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7th Colloquium opening statement

Professor Mervyn King

The changing market cap

Towards the end of the 20th Century,  the limited liability company was using natural assets faster than nature was regenerating them – clearly not a sustainable matter. By 1997, it became apparent that the makeup of the market capitalisation of some iconic companies was changing as a result. As we turned into 21st century only about 20% of the makeup of the market cap was reflected as additives in a balance sheet according to financial reporting standards. This led to the drafting of guidelines by the Global Reporting Initiative (GRI) to guide corporations, and other organizations, on how to report on these incorporeals, intangibles, sustainability and now called ESG —  Environment, Social and Governance — issues.

Impacts on duties of accountability

When I was Chairman of the United Nations on Governance and Oversight and Chairman of this Global Reporting Initiative IFAC held a meeting at the United Nations. We discussed how directors were not discharging their duties of accountability in the following cases:

  • annual reports consisting of only financial statements that did not reflect the make-up of the market cap; and
  • financial statements and reporting on the impacts of the company on the economy, society and the environment that was divorced from reality as these things work together, not in silos

The discussions then started about connecting or integrating this information.

Reporting to effectively demonstrate accountability

Connected Reporting or Integrated Reporting? The  etymology of the word connecting is link and the etymology of the word integration is  system. It was therefore argued that the term “Integrated Reporting” would better reflect what was required. This led to the GRI and Accounting for Sustainability (A4S) launching the International Integrated Reporting Council (IIRC), of which I became the  Chairman.

The start of Integrated Reporting

In 2009, as Chairman of the King Committee on corporate governance in South Africa, we recommended that South Africa should follow an approach of integrated reports and drafted a framework for such a report. The Johannesburg Stock Exchange agreed and made integrated reporting a listing requirement. The IIRC used this as the basis on which to develop the <IR> Framework which has become well known as the International Integrated Reporting Framework. This was the start of integrating  the financial and non-financial information.

Inside-out and outside-in

Importantly though, we were still looking at sustainability from the ‘inside-out’ – the impact of the company and its products and outcomes, on the economy, society, and the environment. Meanwhile there were some seismic events, such as the collapse of Lehman Brothers, which showed the impacts external factors could have on the company. It was these events that launched the Sustainability Accounting Standards Board (SASB). SASB started looking at sustainability from the ‘outside-in’ – that is from the perspective of the impacts of the Brundtland Commission’s three critical dimensions for sustainable development (people, planet, and prosperity) on the company. We saw that sustainability, like a coin, had two sides.

A myriad of standards developed and are now consolidating

Thereafter a myriad of framework providers and standard setters leaped into this ESG space. I gave a talk in London where I said that it was a moral and social outrage that standard setters saw themselves as competitors when  they all should have the same outcome in mind – namely a global comprehensive corporate reporting system. I said we needed some consistency in this reporting rather than the clutter and confusion which was being created for preparers and users. I am told that this had some effect and soon the Group of Five, which included the IIRC and SASB, issued a statement of intent to collaborate. Inevitably, collaboration led to talks of merger and SASB and the IIRC merged to create the Value Reporting Foundation (VRF). Further progress led to a ‘sale’ of the VRF to the IFRS Foundation (IFRS) and the SASB standards were pushed into a new body, the International Sustainability Standards Board (ISSB) under the oversight of the IFRS, a sibling to the International Accounting Standards Board (IASB). This is due for completion by the end of June 2022.

The positioning of Integrated Reporting Framework

The <IR> Framework, as a result,  is being positioned within the IFRS Foundation. There is a problem with this because, although the IASB and ISSB have the authority to set standards and evolve, the IFRS Foundation does not have such powers as it is positioned as a monitoring and oversight board under IOSCO. I speculate that the answer to this problem is for the IFRS to pass ownership of the <IR> Framework jointly to the IASB and ISSB  to form a Working Group in regard to the <IR> Framework. This would  be a baseline for the creation of the integration and connectivity of the financial and non-financial information. Meanwhile the ISSB would issue baseline  sustainability reporting disclosures on which different jurisdictions, using a building blocks approach, can add pertinent layers.

Common cause

The beginning of the end of clutter and confusion was the issuing of the statement of collaboration. Now we are at the beginning of the end of all that. We are creating a large stepping-stone towards moving from one side of the river of corporate reporting’s clutter and confusion to the other side of a global comprehensive corporate reporting system. What  is intriguing in the developing standards and regulations — the European Union’s European Sustainability Reporting Standards (ESRS), China’s statements, the ISSB Standards and the United States Securities and Exchange Commission’s regulations — is that there is common cause; a need for connectivity between financial and non-financial information. 

Hence, the content and the theme of the 7th Colloquium – “Connectivity”.

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Prof. Mervyn King

Patron, Good Governance Academy

Mervyn King is a Senior Counsel, former Judge of the Supreme Court of South Africa, and designated Chartered Director (South Africa). He is Professor Extraordinaire at the University of South Africa, Honorary Professor at the Universities of Pretoria and Cape Town, and a Visiting Professor at Rhodes University. He has honorary Doctorates from Wits University and Stellenbosch University in South Africa, Leeds University in the UK, and Deakin University in Australia.


Mervyn is honorary fellow of the Institute of Chartered Accountants of England and Wales; the Institute of Internal Auditors of the UK; the Chartered Institute of Management Accountants; the Certified Public Accountants of Australia; the Chartered Institute of Public Relations of the UK, and the Chartered Secretaries and Administrators.


Mervyn is Chair Emeritus of the King Committee on Corporate Governance in South Africa, as well as of the Value Reporting Foundation (incorporating the International Integrated Reporting Council and SASB) and the Global Reporting Initiative (GRI). He has received Lifetime Achievement Awards for promoting quality corporate governance globally, from several institutions.


Mervyn chairs the Good Law Foundation and has chaired the United Nations Committee of Eminent persons on Governance and Oversight. He is a member of the Private Sector Advisory Group to the World Bank on Corporate Governance and of the ICC Court of Arbitration in Paris. Mervyn currently chairs the African Integrated Reporting Council and the Integrated Reporting Committee of South Africa and is Patron of the Good Governance Academy.


Mervyn has been a chair, director and chief executive of several companies listed on the London, Luxembourg and Johannesburg Stock Exchanges. He has consulted, advised and spoken on legal, business, advertising, sustainability and corporate governance issues in over 60 countries and has received many awards from international bodies around the world including the World Federation of Stock Exchanges and the International Federation of Accountants.


He is the author of many books on governance, sustainability and reporting, the latest being “The Healthy Company.”

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