Is the most transformative perspective the one you don't have? - Excellence in Integrated Reporting 2021
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Is the most
transformative
perspective the one
you don’t have?
Excellence in Integrated Reporting 2021
Purpose of the 2021 EY Excellence in Integrated Reporting survey Virtual workshop
The purpose of the survey is to encourage and benchmark standards of excellence in the quality of The Excellence in Integrated Reporting workshop will
integrated reporting to investors and other stakeholders in South Africa’s listed company sector. be held as a virtual event this year, due to the social
distancing regulations in place. During the workshop
Over the years it became clear that financial Contact we will:
statements on their own did not tell the whole For more information on this survey, contact
story of a company’s performance. Companies Larissa Clark, IFRS Desk Leader, EY Africa at • Provide an overview of the 2021 EY Excellence in
therefore started reporting on their environmental larissa.clark@za.ey.com. Integrated Reporting survey results;
impacts, employee-related issues and corporate
social responsibility issues in a separate report Disclaimer • Discuss positive and negative trends in integrated
often referred to as a sustainability report, which The survey findings and rankings of the reporting;
accompanies the financial information distributed integrated reports have been independently
to shareholders. prepared by the three adjudicators with • Highlight examples of leading practice, to assist
affiliations to the University of Cape Town companies to prepare their next integrated report;
Since 2010, all companies listed on the (UCT), comprising Professors Alexandra Watson
Johannesburg Stock Exchange (JSE) have been (Emeritus Professor), Goolam Modack (College of • Reflect on how companies should deal with the on-
required to produce an integrated report in line Accounting) and Mark Graham (Graduate School going socio-economic effects of COVID-19 and the
with King III. This requirement has been carried of Business). Accordingly, the survey findings and recent unrest in SA in their integrated reports; and
forward to King IV, effective for financial years ranking of the integrated reports are the views of
commencing on or after 1 April 2017. In addition, the adjudicators. • Consider the requirements of the revised
the JSE requires application and disclosure of International Framework, published in 2021.
King IV in any report lodged with them after The other material has been prepared for general
1 October 2017. information purposes only and is not intended Date: Wednesday 29 September 2021 at 3pm with
to be relied on as accounting, tax or other a replay on Tuesday 5 October at 10am.
EY has been commissioning the Excellence in professional advice. Please refer to your advisors
Integrated Reporting survey for the last ten years for specific advice. Please contact eyreportingupdates@za.ey.com
in order to encourage excellence in the quality
of integrated reporting to investors and other For more information please visit: ey.com/en_za
stakeholders by South Africa’s top companies. Follow us on Twitter: @EY_Africa
B | Excellence in Integrated Reporting 2021
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D | Excellence in Integrated Reporting 2021
Contents
Contents
02 Introduction 14 Top 10 companies
03 Leading with purpose – Reset for growth 17 Overall impressions at a glance
04 Reimagining a purpose-led growth 19 2021 Adjudicators’ observations and
strategy overall performance
06 Integrated reporting – time to refocus? 23 The mark plan at a glance
08 Towards international sustainability 24 The mark plan and adjudication process
standards
26 About the adjudicators
10 10 Years of integrated reporting in
South Africa
27 How can EY help?
12 2021 Rankings
1 | Excellence in Integrated Reporting 2021
Introduction
2020 will always be remembered as the year that brought us opportunity to revisit their strategies, to create sustainable We are joined on this critical journey by the University of
the COVID-19 pandemic. Office based employees were turned and long-term value. We explore the five critical ingredients in Cape Town’s College of Accounting, as we track and evaluate
into Zoom and MS Teams experts overnight as gatherings formulating a purpose-led, long-term value strategy (page 4). the efforts by the Top 100 JSE listed companies to explain
were halted, international supply chains were disrupted, the value that they create over the short, medium and
This has not only been a year of unprecedented economic
and international travel was restricted. As the COVID-19 long-term. This survey is made possible by the continued
uncertainty due to the pandemic and the recent South African
pandemic spread to all corners of the world, our companies, involvement and dedicated efforts of Professors Alex Watson,
civil unrest; we have also seen unprecedented developments
industries and wider economy were severely impacted. It was Mark Graham and Goolam Modack, the panel of independent
on the reporting front. In April 2021, the Trustees of the
challenging for most companies to deal with the immediate adjudicators from the College of Accounting at the University
IFRS Foundation, the oversight body of the International
impact of the pandemic and remain resilient during this time. of Cape Town.
Accounting Standards Board (IASB), published a proposal to
2021 will be remembered as the year of the vaccine. As more amend the IFRS Foundation Constitution to accommodate It is our great pleasure to congratulate Redefine Properties
vaccines become available and vaccination rates in South the formation and operation of an International Sustainability for achieving first place in our 2021 awards. As you will read
Africa start to increase, we are optimistic that restrictions will Standards Board (ISSB). This will pave the way for a global further on in this report, the judges felt Redefine’s report
soon be lifted. In some parts of the world, people are slowly suite of sustainability standards under the banner of the is attractive, well laid out and easy to read. The strategic
returning to their offices, restrictions on travel are being lifted IASB. We have included an interview with James Luke, overview, the integrated stakeholder engagement and the
and sporting events are allowing spectators. IFRS Desk, EY Africa and member of the IASB Foundation’s use of capitals to explain the group’s value creation story are
Advisory Council, on these important developments and what examples of excellent disclosures that demonstrate integrated
2021 also brought South Africans other unique challenges
they mean for South African reporters. We have also asked thinking within the group. The section of the governance
as we saw widespread civil unrest and looting during July.
Alex Watson, Professor Emeritus, University of Cape Town, report that shows how the board considers material matters
The reactions to these events were as varied as the reasons
to share her perspective on the purpose of South African to ensure the achievement of the group’s strategic objectives
therefor. At the same time, it was a powerful reminder of the
integrated reports and whether our integrated reports are still and desired governance outcomes can be considered best
importance of building an inclusive economy and society. Ajen
fit for purpose. practice.
Sita, our Africa CEO, considers the importance of entities
having a clearly defined purpose and focussing on long-term This is the tenth year that we have commissioned the We also congratulate Nedbank Group and Kumba Iron
value creation (see page 3). Excellence in Integrated Reporting survey and awards. As we Ore on achieving second and third place respectively. Our
reflect on this important milestone, we have included some congratulations are extended to all the entities included in
Adversity, such as what South African companies have had
comments on the journey so far and the trends that we have the Top 10 for their outstanding reports. We commend the
to deal with over the past 2 years, creates an opportunity to
seen (see page 10). We believe that in times of unprecedented entities that achieved the rankings of “Excellent” and “Good”
revisit and reimagine our business strategies. As economies
economic uncertainty it is more important than ever to for their efforts and the examples they have set.
start to open up again and business can operate in a manner
encourage companies to report in a transparent and balanced
similar to that of the pre-pandemic era, it is important to For more details on how the companies were selected, the
way. EY is committed to continue the quest for excellence in
recognise that a growth strategy cannot be based on the mark plan and the adjudicators, please refer to page 23.
integrated reporting. We hope that companies will be both
same assumptions and principles as before. It will not be a
inspired and encouraged by those who have set the bar high
return to business as it once was. Businesses should use this
to improve the quality of their integrated reports.
2 | Excellence in Integrated Reporting 2021
Embracing uncertainty
Leading with purpose – Reset for growth
As the business environment around the world evolved during the pandemic, so well as their positioning. An increasingly informed group of consumers, customers
have CEO priorities and the need for leaders to initiate a strategic reset. To put their and stakeholders know the type of organisations they want to associate with
businesses back on a growth trajectory, entities need to re-evaluate their purpose. and those are purpose-led businesses who reflect strong hopes, ambitions, and
There is an ongoing shift from the view that the primary purpose of companies is to aspirations.
enhance and protect value for shareholders, to the view that corporations should
understand and address the needs of their broader stakeholders and in doing so Adversity has created opportunity. Companies need to use this opportunity to
create long-term sustainable value. evaluate, re-set and implement their strategies in double quick time. We look
forward to working with the business community and other stakeholders to create
The shift to a focus on long-term value is an important one. It is a focus away long-term value.
“
from short-term profit-making to long-term value creation. But more than that it
is a focus on creating value for customers, employees, and society as a whole and
not simply maximising shareholder’s value. It recognises that there is a disconnect
between the traditional net asset value of an entity and the value that an entity
creates which includes the non-financial metrics, such as customer relationships, Purpose helps everyone who deals with the company to
intellectual capital, and competitive advantages. There is no doubt that progress understand what the organisation actually stands for
has been made but there is more work to do. Looking at our own 2021 Excellence
in Integrated Reporting survey showed us that 48 of the 100 companies reviewed
and against, who they are, their values as well as their
have made a serious attempt at producing an integrated report that focusses on positioning.
long-term value. The other 52 have not.
So, if we are to reset our strategy, what do companies need to consider?
Companies that thrive, do so because their leaders understand that investing in
a broader set of stakeholder considerations will have a considerable impact on
their ability to attract capital; their ability to attract top talent as well as drive the
sustainability of their businesses. This is a long-term value approach to building a Ajen Sita
growth strategy. The challenge is to move beyond the short-term financial reporting Chief Executive Officer, EY Africa
bias towards drivers of long-term value.
Long term value starts with a clear sense of purpose. The formulation of an entity’s
purpose is an aspirational or unique reason for existing. Where the purpose of
an entity is clearly defined, it will meaningfully inform business decisions and
commitments. Purpose helps everyone who deals with the company to understand
what the organisation actually stands for and against, who they are, their values as
3 | Excellence in Integrated Reporting 2021
Reimagining a purpose-led growth strategy
Reimagining a purpose-led growth strategy
It has been more than a year since the COVID-19 pandemic Sustainability – Sustainability is one of the defining challenges Many studies show that the desire for technological
began. South Africa and many parts of the world are still of our lifetime. It is also the innovation opportunity of a acceleration is one of the most significant drivers of
feeling the impact of the various waves and the unprecedented generation. Entities are increasingly embracing the business transformation. If businesses are to successfully harness
economic lockdown. The recent civil unrest in Kwa-Zulu Natal case for sustainability. Becoming a purpose-driven business technology at speed, they need to upskill and reskill their
and Gauteng has brought further social and economic hardship may require difficult trade-offs as long-term investments are employees. Organisations will also need to create a culture of
to many communities. The consequences of these events will prioritised over short-term profit making. agility and a transformative mindset to be able to successfully
be felt for many years to come. adopt digital transformation.
Businesses that have refocussed their purpose have
At the same time, as vaccines become more freely available experienced some important payoffs. Purpose-driven Trade – Geopolitical tensions and the uncertainty that they
and vaccination rates increase, we are starting to contemplate businesses have employees who are more engaged, committed create are forcing businesses to re-evaluate their operating
life beyond COVID-19. In some parts of the world, economies and motivated. Research has shown that businesses that models. As trade flows and patterns are changing, businesses
and businesses are opening up, people are slowly returning to both define and act with purpose outperform their peers by will need to adapt their strategies to deal with ever changing
their offices and businesses as restrictions on gatherings and 5-7%. This also provides businesses with an opportunity to and unpredictable complexities. The optimisation of supply
international travel are being lifted. differentiate their products, as customers are four times more chains will be critical, not only to ensure resilience in times
likely to buy from businesses with a strong purpose. of instability, but also from an ethical point of view due to
Even in those countries and industries where economies pressures from stakeholders. As economies around the
are beginning to rebound, the pandemic has resulted in Trust – In the post-pandemic era, trust will be a licence to world re-open at different rates, businesses with flexible
an incredibly changed business environment. This is an operate. At a time that trust in governments and institutions trade strategies will be best placed to take advantage of the
opportunity to revisit and reimagine business strategies. But is at an all-time low, the importance of building trust in an opportunities to grow.
a growth strategy in the post-pandemic era cannot be built on increasingly virtual and connected world will be critical to
the same assumptions and principles that drove results in the create long-term value. People want to trust the organisations People – Any purpose-led long-term value strategy will only
pre-pandemic era. It will not be a return to business as it once they buy from, work for and invest in. be successful where people are put front and centre of
was. Businesses should use this opportunity to revisit their everything. Businesses need the right talent to conceptualise
strategies, to create sustainable and long-term value. Technology – The pandemic has given businesses that were and execute a purpose-led strategy – a scarce resource. The
well-positioned to work remotely and function independently most advanced innovations, or cutting-edge technologies, can
In order to create this long-term value, it is important that an of a physical space, a competitive advantage. It has also fail if they lose sight of human values. Leading businesses are
entity has a clear and shared understanding of its purpose. highlighted the fact that we are capable of being far more already reimagining how their people work and where they
This is the reason a business exists – the ‘why’. Its growth flexible and able to work remotely much more extensively work, establishing a new hybrid approach to working. This
strategy should formulate how the entity’s purpose will be than what we thought possible. The pandemic has catapulted will not only manage the transition to the post-pandemic era,
achieved. There are five key elements that will need to be us into the ‘digital first’ era overnight. But the technology but also enable these businesses to allow increasingly flexible
considered in formulating a purpose-led growth strategy. revolution is only just beginning. working arrangements for their employees in the future.
Source: EY – The CEO imperative – Rebound to more sustainable growth
4 | Excellence in Integrated Reporting 2021
Reimagining a purpose-led growth strategy
A purpose-led strategy is the path to long-term value in the post-COVID environment. This is
a strategy built on sustainability, trust, technology, trade and putting people at the centre of
every decision an entity makes. Now is the time to re-evaluate your purpose and strategy and
take advantage of the opportunity to reimagine these to create long-term value.
“
In order to create this long-term value, it is important
that an entity has a clear and shared understanding of
its purpose.
Stephen Ntsoane
Stephen Ntsoane Larissa Clark
Assurance Leader, EY Africa IFRS Desk Leader, EY Africa
5 | Excellence in Integrated Reporting 2021
Integrated reporting – time to refocus?
Integrated reporting – time to refocus?
Ten years after the introduction of integrated reporting in South Africa, as monetary amounts, generally prepared in terms of the well documented
are our integrated reports serving their purpose and continuing to lead, and widely applied International Financial Reporting Standards (IFRS)
or at least follow, global best practice in integrated reporting? This is a and their purpose is well understood. Financial statements may include
difficult question to answer at this point when the purpose of corporate climate related issues to the extent that they create risks that for
reporting is being reconsidered, globally. As we mark ten years of example impact discount rates used for impairment calculations,
integrated reporting in South Africa, it is a good time to reflect on what provision for carbon taxes etc. Reporting is then expanded to
the purpose of integrated reporting in South Africa is and whether we include those sustainability matters that have the potential
need to refocus our efforts. to create or diminish enterprise value in the future and that
investors may factor into investor and shareholder voting
South African companies rushed into integrated reporting in 2010, whilst decisions – the enterprise value approach. Reporting can
the adoption in the rest of the world has been slower, possibly allowing then be expanded even further to include the economic,
preparers to benefit from the learnings of early adopters and developments environmental, and social impacts that are not captured by
in reporting requirements. In South Africa the purpose and consistency enterprise value. That gives rise to sustainability reporting,
of application of the International Framework has varied between which is multi-stakeholder focused and relevant for
reporting entities – 30 of the 100 reports included in this survey state that assessing sustainable development impacts.
their integrated report is aimed at a variety of stakeholders, whereas 25
of the reports state that their report is primarily aimed at the providers ‘Enterprise value reporting’ is the focus of the newly
of capital1. Recent global developments have provided more clarity on formed (June 2021) Value Reporting Foundation, which
the purpose of different types of reports, and in particular, the distinction has been formed by combining the International Integrated
between reports that focus on enterprise value as opposed to those that Reporting Council (IIRC) and the American Sustainability
focus on the enterprise’s impact on sustainable development. Both issues Accounting Standards Board (SASB). Their emphasis is on
are topical, and relevant, but they are different. A report that tries to enterprise value reporting and how it is created, preserved,
combine both, without focusing on the distinction, runs the risk of not or eroded over time. Integrated reporting is a form of
successfully serving its purpose and, unfortunately, is not uncommon in enterprise value reporting, as is evident from the focus of
South Africa. the integrated report on ‘information available to providers
of financial capital to enable a more efficient and productive
The building block approach to corporate reporting, advocated by the allocation of capital’. Similarly, the focus of the new International
International Federation of Accountants (IFAC), is useful to consider when Sustainability Standards Board will also be on enterprise value2.
assessing whether a report is achieving its purpose. The starting block is the
financial statements which include amounts that are already represented
1
Read more about the results of the survey from page 19 to 22.
2
In April 2021, the Trustees of the IFRS Foundation, the oversight body of the International Accounting Standards Board (IASB), published a proposal to amend the IFRS Foundation
Constitution to accommodate the formation and operation of an International Sustainability Standards Board (ISSB). You can read more about their proposals on page 8.
6 | Excellence in Integrated Reporting 2021Integrated reporting – time to refocus?
Sustainability reporting is the practice of disclosing A sustainability report will include all material Applying this distinction to reporting on the current
the most significant economic, environmental, impacts, with only those that are material to Covid pandemic, the most relevant aspect in an
and social impacts, and therefore the contribution enterprise value creation being included in an integrated report is to report on how an organisation
by the entity to sustainability development goals. integrated report. Globally, most companies first has demonstrated its resilience and adaptability to
The Global Reporting Initiative (GRI) Standards are prepare a sustainability report and may progress unanticipated challenges as that is relevant to future
the most widely used standards for sustainability from there to integrated or enterprise value enterprise value creation potential. In contrast, a
reporting. Individual reporting metrics from the GRI reporting, making it easier to apply the double sustainability report will include disclosures on how
standards may be appropriate for use in reporting on materiality approach. The requirement for listed an entity has supported its various stakeholders in
issues that are relevant to enterprise value that are South African companies to prepare integrated Covid times, i.e. the outward impact of your current
not covered by IFRS. reports, while many had never prepared a activities.
sustainability report, has raised the risk of preparing
A challenge, that may be greater in South Africa an integrated report that does not include all If ever there is a time to focus on the direction and
than elsewhere, is applying, and demonstrating material impacts and are not supported by the content of external reports, it is now. Challenges
its application, of the double materiality concept, necessary detailed data collation and verification in the operating context caused by the Covid
promoted by the European Commission and the processes that would have been developed to pandemic, climate and other challenges, increased
GRI. This approach is key to demonstrating the prepare sustainability reports. financial capital provider needs for relevant
completeness of the reports and to ensure that and reliable sustainability information, together
published reports achieve their purpose. First, the The other aspect to consider is whether the reports with unprecedented progress in clarifying and
reporting entity needs to consult a broad group take the appropriate point of view, or direction, of harmonizing reporting requirements are all reasons
of stakeholders to identify all matters which are reporting. A sustainability report is outward looking to reconsider whether current external reporting
material to its most significant impacts on the as it reports on the company’s impact on the world, practices are fit for purpose. In the post-pandemic
economy, environment, and people. The second level whereas an integrated report should report on the era, entities are encouraged to reflect on the
of materiality is then to identify the subset of those extent to which its external environment has an purpose of their integrated reports and whether they
issues that are material to enterprise value creation. impact on its ability to create value in the future and are achieving its intended purpose.
is therefore more inward looking and future focused.
“
Applying this distinction to reporting on the current Covid pandemic, the most
relevant aspect in an integrated report is to report on how an organisation has
demonstrated its resilience and adaptability to unanticipated challenges as that is
relevant to future enterprise value creation potential. In contrast, a sustainability
report will include disclosures on how an entity has supported its various
stakeholders in Covid times, i.e. the outward impact of your current activities. Alex Watson
Independent non-
Alex Watson
executive director;
Professor Emeritus,
University of Cape Town
7 | Excellence in Integrated Reporting 2021Towards international sustainability standards
Towards international sustainability standards
• To build on the work of existing frameworks. The Trustees
One of the consequences of the COVID-19 pandemic is the be referred to as ‘IFRS Accounting Standards’. It would seem have identified that the new board would build upon
increasing focus that non-financial information is receiving. therefore that the concept of ‘IFRS standards’ will be made up the work of the Task Force on Climate-related Financial
Investors are seeing non-financial information as a core of both ‘IFRS Accounting Standards’ and ‘IFRS Sustainability Disclosures (TCFD), as well as work by the alliance of
element in investment decisions and there is an increased Standards’. I would encourage companies to follow the leading standard-setters in sustainability reporting focused
recognition that financial reporting alone does not provide developments and understand the final constitutional changes
on enterprise value.
investors and other stakeholders with a full picture of the value of the IFRS foundation and the new standards when the ISSB
of the company. The expectation gap between the information is created. • To make use of a buildings block approach. This approach
needs of investors and the non-financial information provided
would allow the ISSB to provide a global baseline of
seems to have widened. There is a growing appetite for The Trustees have announced their views on the strategic
standards for sustainability reporting and at the same time
a formal framework for measuring and communicating direction of the new sustainability standards board. What
enhance comparability and consistency of sustainability
intangible value, in particular environmental, societal and are they currently proposing?
reporting. In addition, this will allow for flexibility in
governance risks. There have been four fundamental choices that the Trustees
coordinating with other frameworks and local regulations,
have made relating to both the scope and approach for the
accommodating a wider range of reporting requirements.
In April 2021, the Trustees of the IFRS Foundation (the new sustainability standards board, namely:
Trustees), the oversight body of the International Accounting
Standards Board (IASB), published a proposal to amend the • To establish the audience to whom the sustainability What are the requirements that Trustees consider essential
IFRS Foundation Constitution to accommodate the formation information would be targeted. The current proposals aim for the success of a sustainability standards board?
and operation of an International Sustainability Standards to focus on the information needs of investors, lenders The IFRS foundation is an independent standard-setting
Board (ISSB). This will pave the way for a global suite of and creditors with an emphasis on enterprise value, body. Therefore, the Trustees have considered the following
sustainability standards under the banner of the IASB. therefore taking a capital market approach rather than requirements to make this proposed board a success:
a multi-stakeholder approach. While this may disappoint
We have asked James Luke, IFRS Desk, EY Africa and some stakeholders, the narrower scope makes this project • A sufficient level of global support from public authorities,
member of the IFRS Foundation’s Advisory Council about more manageable and is consistent with the concepts global regulators and market stakeholders in key markets;
these important developments and what they mean for South underlying current IFRS standards.
African reporters. • Collaboration with regional initiatives to achieve global
• To meet the information needs of investors on all consistency and reduce complexity in sustainability
What is the proposed name for the new sustainability environmental, social and governance matters. This is reporting;
standards that will be issued by the ISSB? a broad mandate and climate-related matters are being
Based on the documentation released by the Trustees, the regarded as a priority as there has been clear signalling • Adequate governance structures for the board;
proposed name for the standards issued by the ISSB is ‘IFRS from both regulators and the investor community that
sustainability standards’. The Trustees have proposed that climate risk is pervasive and of importance. • Appropriate level of technical expertise for Trustees,
the standards and IFRIC interpretations issued by the IASB members and staff;
8 | Excellence in Integrated Reporting 2021Towards international sustainability standards
• Capacity to obtain financial support and to achieve the
required level of separate funding; That being said, it is very clear from discussions held by the this assessment entities would probably consider whether
Trustees and the Advisory Council that there will be a link the information they are providing meets these stakeholder
• Development of a structure and culture that seeks to build between both boards. Generally, many issues will affect both needs, whether it would require expanding their processes and
effective synergies with financial reporting; and boards and they would need to work together on solving these systems that record and analyse their non-financial metrics,
issues and setting standards. We may find that as the boards and whether these disclosures explain how the non-financial
• Ensuring the current mission and resources of the progress with their work, the management commentary information supports and enhances the value that the
Foundation are not compromised. may become the vehicle that is best suited for sustainability company creates.
disclosures that will be published by reporting entities. While
Will the composition and governance structure of the ISSB this exposure draft is being driven by the IASB, we may find Overall, I think that South African companies do have an edge
be similar to the existing requirements of the IASB? subsequent exposure drafts being issued by both boards. over other jurisdictions and internationally South Africa has
I do think that this will be monitored by the Trustees. The been considered one of the leading countries with respect
concept of sustainability is far wider than that of financial It is clear that there are currently a large number of to integrated reporting. However, I do see the playing field
reporting and you may find that the skills required on the developments in the non-financial reporting space. What starting to change and our companies may have to be agile in
board may change from time to time. This could be addressed does all this mean for South African reporters? their reconsiderations when it comes to their reporting. There
by a rotation of board members or if need be by a change of Although South African companies have prepared is no reason why South African companies cannot set the
the size of the board. sustainability reports for many years, these reports have benchmark in terms of the proposed sustainable reporting.
largely focussed on sustainable development matters. In recent
Recently, the IASB issued an IFRS Practice Statement years much more attention has been given to governance
Exposure Draft on Management Commentary1. How will related matters, as a result of the spate of governance failures
the issuance of this revised practice statement impact the we have seen in public and private companies. An area that
development of the sustainability standards? South African companies will need to focus much more on in
The practise statement exposure draft proposes a separate the future is climate-related matters and how their operations
appendix detailing the requirements and guidance about are impacting the environment. This is in line with the
intangible resources and relationships, as well as ESG international demand from both regulators and investors for
matters. The board sees the management commentary as increased climate related disclosures from companies.
an appropriate location for reporting on ESG matters and
envisages the revised practice statement being applied in We have entered a transitional phase in terms of reporting
conjunction with the sustainability reporting requirements and where investors and regulators are demanding more non-
guidance. financial information from companies. These decisions will
include an assessment of the needs of their stakeholders. In
James Luke
IFRS Desk, EY Africa
1
IFRS Practice Statement Exposure Draft ED/2021/6 Management Commentary
9 | Excellence in Integrated Reporting 202110 Years of integrated reporting in South Africa
10 Years of integrated reporting in
South Africa
Past winners
20 20 20 19 20 18 20 17 20 16 20 15 20 14 20 13
Nedbank Nedbank Nedbank Kumba Iron Kumba Iron Liberty Royal Gold Fields
Group Ltd Group Ltd Group Ltd Ore Ltd Ore Ltd Holdings Ltd Bafokeng Ltd
Platinum Ltd
In 2012 the Top 10 were not ranked.
Truworths International Ltd Liberty Holdings Ltd and Absa
has been in the Top 10 for all 10 Group Ltd (previously called
years of Excellence in Integrated Barclays Africa Group Ltd) have
Reporting, whilst Sasol Ltd has K
umba Iron Ore Ltd, Nedbank both been in the Top 10 for 6
Kumba Iron Ore Ltd and Redefine
been in the Top 10 for 9 years. Group Ltd, Standard Bank Group years.
Properties Ltd have been in the
Top 3 for 5 consecutive years, whilst Ltd and Vodacom Group Ltd have
Nedbank Group Ltd has been in the been in the Top 10 for 8 years
Top 3 for 4 consecutive years. whilst Redefine Properties Ltd
has been in the Top 10 for 7 years.
10 | Excellence in Integrated Reporting 202110 Years of integrated reporting in South Africa
10 Years of integrated reporting in
South Africa
By Mark Graham, Associate Professor, Graduate School of Business, University of Cape Town
The journey so far Positive trends over the years Progress still to be made after 10 years
• “Integrated reporting is a journey” has become • Significant improvements in the quality of (the • Insufficient
explanation of the value the
the great cliché! better) integrated reports. business wishes to create for itself and others.
• Early reports were often a sustainability report • Improved connectivity of information, • No clear identification as to whether the
combined with the annual financial statements particularly for those with a clearly articulated integrated report focus on factors that are
and some management commentary. purpose. relevant to capital providers and enterprise
value or a broader audience.
• Diversity in structure and innovation in • Better use of infographics, navigation tools and
communication seen over the years. cross references. • Not enough emphasis on strategy and value
creation.
• Ongoing struggle to strike a balance between the • Improved articulation of business models and
traditional annual report and a more forward- operating context. • Not clear what is needed to achieve strategic
looking report that emphasises strategy and value objectives.
• Better differentiation of outputs and outcomes
creation.
and more robust data. • Poor evidence of integrated thinking.
• 50% of JSE listed (top 100) companies are still
• Innovation in layout and structure. • Trade-offs between capitals not given enough
NOT (really) getting it right.
prominence.
• Greater conciseness.
• Gap widening between reports ranked as
• Not enough explanation of how the business will
‘Excellent’ and those ranked as ‘Average’ and • Greater use of websites for detailed
use its various capitals (or resources) to create
‘Progress to be made’. remuneration, sustainability, and compliance
value.
information.
• South Africa’s top reports are comparable with the
• Balance not achieved – challenges, constraints,
best in the world. • Increased usage of the UN’s Sustainable
disappointments, and negative outcomes.
Development Goals.
• Lack of explanation of how governance
structures /processes will create/preserve
value.
• No description of the process that is followed to
ensure the integrity of the information.
11 | Excellence in Integrated Reporting 20212021 Rankings
2021 Rankings
Top 10 rankings
Redefine Nedbank Kumba
with Honours with Honours with Honours
Properties Group Ltd Iron Ore
Ltd Ltd
Vodacom Truworths
Anglo American Netcare Ltd
Group Ltd International
Platinum Ltd
Ltd
Absa Group Ltd Oceana Group Standard Bank
Ltd Group Ltd
“Honours” is awarded to those high quality integrated reports, which the adjudicators believe have come closest to complying with the requirements of the Framework.
12 | Excellence in Integrated Reporting 20212021 Rankings
Excellent* Good* Average* Progress to be made*
The adjudication process
ranks entities in the
following categories:
Absa Group Ltd Adcock Ingram Holdings Ltd BHP Group plc AECI Ltd
Excellent (which Anglo American Platinum Ltd African Rainbow Minerals Ltd Bid Corporation Ltd Anheuser-Busch InBev SA/NV
includes the top Aspen Pharmacare Holdings Ltd Anglo American plc British American Tobacco plc AVI Ltd
10 positions)
Discovery Ltd AngloGold Ashanti Ltd Capital & Counties Properties plc The Bidvest Group Ltd
DRDGOLD Ltd Barloworld Ltd Clicks Group Ltd Capitec Bank Holdings Ltd
Good
Exxaro Resources Ltd Coronation Fund Managers Ltd Dis-Chem Pharmacies Ltd Cartrack Holdings Ltd
Impala Platinum Holdings Ltd Glencore plc Distell Group Holdings Ltd Compagnie Financière Richemont SA
Kumba Iron Ore Ltd Gold Fields Ltd EPP NV Globe Trade Centre SA
Average Mondi plc Growthpoint Properties Ltd Equites Property Fund Ltd Irongate Group
Nedbank Group Ltd Harmony Gold Mining Company Ltd FirstRand Ltd Italtile Ltd
Netcare Ltd JSE Ltd Fortress REIT Ltd KAP Industrial Holdings Ltd
Oceana Group Ltd Liberty Holdings Ltd Hammerson plc Lighthouse Capital Ltd
Progress to be
Omnia Holdings Ltd Life Healthcare Group Holdings Ltd Investec plc MAS Real Estate Inc
made
Pan African Resources plc Massmart Holdings Ltd Mediclinic International plc NEPI Rockcastle plc
Pick n Pay Stores Ltd Mr Price Group Ltd Momentum Metropolitan Holdings Ltd Ninety One plc
Redefine Properties Ltd MTN Group Ltd Motus Holdings Ltd PSG Group Ltd
“Excellent” and “Good” Royal Bafokeng Platinum Ltd Northam Platinum Ltd MultiChoice Group Ltd Reinet Investments SCA
are awarded to entities Sappi Ltd Old Mutual Ltd Naspers Ltd South32 Ltd
that progressively
Sasol Ltd RCL Foods Ltd Pepkor Holdings Ltd Super Group Ltd
achieve a higher level of
Sibanye Stillwater Ltd Shoprite Holdings Ltd Prosus NV Textainer Group Holdings Ltd
adherence to the spirit of
integrated reporting. Standard Bank Group Ltd The Foschini Group Ltd PSG Konsult Ltd
Telkom SA SOC Ltd Tiger Brands Ltd Quilter plc
Truworths International Ltd Transaction Capital Ltd Rand Merchant Investment Holdings
Vodacom Group Ltd Woolworths Holdings Ltd Ltd
Remgro Ltd
Resilient REIT Ltd
Sanlam Ltd
Santam Ltd
Sirius Real Estate Ltd
Stenprop Ltd
The SPAR Group Ltd
Vivo Energy plc
Vukile Property Fund Ltd
13 | Excellence in Integrated Reporting 2021Top 10 companies
Top 10 companies
By Mark Graham, Associate Professor, Graduate School of Business, University of Cape Town
Redefine Properties Ltd Nedbank Group Ltd
Redefine’s report is attractive, well laid out and easy to Nedbank’s report has a clear emphasis on value creation
read. The strategic overview, the integrated stakeholder and strategy. It commences with a section that outlines
engagement and the use of capitals to explain the group’s the group’s approach to integrated thinking, the integrated
value creation story are examples of excellent disclosures reporting process and the way in which the report is
that demonstrate integrated thinking within the group. The structured. The report itself is structured in a sensible way
section of the governance report that shows how the board that makes it easy to follow the value creation narrative. The
considers material matters to ensure the achievement of the focus of the report is on the ability of the organisation to
group’s strategic objectives and desired governance outcomes create value for its stakeholders, with an appropriate suite
can be considered best practice. The detailed reporting on of supporting documents to provide additional compliance
trade-offs provides useful insight into the tough choices facing and other information. We particularly liked the governance
the group and the thinking that lies behind their decision section of the report and the way in which it focusses on
making. The report incorporates the Sustainable Development value creation and preservation together with clear cross
Goals (SDGs) in a meaningful manner and explains how the references to where more information can be found on any
group arrived at the specific SDGs that are relevant to the issue. The discussion on strategic trade-offs and the impact
group. We particularly liked the explanation of the materiality on capitals, outcomes and KPI’s is an excellent example of
determination process and the graphic that was used to showing how strategic decisions are made in an integrated
illustrate how the group’s material matters were crystallised. way. The report handles the impact of the COVID-19
The explanation of performance against the various strategic pandemic in a thoughtful manner, particularly in the context
objectives is comprehensive and balanced. Furthermore, there of framing risk, scenario planning and the outlook for the
is a useful explanation of why each performance measure future.
is important and each measure is clearly linked to other
elements within the report.
14 | Excellence in Integrated Reporting 2021Top 10 companies
Kumba Iron Ore Ltd Anglo American Platinum Ltd
Kumba’s report has an excellent strategic focus with the appropriate amount of strategic Amplats’ report commences with a useful explanation of its approach to reporting and the
detail being provided. The report makes use of iconography to guide the reader through the principles that are applied in drafting its integrated annual report. We particularly liked the
report, whilst the report itself presents a wealth of information in a balanced, transparent, explanation of how the reporting boundary is determined by working outwards from the
and interconnected manner. The narrative is crisp and concise with good use being made core legal entity to consider risks, opportunities and outcomes associated with entities or
of appendices to present more detailed information that may be of interest to readers. We stakeholders that have a significant effect on the group’s ability to create value. The sections
particularly liked the section that outlines the group’s ability to create value over time and the that outline the group’s strategy, business model and the markets within which it operates are
way in which this is clearly framed within the context of its capitals and inputs together with the particularly helpful in setting out the context for the group’s value creation story. Furthermore,
challenges that exist in securing the necessary inputs. The explanation of the group’s strategy the roadmap that shows how the group plans to deliver on its strategy within short, medium
is clear and attention is given to explicitly outlining the short, medium and long-term strategies. and long-term time horizons is useful. The group’s risks are clearly presented, appropriately
The identification of material issues and their implications for value creation, together with integrated with strategy and illustrated with a heat map that shows the likelihood and
the group’s strategic response provides useful insight into the group’s operating context. The consequence of each risk. The reporting is balanced and the explanation of the group’s trade-
group’s opportunities are clearly presented and the way in which they are linked to the capitals offs and the way in which they are managed is excellent. Informative infographics show the
is an indication of integrated thinking within the group. economic contribution that the group makes in both South Africa and Zimbabwe.
Vodacom Group Ltd Netcare Ltd
Vodacom’s report is easy to navigate and makes excellent use of icons to link sections and Netcare’s report contains a wealth of useful information and its sensible structure makes the
guide the reader. The report is crisp, concise, attractive and easy to read. It has a strong focus report easy to navigate. The section dealing with the COVID-19 pandemic is detailed, helpful
on both strategy and value creation. We particularly liked the one-page introduction to the and appropriate, given the sector in which the group operates. We particularly liked the strong
group’s strategy that shows the linkage between strategic objectives, historic performance focus on creating measurable value for each class of stakeholder. Material matters are linked
and medium-term goals, this provides a good introduction to the more comprehensive detail to stakeholder concerns and strategic pillars and clearly separated into immediate and ongoing
that follows. The disclosures, within the explanation of the group’s business model, of the priorities. The way in which strategy progress against each of the strategic pillars is reported
investments made in various resources and relationships to sustain value are useful. The and linked to remuneration is excellent. Good use is made of icons to distinguish between
sections that outline how the group is responding to its external operating environment and to positive, negative or neutral outcomes in both the current year and in the future. The linkage
stakeholder ‘hot topics’ are excellent. The report clearly shows how the group’s ability to deliver to the operating environment, the group’s response, and related risks with extensive cross
value depends on the contribution and activities of a range of stakeholders. In addition to referencing to where more detail can be found gives a clear insight into the agility and resilience
comprehensive disclosure of material stakeholder issues, an internal assessment of the quality of the organisation. The detail provided on each of the group’s capitals, especially relationship
of the relationship with each stakeholder group is also provided. The governance disclosures capital, is comprehensive and clearly explains how sustainable value will be created.
are enhanced by detailing the Board’s key focus areas and showing how these are linked to the
group’s risk and strategy.
15 | Excellence in Integrated Reporting 2021Top 10 companies
Truworths International Ltd Absa Group Ltd
Truworth’s report has a clear strategic focus with an emphasis on value creation both for itself Absa’s report commences with a detailed explanation of the materiality determination process.
and for other stakeholders, together with relevant information on how the value that is created The report focusses on value creation and contains an appropriate mix of forward-looking
is measured. We particularly liked the emphasis on providing information that is specific to information and performance disclosures. A wealth of useful, well contextualised and clearly
the group rather than mere generic or boilerplate disclosures. Furthermore, the report is easy explained data is provided within the report and we particularly liked the extensive use of cross
to navigate, avoids the use of jargon and is written using language that is clear and concise. referencing which makes the report easy to navigate. The detail provided in respect of the
Given the nature of the business, the separate identification of how the impacts of COVID-19 group’s stakeholders’ needs and expectations, that include both a strategic response to these
were managed is helpful. We particularly liked the detailed and integrated disclosure of each needs and expectations and performance measures for each stakeholder group, is excellent.
material issue that incorporates performance against objectives and targets, challenges The business model is comprehensive and the market drivers that are influencing the business
encountered, future objectives and plans, risks and opportunities as well as achieved and target model are clearly explained. The explanation of the group’s strategy is excellent and includes
key performance measures. The section that discloses how the group manages its various useful linkages to material matters, the capitals, key risks and mitigation actions as well as
stakeholder relationships is excellent. The governance section includes a useful and innovative performance against each strategic objective. The report includes a detailed explanation of the
table that unpacks board deliberations by separating key issues and routine matters by those strategic trade-offs facing the group and how these have been managed. Furthermore, the clear
that have been noted, considered, approved, authorised or resolved. identification of how the COVID-19 pandemic is impacting the group’s strategy is helpful.
Oceana Group Ltd Standard Bank Group Ltd
Oceana’s report includes a clear focus on the factors that are relevant to its future value Standard Bank’s report starts with an informative explanation of the group’s approach to
creation. The report achieves a high level of connectivity between material issues, strategic integrated thinking. The report is well laid out, with a structure that is easy to follow and
objectives, principal risks and the external environment context. We particularly liked the navigate. We particularly liked the way in which the report is focused on the group’s value
explanation of how various external issues are impacting on the group’s business model. The creation story and delivering on the group’s strategy with a suitable distinction between short,
explanation of how the group manages trade-offs to deliver long-term value is excellent and medium, and long-term strategies. The group’s five strategic value drivers provide a golden
sufficiently detailed to get a good sense of the effect of each trade-off on the various capitals thread to the narrative and help to integrate the business model, constraints, key trade-offs,
employed. The material risks are clearly presented within the report by using both inherent key priorities, oversight and strategic outcomes. The section that outlines the group’s approach
and residual risk heat maps to show the principal risks that will affect the group’s ability to to resource allocation, with its focus on balancing value outcomes, is excellent. The disclosures
create value. The group’s approach to the development of its strategy is detailed and the actual of financial outcomes and the way in which the financial statements are annotated clarifies the
strategies to achieve the various strategic objectives are comprehensively explained. The strategic progress that has been made in achieving client focus, employee engagement and
governance section is well laid out and achieves the objective of explaining how the various risk and conduct. There are extensive and useful disclosures of the group’s impacts in those
governance focus areas support the group’s strategy and contribute towards the group’s areas where it believes that it can best achieve the group’s purpose while still making a positive
governance outcomes. impact on society.
16 | Excellence in Integrated Reporting 2021Overall impressions at a glance
Overall impressions at a glance
Surveys
“Excellent” integrated 24 24
reports have a 2021
coherent value creation
narrative
3 Integrated reports
52 Excellent
awarded an “Honours”
consistent with 2020 Good
Average and Progress to be made
The quality of
“Excellent” and
“Good” integrated 22
reports continues to
improve
2020
Little improvement in
those integrated reports 29
ranked as “Average” or
“Progress to be made”
49
24 Companies ranked
as “Excellent”,
compared to 22 and
24 Companies
23 in 2020 and 2019
ranked as “Good”
respectively
compared to 29 23
in 2020 and 28 in
2019
2019
28
49
17 | Excellence in Integrated Reporting 2021Overall impressions at a glance
Governance disclosures integrated within Unclear distinction between short-,
the narrative on value creation medium- and long-term strategies
Remuneration disclosure being Insufficient linkage between key
linked to strategic progress and/ or performance indicators and the
other outcomes explanation of how the business is being
managed
Increased usage of the UN
Positive Negative Lack of focus on how current activities
Sustainable Development Goals
trends trends have impacted the future availability of
inputs
Generic explanations of the various trade-
Better integration of financial offs between the capitals
information with the value creation
narrative
Useful disclosure on the effects of Insufficient explanation of the value the business
the COVID-19 pandemic wishes to create for itself and others
18 | Excellence in Integrated Reporting 20212021 Adjudicators’ observations and overall performance
2021 Adjudicators’ observations and
overall performance
By Mark Graham, Associate Professor, Graduate School of Business, University of Cape Town
Companies included in the survey
Key observations
• Top 100 Johannesburg Stock Exchange (JSE) Limited listed companies
selected based on their market capitalisation as at 31 December 2020. • The
quality of “Excellent” and “Good” reports • Better
use of interactive tools to help navigate
continues to improve. within the report and to provide a link to
• Integrated report or annual report for year-ended on or before 31
additional information.
December 2020.
• Excellent reports have a clear strategic focus,
• Largest in survey: Prosus NV with a market capitalisation of R2.6 trillion. an emphasis on value creation and a high level • Improved
linkage of relevant UN Sustainable
of connectivity between the various elements Development Goals (SDGs) to strategy and
• Smallest in survey: Vukile Property Fund Ltd with a market capitalisation presented and consequently have a coherent outcomes.
of R7.6 billion.
value creation narrative.
• Increased
reporting on climate change and
• The 100 companies in the survey account for 97% of the market
capitalisation of the JSE at 31 December 2020. • Very little improvement in those reports ranked inclusion of Task-Force on Climate-related
as “Average” and “Progress to be made”. Financial Disclosures.
• Some
reports have early adopted the new 2021 • More
reports now including extracts of financial
Changes to the top 100 Framework. statements within their financial review and
• Eleven
companies that appeared in the 2020 survey are no longer using annotations to explain items within these
• Many
reports deal with COVID-19 pandemic financial statements.
regarded as being eligible as a result of falling out of the Top 100 due to
relative changes in market capitalisation or other corporate activity. issues in an integrated and sensible way.
• General
improvement in the disclosure of
• New / returning in 2021 survey: • More
reports now including an endorsement opportunities.
• Cartrack Holdings Ltd • Omnia Holdings Ltd signed by all directors.
• DRDGOLD Ltd • Pan African Resources plc • Increased reference being made to separate
• Irongate Group • Prosus NV • More companies are using a broad suite of sustainability reports.
reports to communicate compliance and
• Lighthouse Capital Ltd • Stenprop Ltd
sustainability information that previously would • Continued
improvements in the use of graphs/
• Ninety One plc • extainer Group Holdings
T
have been included in the integrated report. tables/infographics and icons to achieve
• Oceana Group Ltd Ltd
conciseness, integration, and more effective
communication.
19 | Excellence in Integrated Reporting 2021You can also read
