Senior executives’ perspectives of integrated reporting regulatory regimes as a mechanism for advancing sustainability in South African listed companies

Abstract

South African listed companies are among the first in the world to be subject to compliance with integrated reporting requirements in terms of stock exchange listing requirements. Integrated reporting, as a novel and evolutionary step in corporate reporting, along with the influence that integrated thinking and integrated reporting principles will have on companies, has been the subject of global debate in recent years. This study, performed two years into the South African integrated reporting regime, aims to summarise the findings of the perceptions of chief executive officers (CEOs), chief financial officers (CFOs) and senior executives of South African listed companies on the organisational changes perceived as a result of implementing integrated reporting requirements. The findings confirm and strongly support several of the anticipated organisational outcomes of a regulatory integrated reporting regime, most notably the advancement of strategic decision-making that recognises the organisation’s dependence on resources and relationships in creating and sustaining longer-term stakeholder value, greater consideration of the linkages and interdependencies between financial, social and environmental, and economic matters in setting strategic objectives, and an increased organisational focus on integrating social and environmental objectives into strategic objectives and aligning reported key performance indicators (KPIs) with external stakeholder requirements. Integrated reporting is also perceived as encouraging decision-making in the organisation with the objective of longer-term sustainable wealth-creation. However, maintaining the balance between transparency and business confidentiality when disclosing forward-looking information and strategy remains a challenging aspect of integrated reporting for companies.

Investigating risk disclosures in Italian integrated reports

“…These findings support the call for a more comprehensive approach to corporate reporting that is primarily designed to offer relevant information to any stakeholder. Contrasting previous studies (PwC, 2013;Stubbs and Higgins, 2014;Enslin et al, 2015;Raemaekers et al, 2016), results provide arguments for a positive influence exerted by the adoption of IR on risk disclosure practices of Italian companies, despite the reluctance to provide forward-looking, quantitative information and their potential effects of risk remains, representing a challenge which deserves further attention (Steyn, 2014;Enslin et al, 2015;Moolman et al, 2016;Leopizzi et al, 2019;Maroun, 2019). Our results are coherent to some extent with the scenario depicted by proprietary cost theory, where transparency and accountability issues counterbalance the need to prevent damages in terms of loss competitive advantage and reputation potentially arising from the disclosure of sensitive and too detailed information (Steyn, 2014;Moolman et al, 2016;van Zijl et al, 2017;Leopizzi et al, 2019).…”

“…In combining financial and non-financial information in an interconnected and forwardlooking perspective, integrated reporting (IR) is expected to overcome the shortcomings of traditional financial reports, providing stakeholders, including investors, with more informed and better resource allocation and decision-making processes; better alignment of reporting information with investor needs; reduced uncertainty; and higher levels of confidence with stakeholders (Frías-Aceituno et al, 2013a;Steyn, 2014;Pavlopoulos et al, 2019).…”

Appreciations, criticisms, determinants, and effects of integrated reporting: A systematic literature review

“…Other studies highlight the impact of integrated reporting on the administration, finance, and control areas in terms of the reconfiguration of information systems and the increase of the necessary resources (time, capital, and human) to carry out the activities of integrated management control (Steyn, 2014). Churet and Eccles (2014) highlight how the implementation of integrated reporting improves the quality of management and underscores how this positive relationship is particularly accentuated in certain sectors such as healthcare.…”

The effect of integrated reporting on integrated thinking between risk, opportunity and strategy and the disclosure of risks and opportunities

“…This article reports on the results of questions included in section B of the questionnaire. Sections A, C and D are addressed in another study (Steyn 2014b). Respondents were also given the opportunity to include specific comments after each construct in the survey.…”

“…Results of the questionnaire 1This article reports on the results of questions included in section B of the questionnaire. Sections A, C and D are addressed in another study (Steyn 2014b) and information regarding the questionnaire administration process, company profiles, response rates and limitations may be similar.…”