Ethical leadership, the organisation in society, corporate citizenship, sustainable development, stakeholder inclusivity, integrated thinking and integrated reporting are some of the key foundations of good governance and what King IV is all about.
The main theme of King IV promotes the move from financial capitalism to inclusive capitalism. From financial capitalism to inclusive capitalism.
There is now general acceptance that the employment, transformation and provision of financial capital represent only a fraction of an organisation’s activities. Instead, inclusive capitalism takes account of the employment, transformation and provision of all sources of capital – the six capitals – to reposition capitalism as the engine of shared prosperity. It aims to ensure parity to the sources of value creation.
Organisations are moving towards the realisation that “Long-term financial performance depends on the efficient and productive management of resources not currently measured by traditional accounting methodologies – human, intellectual, social and relationship, and natural capitals. The financial capital market system is insufficient to guard against the multifaceted and interconnected risks of the future and hence an inclusive market system should be adopted” (Jonathan Labrey from the IIRC).
Our Sustainability team can assist organisations to prepare for the new reality and new risks or opportunities that will face organisations in the future and the profound changes that are bound to occur.
The equation is simple, the more an organisation’s business model positively impacts on society and the environment, the more the quality of life in developing economies will improve. This improvement, in turn, will positively affect the prospects for those organisations.
In essence, sustainable capitalism refers to an economic system in which value is created in a sustainable manner. The period indicated by long term or longer term would depend on the strategic objectives of the organisation and the risks and opportunities presented by its external environment, including its material stakeholders. The aim is to ensure long term sustainability as a goal for all.
Covid-19, social unrest, protests like “black lives matter” “the me too” movement and others are creating a growing sense that a narrow focus on short-term objectives with little or no consideration of stakeholders or the long-term effects on either the organisations concerned, the economy, the people or the planet as a whole, which is not sustainable.
As a key aspect of its governance role and responsibilities, King IV emphasizes the need for a stakeholder inclusive approach that balances the legitimate needs, interests and expectations of material stakeholders in the best interests of the organisation over time – King IV principle 16
BDO can assist with the development of stakeholder engagement and management models, Social Licence to operate audits,
Contact a Sustainability Specialist