That was the week that was.  Our Emergency Congress with Rights & Humanity and the South African Human Rights Commission (SAHRC) inspired a consistently high level of contribution over the first two days of speeches – and an exhilarating drafting day, building on a wonderful sense of shared convergence of ideas, values and principles, which will inform out contribution to G20.

It was above all a week which reinforced the importance – once again – of understanding global developments, and being alert to new thinking and practice from across the world.  The original idea for the event was that it would be hosted in South Africa, and chatting with Jody Kollapan of the SAHRC – as well as Julia Hausermann – I was reminded of the extraordinary leadership of South Africans in framing their new constitution.

This was reinforced with news from Peter Desmond, Tomorrow’s Company member and a key player in our Beyond Accounting programme, looking at non-financial reporting.  Over here in the UK, we have been building the case for advocating that there should be a mandatory requirement to ensure that Company Directors take environmental, social and governance factors into account, and that audits be required to evidence that this has been done.

In South Africa, it is expected that the Companies Act will be passed into law on July 1 next year. The report will be effective from March 1 2010. The new provisions will be based on ‘King 3’ which applies to all entities, regardless of the manner and form of incorporation and establishment.  It is mandatory for all listed companies on the JSE.

King 3 recommends that sustainability reporting should

·         be focussed on substance over form and should transparently disclose information that is material, relevant, accessible, understandable and comparable with past performance of the company.

·         be formalised as part of the company’s reporting processes

·         have independent assurance

It goes onto make a whole host of suggestions which go well beyond sustainability reporting:

             On pay and renumeration

·         executive pay, particularly bonuses and incentive schemes - King 3 recommends that shareholders approve in advance all long-term share-based and other incentive schemes. It is also recommended that nonexecutive directors should not receive share options. Further, it is recommended that highly leveraged incentive schemes be used with care as they may result in excessive cost or risk for the company.

·         remuneration for individual directors, recommending that companies provide full disclosure of directors’ remuneration individually, giving details of pay, bonuses, share-based payments, restraint payments and all other benefits. King 3 recommends that the remuneration committee ensures an appropriate mix of pay, and that incentives be based on verifiable targets.

·         proposing that an annual remuneration report be issued by the company. Unjustified windfalls arising from the operation of share-based and other incentives are cautioned against.


On the role and structure of the Board

·         enhancing the role of the board - that the chairman monitor how the board functions collectively, how individuals and directors perform, and how they interact at meetings.   

·         the majority of the board should still be composed of nonexecutive directors who should be independent – and that a minimum of two executive directors should be appointed to the board, being the CEO and the director responsible for finance, to  ensure that there is more than one point of contact between the board and the management.