Boards have a duty to maximise a company’s overall economic value and ensure best use of all types of capital. They need to report openly on the companies’ achievements and challenges to its owners.
Boards need to take responsibility for driving the organizational change towards integrated thinking and for ensuring the content of their corporate reporting meets owners’ information needs.
Active governance requires positive action and candid disclosure by boards to meet the material information needs of their shareholders. Directors should ask themselves whether they are satisfied with the following:
- Are the board and management’s strategic planning activities, including the impact on strategy and strategic objectives, being communicated effectively?
- Is the board’s assessment of strategic risks and external factors (including going concern) being communicated properly? Does this communication include an explanation of what has changed and the consequential impact, including any changes to the organisation’s risk profile?
- Have executive and staff incentives been discussed? Is the link to integrated thinking, cultural change and effective implementation of short- and longer-term strategies explained?
- How have one-off reportable events been handled? Has there been continuous disclosure? Does disclosure include board activity, speed and accuracy of response, and consequences/outcomes?
- Has the content of the Integrated Report been discussed regularly? Have the directors been involved in the structure and design of the primary report, other public reports and other board papers?
- Have changes to standing data been properly explained? What about implications of the changes on strategy or risk?
- Active Governance: The Core Of Better Business Reporting (Integrated Reporting - Issue 2, page 36)