South Africa has published what it says are the world's first guidelines for companies on how to produce “integrated” shareholder reports that have a far wider scope than traditional financial accounts.
Its authors say the guidance will be relevant to public companies around the world, which are under pressure to give stakeholders a wider account of their activities.
“We are entering a new era in corporate reporting,” said Mervyn King, chairman of the Integrated Reporting Committee (IRC), which produced the guidance. Traditional annual reports, with their focus primarily on financial information and the short-term horizon, do not meet the changing needs of investors and other stakeholders, he said.
The guidance is aimed at companies listed on the country's Johannesburg Stock Exchange (JSE), which are required to publish an “integrated report” for their current financial year.
South Africa's corporate governance code says listed companies should issue integrated reports so that stakeholders can assess the long-term sustainability of the business. The JSE changed its listing rules in February, requiring companies to comply with the code for financial years that started after March 2010.
King said an integrated report should provide stakeholders with a meaningful and concise overview of the organization.
“An integrated report is not simply bolting the sustainability report to the financial report,” he said. “It incorporates, in clear language, material information from these and other sources to enable stakeholders to evaluate an organization's performance and to make an informed assessment about its ability to create and sustain value.”
The guidance, “Framework for Integrated Reporting and the Integrated Report,” is open for public comment until April 25, 2011.