As discussed elsewhere in this newsletter, faith in free and fair markets is under siege. Never has it been more apparent why high corporate governance standards are needed for protecting and enhancing shareholder value. Effective corporate governance is now in demand the world over and a global initiative is underway to provide a code that might help deliver it.
It’s called the Global Reporting Initiative (GRI) and aims to provide global standards of information that are timely, credible and consistent about an organisation's economic, environmental, and social performance. GRI was started in 1997 and is sponsored by the United Nations Environment Programme and the Coalition for Environmentally Responsible Economies. There is active participation from corporations, Non Governmental Organisations, accountancy firms, business associations, and other stakeholders from around the world.
Last month the GRI held a major conference in Kuala Lumpur where one of the discussions focussed on the role of Stock Exchanges in fostering higher standards of environmental and social reporting. A significant precedent has been set by the King Report on Corporate Governance for South Africa, known as “King 2”. This was released in March and has been heralded internationally as one of the most comprehensive and progressive blueprints for corporate governance in the world.
King 2 sets the stage for good corporate governance in South Africa via the Code of Corporate Practices and Conduct and the Johannesburg Stock Exchange now requires all listed companies to comply with the King 2 Code. Terms like “Good Corporate Governance” and “Corporate Social Responsibility” are all very well as ideals but until now, changes in behaviour have been voluntary. South Africa is leading the way and perhaps others will follow.
(Thanks to Tessa Tennant, Executive Chair of the Association for Sustainable and Responsible Investment in Asia, for her kind permission to use material published in the August Issue of Ethical Investor.)
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