Keynote address


Prof. Mervyn E. King

Chairman Emeritus of the International Integrated Reporting Council (IIRC) in the United Kingdom and the King Committee on Governance in South Africa


Until the end of the 20th century, corporate leaders looked at value through the financial lens. This shareholder-centric governance model mainly focused on increasing shareholder’s wealth instead of the long-term health of the company. However, this system collapsed in 2008.

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The only thing worse than being blind is having sight and no vision.

Hellen Keller

Time has come to challenge the premise of maximizing shareholder value at any cost and implementing regulations focused only on shareholders. Society is questioning the outcomes, impacts and effects that a product or service has on the three critical dimensions for sustainable development: the economy, the society and the environment. The due diligence of the supply chain, the respect of human rights and of the environment, and the perception of stakeholders and citizens through social media have put intangible assets under scrutiny. We cannot carry on business as usual; we’ve got to carry on business as unusual.


Does your company make its money in a sustainable manner? Value is no longer looked at through financial lens. It is looked at through value creation lens that result in corporate social investment. Today, intangible assets represent 86% while other assets are only at 14%. The intangible assets suddenly have a greater percentage part of the market capitalization of iconic companies.

Since the 1930s, financial reporting has been the rule. However, in order to have a “Healthy Company”, we need the collective mind of the board and the management to ensure the long-term health of the company, including the long-term interest of all its stakeholders. And this means inclusive capitalism.


One of the first steps to address these challenges was the launch of the Principles of Responsible Investment in 2006. Investors started thinking differently on how to make capital available and, as a result, the due diligence of a company in the world’s capital markets changed completely. From then on, it was not only about financial due diligence, but, holistically, questions were asked about how the company produces value and creates positive impact. If companies do not implement such an approach, their actions and investments are not representative of the priorities of the 21st century.


In 2008, the Global Reporting Initiative agreed that financial reporting is critical but it’s no longer enough. As we are in a resource-constrained world, it is a crucial element for companies to be sustainable and to build their business model and strategy around sustainability issues. This is no longer a silo of Corporate Social Responsibility, but it should be embedded into the overall long-term strategy of the company.


Reporting became outcomes-based with integrated reporting. Governance covers not only how you direct, how you steer the company, but also how you manage it. The oversight of the board on management and its decisions is key. Boards need to be fully informed about stakeholder relationships, sources of value creation and, overall, how the company makes its money. The agenda items need to change at board meetings in order to focus on the pressing subjects that impact the long-term value of the company.


The criteria for success during the 20th century was to increase share price and profit, no matter the cost to society and the environment. In the value creation model, the outputs stop inside the company, yet the product or service goes out into society to create positive outcomes and to ameliorate the negatives. What are common sense principles of corporate governance in this changed world? It’s easy if you remember the following acronym: ICRAFT (Integrity, Competence, Responsibility, Accountability, Fairness and Transparency).


Companies applying these principles will be practicing good governance that creates an ethical culture and effective leadership, value in a sustainable manner, adequate effective controls and informed oversight, and, most importantly, trust and confidence of community and legitimacy of operations.


The vision must be to have a company-centric governance model which moves away from yesterday’s primacy of the shareholder. It needs to be implemented mindfully to achieve the right outcomes within its business model.