good for business.

Business was engaging with government to ensure the right steps are taken to solve the current crises that exist in SA, said Coovadia. He pleaded with all South Africans to continue to be vigilant and to hold the structures in power to account so that the changes that citizens would like to see in income inequality, service delivery and growth in the economy are affected. He added that it was incumbent on business to get involved, because while people say that business should stay out of politics, in reality, politics is coming into business.

Acknowledging the partners who have joined CGISA along the way, Sadie says the JSE has co-hosted the awards for the past 25 years while PwC has been the convener of judges for the past 10 years.

SA COMPANIES WERE EARLY MOVERS IN INTEGRATED REPORTING