Page 12 - KZN Business Book Vol.3 No.2

KZN

KwaZulu-Natal
Business Chambers Council
KING IV DEMANDS GREATER ACCOUNTABILITY

T he King IV™ Report on which rmly focuses on an ethical e most signicant dierence King IV is voluntary - unless emphasis on remuneration as well

culture, good performance,
between King III and King IV is
prescribed by law or a stock
as clarity regarding the
Corporate Governance for
South Africa was launched
However, the principles are
in November 2016 by the King eective control and legitimacy. that King IV is outcomes exchange listing requirement. appointment of board members.
orientated. King IV aims to reduce
As greater accountability has now
Committee and the Institute of shied to the governing body, the ‘tick box’ or compliance applicable to all business entities However, King IV also
Directors in Southern Africa more insight is expected of these approach to applying governance irrespective of their form or acknowledges that information
(IoDSA). King IV is a set of far individuals (as well as all practices. e principles stated manner of incorporation and technology need to be treated
reaching principles that go to the stakeholders) to implement and are basic to good governance, and including non-governmental as separate entities. Consequently
heart of corporate governance. account for the business practices their application is assumed. organisations, state-owned intellectual capital is regarded as a
e new version is much more implemented by a company. Consequently, business entities are enterprises, the public sector, and corporate asset that is in need of
meaningful than its precursors required to 'apply and explain', medium to small businesses. But, governance structures, which
and of note is a world leader in A number of dierences are rather than 'apply or explain' as the application of the principles protect and develop its content.
establishing corporate governance apparent. Whereas King III specied in King III. e 'explain' should be proportional to the size
standards. King IV is eective for contained 75 principles, King IV part is a narrative of the practices of each entity. Overall corporate governance
nancial years commencing on or contains only 16 principles that have been implemented and should be concerned with ethical
aer 1 April 2017 and replaces applicable to all organisations, and the progress made towards e primary focus of King IV is leadership, attitude, mindset and
King III. a 17th principle, which is achieving each principle. on transparency and on targeted, behaviour.
applicable to institutional erefore integrated thinking and well-considered disclosures. is
A much more mature investors such as retirement funds reporting is central to achieving focus, in line with international http://www.iodsa.co.za
philosophy underlies King IV, and insurance companies. the outcomes. developments, includes a greater
KING IV OUTCOMES

ETHICAL CULTURE PERFORMANCE AND VALUE ADEQUATE AND EFFECTIVE TRUST, GOOD REPUTATION,
CREATION CONTROL LEGITIMACY

1. Ethical leadership 4. Appreciation of the business’ 6. Governing body as custodian of 16. Stakeholder inclusivity
2. Eectively managed ethics inseparable elements governance 17. Responsible institutional investors
3. Responsible corporate citizenship 5. Enable stakeholders to make informed 7. Eective board compositions
assessments 8. Balancing power and responsibilities
9. Appointment of competent executive
management
10. Performance evaluations for improved
performance and eectiveness
11. Govern risk and opportunity to achieve
strategic objectives
12. Manage technology and information to
achieve strategic objectives
13. Legal compliance
14. Fair and transparent remuneration
15. Internal and external assurance

SUSTAINABILITY - THE HEART OF CORPORATE GOVERNANCE

C athie Lewis, Grindrod Lewis said, “Corporate addressing challenges such as alternatives. ere are many According to a recent study

methodologies available to assist
sustainability in the 21st Century
Company Secretary, is a
climate change, biodiversity,
many companies see their greatest
passionate proponent of
margin. Companies need to
that will help drive their own
paramount. Each company is
King IV™ (King IV). One of its goes beyond each company’s prot exploitation of resources is with better decision-making, impact and opportunity in areas
which includes integrated
pivotal principles is that of develop an understanding that required to ‘give back’ to all its thinking as per King IV, business growth. As companies are
corporate sustainability, which growth cannot be innite and that stakeholders.is approach Value-Focused inking (Ralph being viewed as agents for positive
well resonates with her long there is an urgent need to address includes an evaluation of issues Keeney) and systems thinking. change their roles as innovators,
standing beliefs that companies the issues of nite resources for such as the water supply crisis, which may even unlock new
need to be proactive and the benet of future generations. energy usage, striving to reduce A Clear Strategy business opportunities, needs to
accountable for their approach to Consequently, there should no carbon emissions, replacing All eorts aimed at developing be emphasised. However,
doing business. longer be an emphasis on the replenishing resources etc. An sustainability also involve companies need to be careful to
short term capital markets gains ethical workplace also ensures that developing a clear strategy. One understand that when
At the heart of King IV is an achieved but on long term it looks aer the people who not strategy, as proposed by Michael E implementing sustainability
emphasis on an understanding of sustainable capital markets.” only work within the company but Porter and Mark R Kramer in measures everything is
the more holistic approach to participate in its supply chain. is their article “Creating Shared interconnected and nothing works
corporate governance that is Of signicance, no business aspect encompasses working Value” generates economic value in a vacuum.
required to promote sustainability entity operates in isolation, but is conditions, equity, prot share, in a way that also produces value
in companies. Many of the an integral part of society and health, education, living for society by addressing its Lewis concluded, “Of necessity
Report’s overall principles are impacted by the same issues – conditions, and skills training. challenges. ey propose that a companies need to move forward
based on global concepts and people, prosperity, peace and shared value approach reconnects progressively. e biggest question
notably draw on the 17 Global planet. Sustainability in a Consequently, in order to company success with social to answer is, how are you making
Sustainable Development Goals company should be apparent both ensure accountability and ongoing progress. Companies may achieve things better?”
(SDGs) stated in the United in the role and in the responsible feedback much more is expected this progress in three ways: by
Nations 2030 Agenda on manner in which the day-to-day not only of the governing body changing products and markets, References
Sustainable Development. e business is conducted. Such an but of all a company’s redening productivity in the Keeney, Ralph L., “Value-Focused inking
SDGs broadly encompass social approach requires a good stakeholders. Such relationships value chain, and building the A Path to Creative Decisionmaking”
Harvard University Press Cambridge
development – people; inclusive understanding of the social and can only be reached though supply chain at the company's (Massachusetts) 1998
economic development – natural environment in which a proactive engagement, which locations. Porter, Michael E. and Kramer, Mark R.
prosperity; peaceful and inclusive company operates, as well as requires the development of "Creating Shared Value."Harvard Business
Review 89, nos. 1-2 (January–February
societies and responsive qualied data pertaining to the suitable platforms for meaningful e growing spread of inuence 2011): 62–77.
institutions – peace; and a number impact that the daily operations communication. “Part of by larger companies is apparent on
of environmental sustainability are having on the supply chain. developing this relationship may the Fortune 2016 Change the Websites
King IV http://www.iodsa.co.za/?page=
issues – planet. be found in the ability to do more World list of 50 companies that are AboutKingIV
Are you doing the right thing? with less and to have sound values ‘doing well by doing good’. is list Global Sustainable Development Goals
South Africa has adopted the When nding solutions to at the heart of the organisation,” includes companies such as (SDGs) https://sustainabledevelopment.
SDGs, which complement the environmental and social said Lewis. We can no longer GlaxoSmithKline (GSK), Nestle, un.org/
National Development Plan, and problems asking the question,“Are aord to have a binary approach Coca Cola, Walmart, and Intel in
these will contribute greatly to you doing the right thing?” is to important issues but need to its top ten listing, all of which have
national transformation if fundamental to all companies, develop a systems approach when an inclusive approach to moving
implemented eectively. said Lewis. As corporate citizens, making decisions and assess all forward.

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