Dube Reports 2021

i
An assessment of the relationship between integrated reports and

environmental, social and governance disclosures in the mining sector in
South Africa
by
Xolani Dube
Thesis is presented in partial fulfilment of the requirements of the degree of Master of Philosophy
(Applied Ethics) in the faculty of Arts and Social Sciences Stellenbosch University
Supervisor: Prof. M. Woermann
December 2021
Stellenbosch University https://scholar.sun.ac.za
ii
Declaration
By submitting this thesis electronically, I declare that the entirety of the work contained therein is my
own, original work, that I am the sole author thereof (unless otherwise stated), that reproduction and
publication thereof by Stellenbosch will not infringe upon any third party’s rights, and that I have not
previously, in its entirety or in part, submitted it for any other qualification.
December 2021
Copyright © 2021 Stellenbosch University
All rights reserved

iii
ABSTRACT
The primary objective of my thesis is to assess the effectiveness of integrated reports in addressing
Environmental, Social and Governance (ESG) matters in the South African mining sector with a
special focus on JSE listed mining companies. Integrated reporting evolved from sustainability reports
and the aim was, in part, to address ESG concerns through adequate reporting. Integrated reports are
expected to be a platform whereby the business community can communicate effectively with
stakeholders through quality disclosures. The study employs a secondary data approach in which two
indices are used to test the relationship between integrated reports and the quality of ESG disclosures.
These are the Ernst & Young (EY) Excellence in Integrated Reporting survey and the Johannesburg
Stock Exchange’s (JSE) Socially Responsible Investment (SRI) index results for 2011 and 2018 which
I evaluate to assess if the quality of disclosures improved between 2011 and 2018. Specifically, I use
the results from 2011 and 2018 to determine if the quality of ESG disclosures improved because of the
introduction of integrated reports. EY survey results show that the quality of disclosures is not
improving; mining companies have not registered an improvement since the year 2011. This is
however inconsistent with the findings of my literature review. This suggests that more research is
needed to discern the benefits of integrated reports.
OPSOMMING
Die hoofdoel van hierdie tesis is om die doeltreffenheid van geïntegreerde verslae oor die impak van
omgewings-, maatskaplike en regeringsake (ESG) in die mynbousektor in Suid-Afrika - veral JSE-
genoteerde mynmaatskappye - te beoordeel. Geïntegreerde verslae het ontwikkel uit volhoubaarheids
verslae en die doel was om ESG bekommernisse oor voldoende verslagdoening in deel aan te spreek,
en sal ‘n platform wees waardeur die sakegemeenskap effektief met belanghebbendes kan
kommunikeer deur middle van kwaliteit openbaarmaking.
Die studie het ‘n sekondêre data-benadering aangewen en twee indekse is gebruik om die verband
tussen geïntegreerde verlae, en die kwaliteit van ESG openbaarmarking, te toets. Die ‘Ernst and Young
Excellence in Integrated Reporting Survey’ en die SRI indeksresultate vir 2011 en 2018 is vir die
studie gebruik om te bepaal of die kwaliteit van openbaarmaking deur die instelling van geïntegreerde
verslae tussen 2011 en 2018 verbeter het.
Die resultate van die EY-opname toon geen merkbare verbetering in die algemeen nie en dat
mynmaatskappye sedert 2011 geen verbetering in openbaarmaking geregistreer het nie, wat
teenstrydig is met die bevindings van die literatuuroorsig. Dit dui daarop dat meet navorsing benodig
word om die voordele van geïntegreerde verslae krities te evalueer.
iv
ACKNOWLEDGEMENTS
This thesis is dedicated to my late mother Agnes Dube and to my late brother John Dube; you were
both an inspiration. Thank you to Prof Minka Woermann for being a patient and helpful supervisor;
your help benefitted me greatly. I would also like to thank my family, specifically my daughter Uviwe,
for your support throughout this journey.
TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION AND BACKGROUND TO THE STUDY ................................ 1
1.1. INTRODUCTION ....................................................................................................................... 1
1.2. SUSTAIANABILITY REPORTS............................................................................................... 2
1.3. INTEGRATED REPORTS ......................................................................................................... 2
1.4. PURPOSE OF THE STUDY ...................................................................................................... 4
1.5. AIMS OF THE STUDY .............................................................................................................. 5
1.6. METHODOLOGY ...................................................................................................................... 5
1.7.STRUCTURE OF THE THESIS ................................................................................................. 6
CHAPTER 2: LITERATURE REVIEW........................................................................................... 7
2.1. INTRODUCTION ....................................................................................................................... 7
2.2. THEORETICAL FRAMEWORK .............................................................................................. 7
2.2.1. Agency theory and ESG disclosures .................................................................................... 7
2.2.2. Stakeholder theory and ESG disclosures.............................................................................. 8
2.2.3. Legitimacy theory and ESG disclosures............................................................................. 15
2.3. REPORTING FRAMEWORKS ............................................................................................... 16
2.3.1. Global reporting initiative framework (GRI) ..................................................................... 16
2.3.2. International integrated reporting framework (IIRC) ......................................................... 20
2.3.3. Integrated reporting committee of South Africa ................................................................ 24
2.3.4. King Report recommendations ........................................................................................... 25
2.4. SUMMARY OF CHAPTER ..................................................................................................... 26
CHAPTER 3: METHODOLOGY, FINDINGS, DISCUSSIONS AND CONCLUSIONS ......... 28
3.1. INTRODUCTION ..................................................................................................................... 28

vi
3.2. SAMPLING OF COMPANIES ................................................................................................ 29
3.3. CHOICE OF YEARS ................................................................................................................ 30
3.4. INDICES ................................................................................................................................... 30
3.4.1. Ernst & Young Excellence in Integrated Reporting survey ............................................... 30
3.4.2. SRI index rating.................................................................................................................. 36
3.5. RESULTS.................................................................................................................................. 38
3.6. DISCUSSION ........................................................................................................................... 42
3.7. CONCLUSION OF STUDY ..................................................................................................... 44
LIST OF FIGURES
Figure 1: Ernst & Young mark plan’s seven guiding principles ...................................................... 33
Figure 2: Content elements of the Ernst & Young mark plan .......................................................... 34
Figure 3: SRI index minimum requirements .................................................................................... 36
Figure 4: Ernst & Young results for 2011 and 2018 ........................................................................ 38
Figure 5: SRI index scores for 2011 and 2018 ................................................................................. 38
Figure 6: Ernst & Young excellent results for 2011 to 2018 ........................................................... 39
Figure 7: Ernst & Young good results for 2011 to 2018 .................................................................. 40
Figure 8: Ernst & Young average results for 2011 to 2018 ............................................................. 40
Figure 9: Ernst & Young overall results for 2011 to 2018............................................................... 41
LIST OF TABLES
Table 1: Category of stakeholders ...................................................................................................... 9

CHAPTER 1: INTRODUCTION AND BACKGROUND TO THE STUDY
1.1. INTRODUCTION
In this chapter, I contextualize the study, introduce the aims of the thesis, introduce the method that
will be employed to investigate the aims, and provide the study layout. I explain in detail the role
played by reporting frameworks for both Sustainability Reports and Integrated Reports. I also briefly
discuss stakeholder value creation as the principal theory driving this study.
It is common knowledge that the impact of industrial and corporate activities is affecting communities,
stakeholders and the environment (Aras and Crowther 2009: 2). Corporations are perceived as a major
influence on living standards and the state of the world economy. The apparent unethical conduct of
corporations has played a significant role in degrading the environment. A focus on maximising profits
has arguably been detrimental to both good corporate behavior and to meeting the expectations of
stakeholders. The credit meltdown in 2008, for example, is widely viewed as a crisis of corporate
governance. This has created a keen interest in the conduct of corporations. A solution to misconduct
by corporations lies in good ethical behavior and in governance supported by effective and transparent
communication.
A growing demand to know more about the affairs of corporations has compelled businesses to explore
new avenues for communication with stakeholders. Edward Freeman (1994) provides a suitable
definition of a stakeholder as an individual or institution that both affects and is affected by a business.
Examples of stakeholders include employees, customers, suppliers, communities, and government.
The popularity of stakeholder theory is an illustration of a new paradigm in which one can say that the
collective voice of stakeholders is louder than that of shareholders. Freeman emphasises that, for a
business to remain relevant, it must consider the interest of all stakeholders. Stakeholders participate
more than ever before in corporate affairs, and many companies are responding to this pressure by
developing mechanisms that improve corporate reporting (Drury 2004: 16).
Corporates must direct their efforts towards meeting these expectations or risk losing their reputations
(Eccles and Krzus 2009: 16). The primary role of the board of directors is to provide leadership in
creating and managing relations between stakeholders and the company (IoDSA 2016: 21). Thus,
relationships between stakeholders and corporate bodies are underpinned by ethical responsibilities
(Freeman et al. 1995: 98). The previous disconnect between corporations and stakeholders is replaced
by a new culture in which corporations are accountable to all stakeholders, and their conduct is
considered both a statutory matter and an ethical one. Good corporate behavior is best achieved when
both ethics and the spirit of the law underpin corporate culture.
Corporate governance is closely connected with sustainable development. The Brundtland Report
defines sustainable development as the meeting of our present needs without compromising the ability
of future generations to meet their needs (UN 2003: 21). John Elkington’s (1994) triple bottom line
concept – commonly referred to as “people, planet and profit” (i.e. social, environmental and financial
issues) – is a business principle driven by sustainability concerns. Financial reports traditionally
contain information relevant only to equity holders and sustainability matters are seldom addressed.
Corporations are however under pressure to express their commitment to transparent and sustainable
business practices. For this reason, sustainability reports (introduced in the 1980’s) have received much
attention in recent years.
1.2. SUSTAINABILITY REPORTS
A sustainability report is a stand-alone report separate from financial reports. Its aim is to provide
stakeholders with a detailed account of environmental, social and governance matters. Sustainability
reports have evolved since the 1980’s. Today they are highly respected, and even viewed as on a par
with financial reports. The other names for sustainability reports are Environmental, Social and
Governance (ESG) reports or Corporate Social Responsibility (CSR) reports. Sustainability reports are
used to outline the achievements and the commitment of the firm in terms of its triple bottom line
(Aggarwal 2013: 52).
Sustainability reports, together with financial reports, show accountability by corporates to their
stakeholders. Sustainability reports provide data and information relevant to stakeholders (e.g.
governments, customers and communities), while financial reports are a mechanism to communicate
with and account to investors. Around the world, sustainability reporting has been accepted as a
fundamental business principle (KPMG 2011: 6). Sustainability reports are not regulated by any
statutory instruments however, but are instead guided since 2000 by the Global Reporting Initiative
(GRI).
A weakness of sustainability reports has always been their voluntary nature; this makes it very difficult
for them to become established in the corporate world. This weakness has led to the emergence of
integrated reports that have changed the governance landscape in significant ways.
1.3. INTEGRATED REPORTS
Simply put, integrated reports are sustainability reports merged with financial reports. One of the key
differences between integrated reports and financial reports is that integrated reports are forward-
looking while financial reports provide an account of the past. These reports were not introduced to
displace sustainability reports but to enhance the role played by sustainability reports. An integrated
report explains the character and quality of the relationship between a business and its stakeholders
(IRC 2014: 4). Integrated reports are viewed as a single source of truth (Beck et al. 2015: 201), and
have the potential to construct a platform in which all stakeholders participate as equals (Eccles and
Krzus 2009: 152). According to Cheng et al, “integrated reporting will be in the near future the
inevitable indispensable means by which companies account to their stakeholders and the public for
what is expected of them” (2010: 24).
Integrated reports were introduced in 2009 after the International Integrated Reporting Committee
(IIRC) was established in London. 1 Leading sustainability institutions were involved in the formation
of the integrated reporting framework; these include the Global Reporting Initiative (GRI), the
Business Council for Sustainable Development, the World Resources Institute, the Disclosures Project
and the United Nations Global Compact (Stubbs and Higgins 2014: 1069). The sole aim of the IIRC
is to generate guidelines that act as a template corporations are expected to use as a reference point
when generating integrated reports. This serves the interests of all stakeholders and helps to achieve
effective communication, not to mention facilitating the corporate governance principles contained in
governance reports such as South Africa’s King IV Report.
The Integrated Reporting Council (IRC) of South Africa was formed in May 2010, a year after the
formation of the IIRC. Dr Mervyn King – sometimes considered the champion of corporate governance
in South Africa – was instrumental in the founding of the IRC of South Africa which is the benchmark
for integrated reporting in South Africa. The pronouncements of the 2016 King Report on integrated
reports is in line with the IRC of South Africa. In South Africa, all listed companies are compelled to
generate integrated reports according to the stipulations of the 2016 King Report (Eccles and Krzrus
2009: 03). South Africa is often recognized as a world leader in promoting corporate governance
through reforms such as the introduction of integrated reports (ACCA 2012: 06). The JSE was in fact
the first stock exchange in the world to make integrated reporting a listing requirement and is therefore
globally admired as a leader in the implementation of the integrated reporting framework (IIRC 2011:
25).
The requirement for companies to practice integrated reporting in South Africa is a notable step
towards a sustainable business environment (Eccles and Saltzman 2011: 57). At the center of integrated
reporting is the intention to (1) integrate financial reports and ESG reports, (2) integrate the objectives
of companies with the triple bottom line, and (3) integrate the interest of the diverse stakeholders in a
1
Elkington however planted the seeds of integrated reporting as far back as 1994 when he crafted the triple bottom line
concept (Eccles and Saltzman 2011: 59).
company. This is the reason why integrated reports are a moral and ethical issue in the business world.
However, integrated reports are limited to public limited companies listed on the JSE. Other forms of
business, such as private limited companies and partnerships, are not compelled to uphold the
stipulations of the IRC of South Africa. This is a significant drawback in the application of integrated
reporting in South Africa.
Everingham and Kana state that
corporate reporting is in a process of evolution. Over time companies can expect growing
pressure to develop meaningful disclosure practices that more adequately address the diverse
information requirements of different stakeholder groups on an integrated basis (2008: 3).
It follows that integrated reporting can play a leading role in improving the quality of disclosures and
help to build trust between corporations and communities (Forker 1992: 76).
The above explication serves to introduce the various efforts in the business world to address
stakeholder concerns in an open and transparent manner. As should be clear, there has been a gradual
evolution in the business world from financial reporting to sustainability reporting and finally to
integrated reporting in addressing ESG concerns.
1.4. PURPOSE OF THE STUDY
The aim of my study is to critically evaluate the effect of integrated reports on the quality of social,
environmental and governance disclosures made by mining companies listed on the JSE. The JSE has
a total of three hundred and seventy-one companies currently listed, all of which are compelled by the
King Report to generate integrated reports. This study will focus on JSE listed mining companies,
specifically what are considered to be the top five: (1) Anglo gold Ashanti Ltd, (2) Lonmin Ltd, (3)
BHP Ltd, (4) Exxaro Ltd, and (5) African rainbow Ltd. 2
Subsidiary companies of holding companies are excluded from this study because the both are guided
by the same policy. A holding company is a parent company with direct control in its subsidiary
companies. Holding companies, through their majority shareholding, will in most cases impose their
policies on subsidiary companies. In other words, the reporting policies of subsidiary companies
resemble that of their parent company. The standards of reporting of both the parent and the subsidiary
are therefore the same, and evaluating both is unnecessary.
2
Sample mining companies for the study were drawn from a list available at http://www.jse.co.za.
The South African economy depends on, among other things, mining activities for employment,
foreign currency earnings and contributions to the national treasury in the form of tax. Mining in South
Africa played a significant role in establishing the JSE, and mining companies currently contribute
30% of capital circulating at the JSE. Mining thus remains a critical constituency of the South African
revenue service. That said, mining activities have degraded the environment. Ground water in
particular is heavily contaminated with acid from mining. Amouroux et al’s (2013: 113) research
demonstrates that the western part of Gauteng – a traditional gold mining area – has high levels of acid
contaminating ground water sources. Mining have been identified as the cause of the contamination.
Mining activities are highly detrimental to the environment, particularly in South Africa. The
abandoned asbestos mines in South Africa remain unrehabilitated, and a large land mass in the North
West province is unusable due to mining activities (Sorensen 2011: 644).
Mining companies have also been accused of paying insufficient attention to the spread of HIV and
TB in the mining sector. The prevalence of HIV and TB can be blamed on both overcrowding in hostels
used to house mine workers and the over-reliance on a migrant labour force (Corno and de Walque
2012: 472).
Some might say that there is therefore a ‘dark cloud’ over the mining sector. As such, the mining sector
in South Africa will have to transform itself and become a sector that conforms to the expectations of
its stakeholders. More effort needs to be directed to sustainable methods of mining, and more attention
should be given to social and environmental matters. This research study seeks to evaluate the
environmental, social and governance concerns in the mining sector through reporting and disclosures.
1.5. AIMS OF THE STUDY
The aim of my study is to reach an objective conclusion regarding the influence of integrated reports
on the quality of ESG disclosures. This will be achieved by comparing the outcomes of ESG
disclosures. In South Africa, integrated reports replaced sustainability reports in 2011. This study will
evaluate the quality of disclosures in these reports for the period 2011 and 2018. I will use the Ernst &
Young (EY) Environmental, Social and Governance (ESG) disclosure scores and the Johannesburg
Stock Exchange’s (JSE) Socially Responsible Investment (SRI) index for each of the five companies
identified to assess changes concerning the quality of disclosures made between 2011 and 2018.
1.6. METHODOLOGY
EY is an accounting firm established in London in 1849. EY has operations across the globe including
in South Africa. The South African office annually runs a program called EY Excellence Awards
(introduced in 1998) in which JSE listed companies are rated in terms of ESG disclosures. The scores
achieved by each participating company are guided by an index created by EY.
My study will also refer to ESG data provided by the SRI index. The SRI index was a world first in
2004 at the JSE. Both EY and SRI are internationally respected independent institutions that have been
at the JSE for more than 15 years. They annually rate JSE listed companies on a voluntary basis. The
five mining companies selected for this study have all been rated by both EY and the SRI index for
the period 2011 and 2018. For all five, two scores will be used, one from each rating company.
1.7. STRUCTURE OF THE THESIS
Chapter two contains my literature review in which literature regarding sustainability reporting and
integrated reporting will be discussed. I also discuss the concepts of stakeholder theory, voluntary
disclosure and legitimacy theory. We will also pay attention to the transition from financial reporting
to sustainability reporting and to integrated reporting. I also focus on guidelines provided by and the
framework designed by the GRI and the IIRC. I conclude with a discussion of the King Report. Chapter
two is informed by existing literature on ESG reporting and gives special attention to integrated
reporting at the JSE.
In chapter three, I focus on the sampling procedure and the evaluation process of the two indices
previously mentioned. I analyze the scores achieved by the sampled companies with the goal of
evaluating the effectiveness of integrated reporting on ESG disclosures. After a discussion of the
findings, I conclude chapter three with suggestions for future research and with a summary of the main
findings of my thesis.
CHAPTER 2: LITERATURE REVIEW
2.1. INTRODUCTION
In this chapter, I discuss the existing literature on integrated reporting and the relationship between
these reports and the quality of ESG disclosures at the JSE. This chapter is divided into three sections
each of which focuses on a specific component of the relationship between integrated reports and ESG
disclosures.
Firstly, I discuss three theories relevant to this study: (1) agency theory, (2) stakeholder theory, and
(3) legitimacy theory. They sit at the heart of good corporate governance in both public and private
corporations. I will also explicate the link between integrated reports and these theories.
Secondly, I discuss frameworks that are currently in place to regulate the structure of integrated reports.
I give special attention to (1) the International Integrated Reporting Council (IIRC), (2) the Global
Reporting Initiative (GRI), (3) the Integrated Reporting Committee (IRC) of South Africa, and (4) the
King IV Report. Each of these frameworks provide not only a template, but also the spirit and values
that can safeguard the effectiveness of integrated reporting. The origins of these frameworks and their
strengths and weaknesses will also form part of my literature review.
Lastly, I focus on integrated reports as a modern vehicle to drive forward the ethics agenda of reporting.
Sustainability reports are currently viewed as the genesis of integrated reporting, and my literature
review will cover, not only sustainability reporting, but also statements of financial performance and
statements of financial position; these are collectively known as financial statements.
2.2. THEORETICAL FRAMEWORK
2.2.1. Agency theory and ESG disclosures
Agency theory seeks to explain the relationship between shareholders and the board of directors of an
enterprise, business or firm. According to agency theory, shareholders are the “principals” and the
directors are the “agents” who act on behalf of them (Mohammed and Muhammed 2017: 76). Agency
theory is an attempt to create an environment in which managers can effectively act on behalf of the
owners of the firm (Bendickson et al. 2016: 178). The management structure of a modern firm grants
shareholders a privileged position. They participate in a voting process to elect members of the board
who report back to the shareholders.
Agency theory suggests that the directors of a company are hired to protect the interest of shareholders,
and this may conflict with the interests and values of stakeholders. Freeman (1994: 10) argues that, if
implemented, agency theory should consider all stakeholders of a business and not just shareholders.
If not, there may be a disconnect between an enterprise and its stakeholders. Demands made by
stakeholders are related to the so-called agency problem (Bendickson et al. 2016: 189). The agency
problem is defined as the dissatisfaction of the principal with the outcome of an agent’s performance;
agency costs are incentives provided by the principal in order to align their interests with those of the
agent (Bendickson et al. 2016). The agency problem illustrates that stakeholders cannot depend on a
third party to pursue their interests and calls for a widening of the agency concept.
Agency theory will have to evolve and widen its base. It should consider, not only shareholder
interests, but also protect the gains already made by the corporate world towards achieving a
sustainable business environment. Bendickson et al. (2016: 189) conclude that agents will have to
employ a new approach in closing the gap between shareholders and stakeholders. This will involve
shifting attention to all stakeholders even if it risks creating conflict within the organization. The board
of directors is slowly evolving to become the agent of stakeholders and not just of shareholders. The
corporate world is beginning to move in a new direction of inclusive capitalism. This is happening
through the social advancement of its stakeholders or corporate citizenship; it is a new model that holds
the promise of broad-based success. Agency theory in its traditional form limits the influence of a
business as a corporate citizen.
In the next section, I focus on the effectiveness of reports as a facilitator of legitimacy and how
stakeholder value is promoted through adequate reporting. I will show how stakeholder theory has
played its role in shaping the content of new reports and how it has been put forward as an incentive
for the adoption of sustainability reports and integrated reports.
2.2.2. Stakeholder theory and ESG disclosures
As mentioned in the Introduction, Edward Freemen developed stakeholder theory in 1984 and thereby
paved the way to stakeholder value creation. Corporations should be managed on behalf of
stakeholders which involves integrating the diverse interest of stakeholders (Freeman 1984: 10).
According to Freeman et al. (2010: 27), stakeholder value has the potential to ease conflicting interests
of stakeholders. Stakeholder value also creates opportunities for businesses because it encourages a
cooperative environment where conflict is reduced.
Freeman defined a stakeholder as “[a]ny group or individual who can affect or is affected by the
achievement of the organization’s objectives” (1984: 46). For Santana (2012: 260), stakeholders can
be identified through the legitimate demands or expectations they have of the firm. These demands
could be a dividend, a salary or action to be performed by the firm. The type of demand is then used
to identify the stakeholder as a primary or secondary stakeholder.
According to Fassin (2011: 41), defining stakeholders is more effective if we divide them into primary
stakeholders and secondary stakeholders. Primary stakeholders are legitimate and have a genuine legal
claim in the organization. Secondary stakeholders are those who do not have a formal and structured
relationship with the organization; their claim is indirect and usually defends the interests of primary
stakeholders, e.g. trade unions. Fassin (2011: 40) further talks of (1) stakeholders, (1) stake watchers
and (3) stake keepers. (1) Stakeholders are those who hold a well pronounced stake, e.g. shares or any
other interest that create a legitimate claim. (2) Stake watchers those with a responsibility to manage
the enterprise, e.g. directors. (3) Stake keepers are those who craft regulations and rules to monitor the
operations of a firm, e.g. auditors and independent bodies (central governments are major stake
keepers).
Fassin (2012: 89) later expands these three concepts into four as follows. (1) Stakeholders are stake
owners who own a stake in the form of shares or any instrument used to describe ownership of the
enterprise. (2) Stake watchers constitute the management team or directors hired to run and manage
the firm on behalf of stake owners. (3) Stake keepers are pressure groups and regulators in the form of
nonprofit organizations and government entities with a mandate to regulate the entire industry or
sector. (4) Stake seekers are those secondary stakeholders who aim to have a stake in the organization.
Category Stake owner Stake watcher Stake keeper Stake seeker
Attribute Stakeholder Pressure group Regulator
Legitimacy Normative Derivative Mixed Self-proclaimed
Dependence Mutual Firm Independent Independent

dependence
Influence Mutual On the firm/ On the firm/ Indirect

indirect indirect
Power and By the firm On the firm On the firm On the firm
dominance
Loyalty Natural Limited Neutral Opportunistic
Responsibility Of the firm None Externally None

imposed
10
Fairness Natural Expected Expected None existent
Reciprocity Implicit Expected Neutral Arbitrary

neutral
Table 1: Categories of stakeholders
Table 1 illustrates the four categories of stakeholders: stake owner, stake watcher, stake keeper and
stake seeker, along with attributes of the four categories. These attributes include legitimacy of the
stakeholder, influence, power and loyalty. Legitimacy extends more power and authority to
stakeholders. The grid therefore indicates that the more legitimacy a stakeholder has, the more power
and authority they will have; less legitimacy means less power and authority (Fassin 2012: 90)
Oetzel and Kathleen (2012: 179) hold a similar view to Fassin. They argue that a relationship between
stakeholders and the firm is underpinned by legitimacy and urgency. A common view among firms is
that stakeholders do not weld the same amount of influence or power. A firm’s response to stakeholder
demands is likely to be determined by the legitimacy and urgency of the stakeholder in question. This
further affirms the value of legitimacy and urgency of stakeholders.
Agle et al. (1997: 864) propose that apart from legitimacy and urgency, power (or authority) plays a
major role in stakeholder identification. The amount of legitimacy and urgency carries less meaning
without power to influence the enterprise. This power ultimately wins out regardless of legality and
urgency. Therefore, legitimacy and urgency are means to the end that is power when it comes to
stakeholder relevance.
Both Fassin (2012) and Santana (2012) think that the best way of identifying stakeholders is through
categorizing them and identifying their role or interest in a business or organization. Perrauit (2015:
31) however argues that categorizing stakeholders complicates relationships among them. Finding
means of identifying stakeholders individually is more practical and has the potential to create healthier
relationships.
Contra Perrauit, Crane and Ruebottom (2011: 77) argue that, when stakeholders are defined through
their function to consume, invest and work for an institution, stakeholders who do not transact with
that institution are excluded. LGTB formations and similar non-profit organizations do not fit into the
generic criteria of stakeholders. This reveals the shortcomings of the generic definition of stakeholders.
Religious and cultural groups may not have an economic function in the organization; they are
nonetheless stakeholders, even if they are not part of the traditional circle of stakeholders. The generic
definition and similar categorizations overlook, not only the social bond and the cohesion of all
11
stakeholders, but also their presence in the daily operations of a business. As such, firms should not
create an exclusionary list of stakeholders; individuals and institutions are stakeholders to the extent
that they affect or are affected by the firm (even if on an irregular basis). These individuals and
institutions may not be well-defined actors, but they are as relevant as putatively legitimate
stakeholders.
Perrault (2015: 25) however states that before a firm can attend to its stakeholders it should be able to
identify them. She acknowledges that identifying stakeholders effectively is a challenge, but maintains
that stakeholder identification is at the core of stakeholder value. Guidance and principles should be
put in place by organizations to be able to note and understand the interests of all stakeholders. In the
absence of an effective stakeholder identification process, firms will face problems from stakeholders
whom they have not appropriately identified.
Applying stakeholder theory to integrated reporting, Alves et al. (2011: 6) argue that stakeholder
theory enhances inclusive reporting through integrated reports. Atkins and Moroun (2015: 11) likewise
argue that integrated reporting is a more effective means of promoting stakeholder engagement.
Regarding the relationship between stakeholder value and integrated reporting, the IIRC (2013: 5)
states that an integrated report should show (1) how the organization is incorporating the views and
interests of stakeholders in their reporting and (2) how the firm is responding to stakeholder needs.
Apart from promoting relations, integrated reporting through inclusive reporting also advances the
firm’s image and its viability.
Contra Friedman’ (1996: 133) view that shareholders are the only genuine stakeholders of a firm,
profit-making should arguably not be the firm’s only objective. Friedman argues that the real interest
of any business is to increase profits on behalf of shareholders (provided such ambitions are undertaken
within the framework of the law). This view conflicts with the definition of stakeholder value creation.
Stakeholder value is a concept that allows individual businesses to get to know themselves better
through engaging the different role players who participate in different ways to help the firm achieve
its goals. According to Freemen et al. (2010: 11), stakeholder value is not a hindrance to generating
profits, but is, in fact, a key ingredient to enhancing profit-making. The stakeholder concept thus
extends opportunities, not only to the firm, but also to stakeholders (Buchholtz and Carroll 2008: 65).
Stakeholder value aligns the interests of all stakeholders, and Freeman et al. (2010: 15) believe that
such an alignment creates real value for all stakeholders. Stakeholder value is a key ingredient to
corporate success, and an inclusive approach builds a solid foundation for transparency and good
corporate governance. At the heart of stakeholder theory is stakeholder inclusiveness and equitable
12
distribution of resources. Integrated reporting has the potential to move the values of stakeholder
theory forward. The traits of both stakeholder theory and integrated reporting converge at the center
of inclusiveness and good corporate governance. 3
Englander and Kaufman (2011: 9) suggest that since the memorandum of incorporation (MOI) of a
firm instructs the directors to treat stakeholders as equitably as possible, corporations are compelled to
embrace the inclusive approach. The ideal of a sustainable business environment depends on the
stakeholder concept (Buchholtz and Carroll 2008: 65). In promoting transparency, the stakeholder
concept has the potential to repair the already damaged reputation of corporations through enhancing
trust. Transparent communication is compatible with business success. Integrated reporting promotes
clear and inclusive communication, and constitutes a significant step towards achieving sustainability
in the corporate world.
Stakeholders provide firms with a ‘social license’ to operate; a firm’s legitimacy is the outcome of
stakeholder approval. Stakeholder participation in a business is paramount, and firms are more likely
to succeed when stakeholders play their respective roles (IoDSA 2016: 25). The primary reason to
function as a business is to satisfy the expectations of stakeholders, and this task is made simpler when
stakeholders are given enough flexibility to participate. 4
According to O’ Donavan (2002: 345), legitimacy theory (discussed in section 2.2.3) and stakeholder
theory are interconnected in that they both emphasis the significance of stakeholders in the life of a
firm. When a firm can identify its stakeholders and pay attention to their needs, it initiates a lasting
partnership and achieves real value in the long run.
Regarding the mining industry in South Africa, Lingenfelder and Thomas’s (2011: 11) research
findings suggest that mining companies listed on the JSE generally do not engage stakeholders on a
regular basis. This is partly because (1) mining operations in rural areas offer better wages than farmers
and (2) mine workers demand less from their employers given that they view their jobs as a rare
opportunity (Braun and Kisting 2006: 1388). Rural communities in South Africa are also mostly poor
and illiterate. Their participation as stakeholders is thus often ineffective, and mining companies take
advantage of this situation. This can became a significant factor in the destruction of meaningful
3
ACCA and FTSE (2007: 19) state that one of the primary reasons why companies are beginning to report on ESG matters
is that stakeholders are demanding this kind of reporting.
4
Marx and van Dyk (2011: 104) note that the corporate world has moved from the notion of just making profits for
shareholders to a broader view which includes other social responsibilities.
13
engagements. Engagement with stakeholders is central to stakeholder theory since it allows both the
firm and the stakeholders to assume their roles in the firm. Engagements provide a platform in which
stakeholders and the enterprise can interact. As GRI states,
[a] process of stakeholder engagement can serve as a tool for understanding the reasonable
expectations and interests of stakeholders as well as their information needs, such engagements
can provide useful inputs for decisions on reporting (2016: 8).
Stakeholder engagement is a significant feedback platform that has the potential to mitigate labour
unrest and civil disobedience. These engagements allow organizations to receive feedback that, when
put to good use, assist businesses to avoid the escalation of unrest, e.g. in Marikana 2012, where 43
miners died (34 of which were shot and killed by the police). Lonmin (who owned the Marikana mines)
provides an example of how stakeholder engagements are vital in creating harmony among
stakeholders. Regular engagements with stakeholders – if suitably executed – can (1) create an
environment where ongoing learning is enhanced within the organization, (2) there is increased
accountability to stakeholders, and (3) trust is strengthened in the process (GRI 2016: 8). Organizations
can cause significant damage by failing to evaluate feedback through the stakeholder channels. The
Marikana incident is an exemplar of how communication breakdown can lead to tragedy and mistrust.
As Hill and Maroun (2015: 591) note, Marikana is a reminder that mining companies should begin to
pay more attention to social responsibility matters in order to avoid such incidents.
The Marikana unrest was triggered by a conflict over union recognition between AMCO (a newly
formed union) and NUM (a more established union). Lonmin refused to recognize AMCO because it
had lower registered membership numbers than NUM (Thomas 2017: 71). Lonmin failed in its duty
to identify AMCO as a stakeholder, and stakeholder engagement could therefore not take place. The
underlying lesson is early stakeholder identification. Thomas concludes that “had the management of
Lonmin appreciated the importance of early stakeholder identification and meaningful engagement
major tragedies that occurred in this mining disaster may have been averted” (2017: 72).
Regarding the relevance of stakeholder value, Engelbrecht and Thomas (2017: 79) argue that the
Marikana tragedy was, in part, created by the failure of Lonmin to continuously evaluate the status of
its stakeholders. AMCO, being a new union, was not identified as a legitimate stakeholder, and their
demands were therefore ignored.
Currently, the community of Xolobeni in the Eastern Cape province of South Africa is insisting that
they will not allow a new mine to begin its operations there. They are firm on their right to say “no”
to mining in their area. A court judgement in favor of the community referenced the interim protection
14
of informal land rights act and ruled that the department of mineral resources may not grant mining
rights to any prospective mining house without the consent of the community. In the case of Baleni
and Others v Minister of Mineral Resources and Others ([2019]), the court ruled that the mining
company must get full consent of the community to be granted a mining license. Despite the promise
of jobs and other opportunities connected to mining, the community insisted that they were better off
without the proposed mine. This too is an example of stakeholder engagement failure. The Xolobeni
matter casts light on the social aspect of mining and illustrates the need to pay attention to social
contracts between communities and mining companies (Bennie 2011: 43).
The Xolobeni matter contains two features of stakeholder value: (1) stakeholder engagement; the court
judgement drew special attention to the lack of engagement between the prospective mining company
and the community of Xolobeni; (2) the social license not granted due to the lack of a genuine
stakeholder engagement process. In a similar case Maledu and Others v Itereleng Bakgatla Mineral
Resources Pty ([2018]), the judgement likewise concluded that the mining company could not go ahead
with mining activities given that relevant stakeholders, whose consent was needed to legalize the new
arrangement, were not consulted.
Regarding environmental concerns, coal mining in South Africa is one of the most significant
contributors to Sulphur Dioxide emissions, and this plays a significant role in environmental
degradation (Earthlife Africa and Oxfam international, 2009: 14). 5 Integrated reporting and ESG
disclosures have a role to play in addressing environmental disasters created by mining activities.
Disclosures can assist both companies and stakeholders in finding solutions to problems exposed by
integrated reports.
Economic advancement invariably presents new risks. The environment often suffers when the
demand for environmental resources is increased due to economic activity. (Brundtland Report 1987:
51). This creates a new ethical obligation: mining companies must protect the environment, and this
begins with the outcomes of reporting.
In sum, stakeholder theory is a subject of ethics. Its aims are to better prepare a business to be fair in
its dealings by accommodating the needs and expectations of all stakeholders. The take-home message
of this section is that stakeholder theory puts a business in a better position to align its interests with
5
The Xolobeni case has likewise, not only highlighted the concerns of communities, but also the environment as a factor
in mining.
15
those of stakeholders. Failing to engage with stakeholders can create detrimental effects for companies
as evident in the examples of Marikana and Xolobeni.
Stakeholder theory allows businesses to broaden their scope. New platforms are created in which frank
conversations are initiated among stakeholders allowing a business to receive constructive feedback.
The outcomes of these conversations assist organizations in achieving compliance. Stakeholder theory
also adds value to compliance requirements (including statutory expectations) and the King Report
requirements (over and above the already mentioned benefits).
According to Buchholtz and Carroll (2008: 64), a business is a multipurpose institution that connects
different stakeholders with diverse expectations. Thus, stakeholder value can guide firms on how to
adequately satisfy the expectations of each stakeholder. This can be achieved through recognition of
stakeholders and stakeholder engagements whereby businesses learn more about their stakeholders.
Value creation is a principle of business that enables a firm to generate gains for all stakeholders. It is
thus broader than the concept of profit-making, which – according to Freeman et al. (2010: 13) – is
too narrow and only creates value for a small number of stakeholders, i.e. shareholders. Stakeholder
theory helps managers and institutions to see the ‘bigger picture’, and this encourages a move away
from short-term thinking (Weiss 2006: 53). A firm is a corporate citizen, and its role in society is
broader than mere profit-making.
In conclusion, stakeholder value as a body of knowledge highlights a significant source of conflict in

organizations. The theory is however fast becoming a source of solutions. This is illustrated by the
Marikana unrest in which an oversight of stakeholder recognition and stakeholder engagement were a
primary contributor to the eventual tragedy.
2.2.3. Legitimacy theory and ESG disclosures
Legitimacy theory attempts to explain the social contract between a business and its surrounding
communities. For O’ Donavan (2002: 344), since business is a “social creature”, it is expected that it
behave in a socially acceptable manner. This entails the broad responsibility a business has regarding
its social contract with its stakeholders. Legitimacy theory assumes that, for a business to thrive, it
must achieve legitimacy from communities immediate to its operations. A business should conduct its
activities in line with the expectations of society in return for recognition. The use of reports to achieve
legitimacy is a common practice. As O’ Donavan (2002: 349) notes, most firms use the dissemination
of information as a mechanism to restore or gain legitimacy.
Legitimacy theory seeks to identify the ‘common denominator’ between a firm and society including
approval of the existence of the firm by society. The social license to operate is granted to the firm by
16
society. Regarding legitimacy, Beck et al. (2015: 194) argue that, when firms adopt and comply with
the rules of society in which they operate, a bond it created between society and the firm. Legitimacy
is ultimately earned through embracing societal values.
Legitimacy theory is a reminder that a business cannot function in isolation and that recognition from
all stakeholders is fundamental to its survival. Stakeholder value underpins relations between a firm
and its stakeholders, while legitimacy theory is mostly concerned with the tacit arrangement – the
social contract – involving stakeholders’ approval that the firm may operate. According to the IoDSA
(2009: 21), the decision-making process of an organization should include all stakeholders because
this promotes, not only the legitimacy of the decision, but also the legitimacy of the institution itself.
Recognition by all stakeholders is the central motif of legitimacy theory. Legitimacy theory also
connects well with integrated reporting. Integrated reporting aims to achieve inclusiveness through a
pluralistic reporting approach. Dissemination of information through disclosures is one of the most
effective means a firm can employ to maintain and achieve legitimacy (O’ Donavan 2002: 346).
This section has focused on the legitimacy of firms, the social license granted by stakeholders to firms,
and how legitimacy theory is interconnected with stakeholder value. The literature suggests that both
corporate governance and business ethics are promoted by legitimacy theory and stakeholder theory.
In the next section, I will focus on the institutions that continue to play a role in promoting stakeholder
theory through reporting.
2.3. REPORTING FRAMEWORKS
2.3.1. Global reporting initiative (GRI)
Reporting frameworks are established to provide guidance to companies on how to disseminate

information to stakeholders as well as to promote transparency and trust between firms and
stakeholders. A reporting framework is essentially a group of laws on disclosures and reporting. The
GRI (as introduced in section 1.2) is an organization formed in the United States in 1997 with the aim
of creating a framework for guiding companies in generating sustainability reports.
The GRI has since grown to become one of the most prominent nonprofit organization of its kind. Its
standards are recognized as being the most effective in guiding companies to achieve sustainability
(KPMG et al. 2010: 18). The GRI is a global institution that stands at the heart of sustainability
reporting and provides a framework for how to report in a sustainable manner (KPMG 2011:21). The
GRI released its first standardized framework in 2000 and created the G3 guidelines which are used
by firms as a reference point when generating sustainability reports (Ungerer 2013: 29). IoDSA (2009)
considers the GRI guidelines to be the global benchmark for sustainability reporting. According to
17
ACCA and FTSE (2007: 19), the GRI guidelines are the most popular reporting standards on the
environment and climate change. These standards contain indicators and provide guidelines on
sustainability and energy use.
ACCA and GRI (2010: 25) report that there has been a 300% increase in the number of institutions
using the guidelines provided by the GRI as a basis for their reports (this increase was recorded
between 2003 and 2008). King III also recommends that companies adopt the GRI’s G3 guidelines as
the basis for their reports (ACCA and GRI 2010: 74). ACCA and GRI (2009: 6) maintain that
environmental and emissions disclosures should be as credible and truthful as possible. This is
achievable via a number of platforms, including the guidelines provided by the GRI through its G3
environmental indicators. Stakeholder value is therefore a prominent feature in the GRI guidelines,
and this affirms the relevance of the stakeholder concept in reporting and in information dissemination
by firms.
Sustainability reports, not only provide empirical data based on the period under review, but also
express the estimated impact of each achievement or failure on the environment and other social
factors. Sustainability reports are primarily used to disclose how a reporting institution contributes
towards a sustainable future. The impact made by an organization is divided into environmental, social
and economic factors. A sustainability report creates a platform on which organizations can reveal
their contributions towards a sustainable world, along with their negative and the positive impacts
according to the GRI guidelines. GRI (2016: 3) states that reports prepared in accordance with the GRI
standards should also provide a reasonable representation of how the organization is achieving
sustainable development goals.
Brundtland Report defines sustainable development as follows: “Sustainable development is

development that meets the needs of the present without compromising the ability of the future
generations to meet their own needs” (1987: 54). The GRI seeks to achieve sustainable development
through sustainability reports.
Sustainability reports reveal how an organization contributes or aims to contribute to achieving

sustainable goals at a global level. The goal is to present the performance of the organization in relation
to the global view of sustainable development. Organizations have a key role to play in attaining
sustainability goals as outlined by the World Commission on Environment (GRI 2016: 3). Through
their activities, all organizations make both positive and negative contributions towards the goals of
sustainable development. Because of these contributions, every institution has a role to play in
promoting and advancing sustainable development goals (GRI 2016: 3). In other words, the goal of
18
reporting institutions should be aligned with sustainability goals, and failure of reporting companies
to achieve this alignment should be evaluated to determine the resultant negative impact. The report
should show how an organization engenders opportunities and risks to sustainability goals.
Sustainability reports should mention all the significant impacts in the reporting period along with
reasonable estimates of significant future impacts.
According to the GRI (2016: 3), organizations across the globe are contributing towards the
achievement of sustainability goals. This creates a new responsibility for institutions to report the
impact their activities have on the attainment of these goals. This view is further developed by KPMG
et al. (2020) who state that the GRI plays a crucial role in promoting sustainable development through
its guidelines on ESG reporting. This, they say, is a significant contribution given that the
achievements of individual firms remain unknown without proper guidelines on how to communicate
achievements and failures related to sustainability goals. Both KPMG et al. (2020) and GRI (2016)
agree that an effective reporting tool, such as the guidelines provided by the GRI, are important for
achieving the United Nations sustainability goals.
Social impacts include HIV, poverty, inequality and unemployment. Social impacts also include the
potential impacts that an organization has on the wellbeing of the community. Environmental impacts
include climate change, air pollution, land degradation, water contamination and waste disposal. The
GRI framework provides information and guidelines on how firms can assess or measure their impact
on society and on the environment (Business Call to Action and GRI 2016: 13). 6
Organizations have a collective responsibility to promote a sustainable business environment. Through

its standards of reporting, the GRI has created an instrument that can better serve the business
community to successfully pursue sustainability (GRI 2016: 3). The GRI has earned a prominent place
in the ESG disclosures agenda, and its global footprint has created a positive influence on ESG
reporting across the world.
One of the key aspects of a sustainability report is stakeholder engagement. Through its framework,
the GRI has made it a requirement for reporting institutions to engage stakeholders and disclose the
outcomes of these engagements (as outlined in section 2.2.2 with reference to the Xolobeni case and
the Marikana disaster).
According to GRI (2016: 19), a report is not complete unless stakeholder views are considered, and
this is achieved only when effective stakeholder engagements are conducted on a regular basis. The
6
The impacts of a firm’s activities are divided into short term versus long term impacts according to the GRI guidelines.
19
GRI has included stakeholder engagements as a reporting requirement (practice note 21 of 102
provides a guideline on how institutions can engage stakeholders). A stakeholder engagement process
can serve as an effective mechanism for understanding, not only the expectations and views of
stakeholders, but also their contributions to the institutions (GRI 2016: 8). The GRI presents a
framework promoting sustainability, stakeholder incisiveness, legitimacy of firms and transparency.
These are all ethical matters; and the GRI framework accordingly provides a workable new avenue
allowing firms to pursue and achieve good corporate governance through reporting and disclosures.
Research shows that most mining companies around the world are using the GRI as a guide to
generating sustainability reports (Amoako et al. 2017: 206). The GRI reporting principles are guiding
the reporting process, making it inclusive of environmental concerns (Atkins and Maroun 2018: 767).
Environmental matters have become a primary concern in the mining community, particularly in South
Africa where ground water sources have been contaminated by mining activities. Environmental
impacts of mining include soil erosion, sinkholes, loss of biodiversity and the contamination of both
ground and surface water sources. The environment cannot function or exist separate from human
activity. Attempts to protect the environment in isolation from humans defeat efforts directed at safe-
guarding both the environment and human existence (UN 1987: 13). Protecting the environment and
ourselves is best achieved through reporting truthfully about the environment via sustainability reports
and integrated reports.
There is a notable shift in the governance of private institutions. Both central governments and
corporations are beginning to understand that private entities – as much as they can create problems –
are part of the solution to the many challenges we face as a global community. Attempts to regulate
the private sector landscape through hard and fast rules is slowly transforming to voluntary self-
regulation. These so-called soft rules are ‘enforced’ by institutions emerging as the new regulators
regarding reporting and transparency.
The GRI facilitates effective partnerships between private entities, governments and communities
(Humphreys et al. 2013: 471). It played a significant role in forming the International Integrated
Reporting Council (IIRC) in 2007 and paved the way to a new communication platform in the form of
integrated reporting. The GRI remains a relevant participant in sustainability reporting. It continues to
play its role through cooperation and partnerships with other institutions – e.g. the King Committee of
South Africa and the Institute of Chartered Accountants – in pursuing a sustainable business
environment through reporting. Cheng et al. (2010: 74) note that the GRI views sustainability reporting
as a critical step towards integrated reporting. Likewise, according to KPMG (2011: 21), without the
20
GRI and sustainability reporting, there would be no progress towards integrated reporting and a more
inclusive platform for reporting.
The GRI and the IIRC are two institutions that continue to play a significant role in the domain of ESG
disclosures. In the next section, I will focus on the IIRC and show how it has contributed to the ESG
disclosure agenda.
2.3.2. International integrated reporting framework (IIRC)
The IIRC took over from the GRI and created a framework for integrated reports. In the previous
section, I discussed the significance of the GRI and of sustainability reports. Reporting has since
evolved however from sustainability reporting to integrated reporting regulated by the IIRC.
As mentioned in the introduction to chapter 1, the IIRC was formed in London in 2009 with the aim
of creating a framework for guiding corporations in generating integrated reports. The aim of the IIRC
is to provide a framework that will (1) improve the quality of information and (2) promote
accountability and stewardship of capitals employed by the company (IIRC 2013: 2). The IIRC was
formed by the Prince’s Accounting for Sustainability Project, the GRI and other nonprofit
organizations. The IIRC was established primarily to facilitate a transition from sustainability reporting
to integrated reporting. The idea was to blend sustainability reports with financial reports and
ultimately allow reporting to include ESG disclosures. The IIRC, through its guidelines, is a key player
in the evolution of reporting. This development from financial reporting to integrated reporting has
presented new opportunities for institutions to genuinely integrate the interest of stakeholders into one
report (Beck et al. 2015: 193). The principal aim of the IIRC is to establish a globally accepted
framework making it possible for firms to effectively integrate financial and sustainability information
into one report (KPMG 2011: 24). Following the GRI, the IIRC has grown to become the flagship for
ESG disclosures through integrated reporting.
According to Willis and Missiange (2010: 23), the IIRC – with the participation of other influential
global institutions – has the potential to transform the governance of the business world through
adequate reporting. The ideal framework will allow corporations to report fairly and accurately. The
first integrated reporting framework was introduced by the IIRC in 2013 (Bennie and Tweedie 2015:
51). The aim of the IIRC is to generate reporting guidelines which include financial, social,
environment and governance information into one report (Beck et al. 2015: 193). The guidelines also
provide principles and values to inform and guide reporting. These standards are intended to instill a
culture of transparency and inclusiveness into the daily operations of an enterprise.
21
IIRC (2011: 1) states that the objective of an integrated report is to allow stakeholders to evaluate
whether a firm can create sustainable value to stakeholders over the short and long term. Traditional
financial reports are evolving to become integrated reports. This will grant both firms and stakeholders
a more holistic report covering all aspects of the firm. According to KPMG (2011: 20), institutions
that continue to rely on a single channel of communication – e.g. financial reporting – will soon realize
that this is making them less competitive.
Every stakeholder in an organization is a holder of capital. The six capitals contained in the IIRC are
connected to specific stakeholders, and each stakeholder group contributes a particular capital to the
organization. Adam Smith only proposed three capitals or factors of production: land, labour and
financial capital (Bauer 2007: 4). Things have moved on since then, and more capitals are recognized
today. As mentioned, the integrated reporting framework identifies six capitals:
1. The holders of financial capital are called shareholders;
2. employees of the business contribute human capital;
3. nature contributes natural capital;
4. manufactured capital refers to tools and equipment used in the production process;
5. intellectual capital is human knowledge which, when put to good use, creates processes
enhancing efficiency;
6. social and relations capital secures healthy links between the business and its stakeholders;
these links hold the ‘ecosystem’ of capitals together.
IoDSA (2016: 5) states that the resources or capitals deployed by organizations are connected; they
interrelate on a regular basis. Reporting institutions should, not only express this interconnectedness,
but also show how their business activities benefit from these capitals.
The six capitals contained in both the King Report and the IIRC framework connect sustainable
development to stakeholder value and to business. It is a more comprehensive way of presenting the
triple bottom line concept (section 1). The IIRC views the notion of six capitals as an enabling factor
in effective communication (Bennie and Tweedie 2015: 57). This is a comprehensive model that
acknowledges the contributions made by the diverse stakeholders of a business and puts integrated
reporting at the forefront, thus promoting inclusiveness. Stakeholder value creation is also elevated to
a prominent position in terms of good business values.
The rate at which institutions are building up or exploiting the various capitals has a significant effect
on the availability and quality of these capitals. This is particularly the case when capitals are in limited
22
supply. Adequate disclosures about capitals will help create awareness on their real value. Reporting
on the implications of an unsustainable use of capitals is an important part of the integrated reporting
framework (ACCA and IIRC 2013: 4)
Relations with stakeholders is recognized as one of the six capitals, and this highlights the importance
of stakeholder relations in any institution. The IIRC has identified these relations as social and relations
capital. This capital is of growing significance in allowing organizations to create value over time. The
mere disclosure of stakeholder relations is the equivalent of accounting for those stakeholder relations
(ACCA and IIRC 2013: 5).
As organizations draw from the different capitals, they should put mechanisms in place to monitor the
impact this has on the sustainable development goals. Capitals are a store of value, and organizations
are compelled to use the six capitals in a sustainable manner if they want to continue to provide benefits
in the future and to safeguard their legitimacy. These capitals can be built upon or increased through
recapitalization. For example, financial capital is increased when there are profit gains; human capital
is increased when employees receive training to better equip them with new skills; and, manufacturing
capital is increased when new and more efficient machines are acquired. Capitals are at the center of
integrated thinking, and the recognition of all six capitals creates more opportunities for organizations.
The IIRC presents these capitals as a guiding principle on how to manage the resources at an
institution’s disposal (SAICA 2015: 11). Natural capital represents the elements of nature providing
water, solar energy and fertile soils to an organization. These so-called eco-services constitute critical
capital to organizations. ACCA and IIRC (2013: 4) note that not all capitals put to use by institutions
are owned by those institutions. Some are owned by other stakeholders, and others are not owned at
all (on the conventional meaning of ‘owned’), e.g. clean air. This understanding of capitals creates a
new meaning to the concept and allows institutions to effectively categories them.
As Groom & Turk (2021: 02) note, ecosystems are degraded and eroded by current economic systems
which do not pay adequate attention to the health of the biosphere. This has a long-term impact on the
quality of life of, not only human beings, but of all living organisms. As such, there is a need to pay
particular attention to the negative externalities generated by business activities, specifically those
outcomes resulting from uncontrolled exploitation of natural capital. 7
7
Bohringer, Rivers and Yonezawa (2016: 12) note however that externalities are difficult to contain. Victims could be
miles away from the source of harm, and victims cannot be compensated if they are unknown.
23
The agenda of the framework under discussion is to move away from a single capital system and
towards an inclusive system through the recognition of multiple capitals. The key issue of capitals as
presented by the framework is sustainability. How can organizations draw from capitals without
depleting them to nothing, and how can capitals be used to support the sustainable development goals?
Organizations should be able to evaluate the real impact they make, not only on the six capitals, but
also on the sustainable development goals. The six capitals ultimately explain the complex
relationships between business, society and the environment. This is done through a business model
that illustrates the relevant connection of inputs, business activity, outputs and outcomes. Regarding
corporate governance, the capitals are a demonstration that integrated reports (unlike financial reports)
are inclusive in nature. All the capitals are given equal attention; each capital is perceived to be equally
important. This view suitably promotes, not only stakeholder value, but also sustainability goals.
Each capital is connected to specific ESGs; the goal is to influence decision-makers to acknowledge
the contributions made by all capitals. The purpose of natural capital, for example, is to protect the
environment. Corporations should be mindful of the value of each capital at their disposal, and
endeavor to utilize these capitals in a sustainable manner (Atkins and Maroun 2018: 769). The six
capitals broaden Adam Smith’s notion of factors of production. They allow organizations to
understand which capitals are providing resources and how much is drawn from each capital at any
given time. Organizations are now able to accurately factor in renewable and nonrenewable sources of
capital, particularly energy sources.
The IIRC, through its framework, creates an awareness of the environmental and social impact of
business activities. This awareness is an extension of the 1987 Brudtland Report on sustainable
development, and is closely aligned with the United Nations’ sustainable goals ( section 2.3.1). As
Cheng et al. (2010: 76) note, integrated reporting has the potential to clearly communicate the
relationship of sustainable development goals with the rest of the financial targets of a firm. This adds
value to the business, thereby attracting more investment.
The IIRC framework promotes integrated thinking. Integrated thinking facilitates effective
coordination of the different departments in an institution and provides a common direction for the
institution overall. Integrated thinking also makes it possible for organizations to better manage
internal relations. Integrated thinking entails coordinating decision-making and promotes an efficient
interconnectedness between departments and individuals. As Cheng et al. put it,
[t]he intended purpose of integrated reporting is to build meaningful connections between ESG
and financial performance, integrated reporting could become the missing piece to an approach
24
that would truly integrate CR [corporate responsibility] into the core business of a firm (2010:
78).
Integrated thinking is the direct inverse of so-called silo thinking. We can think of integrated thinking
as the ‘back bone’ of the integrated reporting framework. This is because it, not only breaks down silo
mentality, but also creates an organization that functions to achieve common goals for all stakeholders
and for all departments. It removes the competitive nature of individuals and departments and allows
a firm to center its interests around a ‘common denominator’.
In the next section, I will discuss the Integrated Reporting Committee (IRC) of South Africa that was
formed after the IIRC. The IRC of South Africa was formed to serve the South African business
community, and the principles of the IRC of South Africa are close to those of the IIRC. In South
Africa, under the leadership of Marvin King, a local framework similar to that of the IIRC was created
but tailored to serve South African business needs. I will show how this framework has influenced and
aided South African firms in achieving completeness in reporting.
2.3.3. Integrated Reporting Committee (IRC) of South Africa
As mentioned in the introduction, the IRC of South Africa was established a year after the formation
of the IIRC in 2010. The IRC of South Africa was formed with the active participation of Marvin King
(a former Judge of the South African High Court and a renowned figure in the field of corporate
governance). King played a prominent role in crafting the first King Report in 1994 and has contributed
to all subsequent King Reports. The IRC of South Africa is supported by the King Report, and
companies listed on the JSE are compelled by the King Report to disclose their financial and ESG
information through integrated reports. The IRC of South Africa has gained prominence since its
inception in 2009, and ESG disclosures are slowly becoming a critical component of integrated reports.
Financial statements in South Africa are regulated by the International Financial Reporting Standards
(IFRS). This institution pays particular attention to the disclosure of material financial information on
three major financial statements: (1) the statement of cash flow, (2) the statement of financial position,
and (3) the statement of financial performance. Such information serves the interests of shareholders
and the government for tax purposes. As Everingham and Kana (2008: 1) note, financial reports are
designed to provide information to a certain section of the stakeholder community, notably
shareholders and potential investors. The interests of other stakeholders are not included in financial
reports. Bernard and Stark (2015: 16) discredit the wisdom of the traditional financial reports and do
not consider them to be adequate in providing information to all stakeholders. These reports are too
narrow and serve only a small fraction of the stakeholder community.
25
The IRC of South Africa seeks to change the traditional view of reporting by placing ESG data at the
forefront of the reporting agenda. The reporting framework proposed by the IRC of South Africa has
placed great emphasis on inclusiveness and completeness of reports. IRC (2011: 4) states that the IRC
of South Africa reporting framework has the potential to (1) reflect the impact of firms on the
environment and (2) promote integrity, transparency and accountability through integrated reports.
The use of one framework is key in making comparisons between corporations on matters relating to
the quality of disclosures. It is therefore recommended that firms adopt one framework to standardize
ESG disclosures. The IRC of South Africa will have to continuously review its framework to keep it
relevant to local stakeholders. This reviewing will also align the framework with practices in the rest
of the world. Ongoing reviews are important because progress achieved in the corporate world creates
new challenges and new demands.
Regarding the relationship between stakeholders and integrated reports, Gianfelici and Casadei (2015:
549) note that integrated reports are relevant and effective as a tool for deepening relations between
stakeholders and firms. Integrated reporting is a process that involves stakeholders and this promotes
the relationship among stakeholders. IIRC (2011: 3) likewise states that the ultimate objective of an
integrated report is to provide stakeholders with the means to evaluate whether institutions can create
and sustain value over the medium to long term.
Both the IIRC and the IRC of South Africa are institutions that seek to change the content and values
of reporting. Their primary aim is to allow organizations to provide valuable information to all
stakeholders. In the next section, I focus on the King code which seeks to achieve the same objectives
as the IIRC and the IRC of South Africa. The King Code however goes beyond reporting; it aims to
instill values in institutions that ultimately translate into good corporate citizenship.
2.3.4. King Report recommendations
The King Report on Corporate Governance is a document introduced in South Africa in 1994 that
provides guidelines on corporate governance issues. It has since been revised three times to
accommodate new developments in the corporate world. The King Report is not a statutory instrument
but a voluntary reference guide that promotes good corporate governance in South Africa. Since 1994,
the King Reports have served the South African business community well; they have become what
many consider to be the pillar of corporate governance. A new corporate culture is slowly developing
in South Africa through the principles contained in the King IV Report.
The King Report is the most important document in South Africa when it comes to corporate
governance. Since its inception in 1994, it has, not only created new attitudes, but new business
26
cultures in South Africa. Its presence at the JSE has moreover made it relevant to the biggest equity
funds in the country. Notable new governance institutions have also taken after this document, and the
values contained therein have become a centerpiece many institutions converge around. The influence
of the King Report in South Africa is evident in the number of institutions that have embraced its
guidelines. KPMG (2011: 10) reports that in 2011 a total of 97% of South Africa’s top one hundred
listed companies at the JSE included ESG activities in their reports. This impressive number is
attributable to the contributions of the King Corporate Governance Commission.
King III emphasizes integrated reports as an effective instrument for disseminating both financial and
ESG information to stakeholders. The fundamentals of the King IV Report include integrated
reporting, integrated thinking and stakeholder inclusiveness (IoDSA 2016: 4). The IRC of South Africa
and the GRI are also active participants in regulating the reporting processes in South Africa where
the new focus is on ESG disclosures.
Organizations are compelled by the King Report to provide adequate strategic information to
stakeholders though disclosures (Ungerer 2013: 27). Strategy, risk and performance are an integral
part of the integrated reporting process; they provide a ‘complete story’ of the firm to stakeholders.
IRC (2011: 3) notes that King III calls for institutions using integrated reports to bear in mind that
impacts they make on the environment are material issues that can cause damage to the very existence
of the institution. Apart from the completeness of integrated reports, the King code also emphasizes
the importance of stakeholder engagements. IoDSA (2009: 27) likewise states that an integrated report
is an effective mechanism for formally reaching out to stakeholders. Integrated reports have the
potential to promote the trust necessary for healthy stakeholder relationships.
2.4. SUMMARY OF CHAPTER
In this literature review, I have discussed the views of scholars on legitimacy theory, agency theory,
stakeholder theory and the integrated reporting process. Their views generally support the integrated
reporting process as a viable platform in shaping a modern inclusive corporate culture that strengthens
the principles contained in the King Report. According to the literature, integrated reporting has the
potential to serve the interests of all stakeholders and move the corporate world in a new direction that
can yield the desired outcome of good corporate governance. The literature also suggests that
sustainability reporting, not only plays a significant role in generating debate around ESG disclosures,
but also contributed towards a transparent business model inclined to a sustainable business
environment. The literature also highlights the sometimes-slow pace at which the corporate world is
moving towards a new environment in which profit-making is not the principal objective.
27
Reporting in South Africa is regulated by frameworks provided by the IRC of South Africa, the IIRC
and the King Report. The IRC of South Africa crafted the integrated reporting framework currently in
use in South Africa. The King Committee presented the King Report which serves to guide listed
companies on good corporate governance. The literature on these three major institutions highlights
the role they continue to play in shaping the business landscape in South Africa, particularly at the
JSE. The literature also gives credence to the progress achieved over the years and to South Africa’s
status as one of the leading countries in terms of reporting.
In this literature review, I have also discussed the transformation of reporting from financial reporting
to sustainability reporting and finally to integrated reporting. Corporate reporting has evolved, and it
is expected that the current shape of corporate reporting will keep transforming to better serve the
needs of all stakeholders. The literature reviewed further highlights the potential of integrated reporting
as a new vehicle of good corporate governance through reporting.
Integrated reports are viewed as ethical reports more than business reports, and have fast become the
‘moral voice’ in the corporate world. The integrated reporting process illustrates that corporate
governance need not compete with profits. Ethics and profits can grow together. Companies can thrive
by recognizing the intermingled nature of these two desiderata and by pursuing them in tandem.
28
CHAPTER 3: METHODOLOGY, FINDINGS, DISCUSSION AND CONCLUSIONS
3.1. INTRODUCTION
In this chapter, I discuss data sources and data collection. I provide a blue print for how the process of
data collection unfolds and outline methods of data analysis and sampling procedures. In essence, this
chapter is concerned with the tools that should be employed to achieve the aim of this study. I aim to
provide evidence for whether integrated reports are playing a role in disclosing ESG matters,
particularly in mining companies.
I will further critically analyze the relevant data to test and confirm the existence of a relationship
between integrated reports and ESG disclosures. I also evaluate data related to the quality of ESG
disclosures since the inception of integrated reports in 2011. More specifically, I will employ a
secondary data analysis approach, and this process will begin with indices already prepared by the two
institutions identified for the study: the JSE’s SRI index and the EY Excellence in Integrated Reporting
index. The data to be analyzed covers the period 2011 to 2018 and concerns the mining companies
Exxaro Ltd, Lonmin Ltd, Anglo Gold Ashanti Ltd, Kumba Iron Ore Ltd and Impala Platinum Ltd.
The goal of the study is to investigate the influence of integrated reporting on the quality of ESG
disclosures. The study will test and evaluate this relationship. The idea is to compare the ESG
disclosures contained in integrated reports of 2011 (which was the year that integrated reporting was
introduced in South Africa) to those contained in integrated reports in 2018; i.e., scores achieved for
2011 will be compared to those achieved in 2018. Each company will be benchmarked against its score
from 2011 to assess any difference in quality to its score from 2018. The same procedure will be
repeated for all identified companies. The reason for choosing the 2011 integrated reports rather than
the 2010 sustainability reports as the unit of analysis is because the indices for measuring ESG
disclosure changed with the transition to integrated reporting. To allow for a meaningful comparison,
it is necessary to test the quality of disclosures at the hands of data emanating from the same index.
I begin this chapter with an outline of the rating process employed in identifying the companies to be
evaluated. I then move on to show how the years under investigation were identified. The second part
of the chapter will provide a profile of index companies chosen as a source of data for the study. In the
final section, I present the results for each participating company. A discussion of the results will take
place at the end of the chapter.
29
3.2. SAMPLING OF COMPANIES
There are three hundred and eighty-eight companies listed on the JSE. Forty-five of these are mining
companies, five of which are the focus of this research. The top five mining companies have been
identified for this study. 8 These rated companies include (1) Kumba Iron Ore Ltd, (2) Impala Platinum,
(3) Exxaro Ltd, (4) Lonmin Ltd, and (5) Anglo Gold Ashanti Ltd. The sample size is 11% of the total
number of listed mining companies in South Africa. Let us now take a brief look at the background of
these companies.
1. Kumba Iron Ore, is a listed South African company and is one of the top producers of iron ore in
the world. Kumba Iron Ore began trading at the JSE in 2006 after the restructuring of Kumba
Resources (Kumba Annual Report 2007: 24). Kumba Iron Ore has both a footprint in Africa and
investments in overseas projects (Kumba Annual Report 2007: 29).
2. Impala Platinum is a South African platinum mining company with operations in several countries
including Canada and Zimbabwe. Impala Platinum is listed on the JSE, and its administration
office is in Johannesburg South Africa (Implats 2020: 2).
3. Exxaro is a global coal mining company with operations and projects in South Africa, Australia,
Europe and the United States. The South African projects are located in Limpopo and
Mpumalanga. Exxaro was established in 2006, and has a stable output (Exxaro limited 2019: 5).
Exxaro has the largest coal reserves in South Africa, and is a major supplier of coal to Eskom
(South Africa’s public electricity utility) (Exxaro limited 2018: 11).
4. Lonmin – formerly known as Lonrho – was established in the United Kingdom in 1909 and is a
leading producer of platinum. Lonmin is listed on the JSE and on the London Stock Exchange. Its
major business is the mining and refining of platinum (Amnesty International 2016: 9). Lonmin is
ranked the third biggest producer of platinum in the world (Bezuidenhont et al. 2011: 681).
5. Anglo Gold Ashanti is a South African mining company and is listed on the JSE. The company
was established in 1887 in South Africa (Ashanti Gold Fields 2012: 4). The head office of the
company is also located in South Africa. Anglo Gold Ashanti has grown to become a ‘global
player’ with operations in Australia, Ghana and Peru and projects in Mali, Philippines, Finland and
Canada (Ashanti Gold Fields 2012: 04).
8
As per http://www.jse.co.za.
30
3.3. CHOICE OF YEARS
The sample period for my study is from 2011 to 2018. The period between 2011 and 2018 is long
enough to make an assessment and draw reasonable conclusions regarding any changes in the quality
of disclosures made in integrated reporting. The data extracted concerns the performance of mining
companies during the identified period.
3.4. INDICES
EY Excellence in Reporting disclosure scores and the JSE’s SRI index were identified for the study
because these two institutions are the most renowned at the JSE and also held in high esteem around
the world. These two institutions were present at the JSE prior to the introduction of integrated reports.
The EY Excellence in Reporting survey was established at the JSE in 1997, while the SRI index was
established in 2004.
3.4.1. Ernst & Young Excellence in Integrated Reporting survey
Ernst & Young (EY) introduced the Excellence in Integrated Reporting survey in 2011 as a way to
encourage listed companies to improve the quality of reporting and disclosures (Ernst & Young 2017:
01). Through a well-constructed matrix, the EY survey is able to rate the quality of integrated reports.
This is done via a process that allocates scores to components of the integrated report, thereby allowing
companies to identify both their strengths and weaknesses in reporting. The criteria are closely aligned
with the requirements contained in the Integrated Reporting Framework (Ernst & Young 2019: 17).
The framework was issued in 2010 and adopted in 2013. This allows listed companies to utilize a
standardized template to monitor their level of performance (SAICA 2016: 07). The International
Integrated Reporting Council was established in 2010 with the view to develop what became the
International Integrated Reporting Framework (IIRC) (IIRC 2011: 5). A suitable reporting framework
was developed in 2010 and piloted in 2011. South Africa was one of the first countries to use the pilot
framework at the JSE. EY also used the pilot framework to rate participating companies in the EY
survey. The framework was then officially adopted in 2013 without any changes to its contents.
EY’s Excellence in Reporting survey began in 1997. The survey was previously known as the
Excellence in Financial Reporting. It then changed to Excellence in Corporate Reporting, then to
Excellence in Sustainability Reporting, and finally become the Excellence in Integrated Reporting
survey (Ernst & Young 2012: 03). The idea was to rate the quality of reporting at the JSE, and
participating companies were made aware of their standard of reporting as per EY’s criteria. Integrated
reports were first rated in 2011.
31
Both the Excellence in Sustainability Reporting (phased out in 2011) and the Excellence in Integrated
Reporting surveys are designed to capture the quality of disclosures made in the given report. My study
will use the results of 2011 through 2018 to identify and evaluate whether there is a trend
demonstrating progress through integrated reports. Each report is marked according to a pre-agreed
mark plan that provides a grid illustrating how marks should be allocated. Marks are allocated based
on the quality of information presented in the report, and information contained in the report should
address the needs of stakeholders. 9 At the end of the marking process, the scores achieved by a report
are aggregated, and a single score is derived from individual scores accumulated from seven principles
(figure 1) and eight content elements (figure 2).
The Excellence in Integrated Reporting survey rankings are divided into four categories: excellent,
good, average and progress to be made. An ‘excellent’ rating is the best possible score with a rating of
1. ‘Good’ is second best with a rating of 2. ‘Average’ is scored as a 3. The least rated companies are
classified under the ‘progress to be made’ score which indicates gaps and omissions in the report. A
‘progress to be made’ ranking implies that the report has met very few of the requirements. An ‘honors’
rating is awarded to integrated reports that have satisfied all of EY’s criteria.
The survey accommodates the top hundred listed companies and the top ten state owned enterprises in
South Africa. The selection of companies for the survey is based on market capitalization as at the end
of the preceding financial period. In other words, companies identified for the 2018 survey are selected
from the top hundred companies of 2017. Companies selected for the survey include mining companies
as well as companies operating in other sectors of the South African economy. A total of eleven mining
companies were included in the EY survey in 2018 and thirteen mining companies participated in the
2011 survey.
As mentioned in section 3.4.1, the EY survey has evolved over time. The survey was previously known
as the EY Excellence in Sustainability Report. In 2010 a total of sixty-seven companies and ten state
owned companies were selected for the EY Excellence in Sustainability survey. This study will
however focus on the EY Excellence in Integrated Reporting from 2011 to 2018 and will not include
scores before 2011.
The process of ranking and marking an integrated report aims at identifying reports that meet standards
of good disclosure. Notably, an excellent report is one with good disclosures and completeness of
information. According to EY,
9
Extra marks are awarded for a crisp presentation underlying the relevant information (Ernst & Young 2016: 26).
32
[a] mark out 10 is awarded for each of the seven guiding principles, i.e. strategic focus and
future orientation, connectivity of information, stakeholder relationship, materiality,
conciseness, reliability and completeness and lastly consistency and comparability (Ernst &
Young 2017: 26).
Further,
a mark of 10 is awarded for each of the eight content elements i.e. organizational overview and
external environment, governance, business model, risk and opportunities, strategy and
resource allocation, performance, outlook and finally basis of presentation and preparation (
Ernst & Young 2017:26).
The mark plan is guided by the principles of the Integrated Reporting Framework that was approved
in 2011 and adopted in 2013. The plan allocates marks according to criteria crafted by EY and the
University of Cape Town. Each report identified for the EY Excellence in Reporting survey is
separately marked by three adjudicators according to the mark plan. The mark plan was prepared by
adjudicators from the University of Cape Town in partnership with EY. The team consist of professors
Mark Graham, Alexandra Watson and Goolam Modack, all from the department of accountancy at the
University of Cape Town. Watson and Graham have been members of the adjudication panel of EY
Excellence in Reporting since 1997 when the awards were introduced. Modack joined the EY
Reporting awards in 2005 (Ernst & Young 2016: 30).
The aim of the survey is to identify reports that (1) uphold the spirit of integrated reports and (2)
disclose information in a comprehensive and truthful manner. Such reports receive a higher score.
According to EY,
[t]he mark plan is based on the Integrated Reporting Framework’s seven guiding principles as
well as the eight content elements, in addition consideration is also given to the framework’s
fundamental concept (2017: 25).
The mark plan is designed by the adjudicators and assumes compliance with the International
Accounting Standards (IAS) and other statutory requirements. The plan pays particular attention to the
quality of information presented in the report (Ernst & Young 2017: 12). The plan also emphasizes the
need to comply with the listing requirements issued by both the JSE and the King Report (Ernst &
Young 2017: 17). The EY Excellence in Integrated Reporting survey evaluation criteria have not
changed since its inception in 2011. As such, a comparison of performance for 2011 through 2018
should provide sufficiently credible and fair results.
33
The marking process is not a merely a so-called tick box exercise; the plan is determined by statutory
requirements and regulations from the JSE and the King Report (Ernst & Young 2017: 12). This means
that the plan remains relevant to participating companies.
Figure 1 below shows the seven principles used as criteria. Each has a total weighting of 10 marks.
These seven guiding principles are the foundation of the mark plan and are contained in the
International Integrated Reporting Council Framework of 2013 (International Integrated Reporting
Council 2013: 26). The table illustrates the content of each principle and also shows its significance.
The first criterion is strategic focus and future orientation; it entails the disclosure of long term plans
of the organization. The other six criteria items include connection of information, stakeholder
relationships, materiality, conciseness, reliability and completeness and consistency and
comparability. These principles serve as a guide to the adjudicators when marking a report for the EY
Excellence in Integrated Reporting survey.
No Guiding Principle Possible mark Actual mark
1 Strategic focus and future orientation. An 10

integrated report should provide insight into the
organization’s strategy.
2 Connection of information. An integrated report 10

should show a holistic picture of the
combination, interrelatedness and dependencies.
3 Stakeholder relationship. An integrated report 10

should provide insight into the nature and quality
of the organization’s relations with its key stake
holders.
4 Materiality. An Integrated report should disclose 10

information about matters that substantively
affect the organization’s ability to create value.
5 Conciseness. An integrated report should be 10

concise.
34
6 Reliability and completeness. An integrated 10

report should include all material matters both
positive and negative in a balanced way.
7 Consistency and comparability. The information 10

in an integrated report should be presented on a
basis that is consistent over time and in a way that
enables comparison with other organizations.
Possible Total 70
Figure 1. EY survey mark plan’s seven guiding principles 10
Figure 2 below shows the content element grid that forms part of the mark plan used by the adjudicators
to allocate marks to integrated reports. A maximum of ten marks is allocated to each of the eight
content elements. These elements include the following: organizational overview, external
environment, governance, business model, risk and opportunity, strategy and resource allocation,
performance, outlook and lastly basis of presentation and preparation (Ernst & Young 2016: 25). These
elements also provide guidance on marking the reports; they make consistency in marking possible.
The content elements are part of the IIRC framework and are used to provide guidance in the
preparation of integrated reports. The IIRC elements are linked to each other. The framework presents
the elements in the form of questions to allow companies flexibility in expressing the performance of
the organization (IIRC 2014: 15).
No Content Elements Possible Mark Actual Mark
1 Organizational overview and external 10

environment. An integrated report should
answer the question what does the organization
do and what are the circumstances under which
it operates.
2 Governance. An integrated report should 10

answer the question how the organization’s
governance structure supports its ability to
10
Extracted from the International Reporting (IR) framework 2013; available at http://www.theiirc.org.
35
create value in the short, medium and long

term.
3 Business model. An integrated report should 10

answer the question what is the organization’s
business model. Its business model should
include inputs, outputs and outcomes.
4 Risk and opportunities. An integrated report 10

should answer the question what are the
specific risks and opportunities that affect the
organization.
5 Strategy and resource allocation. An integrated 10

report should answer the question where does
the organization want to go and how does it
intend to get there.
6 Performance. An integrated report should 10

answer the question to what extent has the
organization achieved its strategic objectives
for the period and what are its outcomes.
7 Outlook. An integrated report should answer 10

the question what challenges and uncertainties
is the organization likely to encounter in
pursuing its strategy.
8 Basis of preparation and presentation. An 10

integrated report should answer the question
how does the organization determine what
matters to include in the integrated report and
how are such matters quantified and evaluated.
Possible Total 80
36
Figure 2. EY mark plan’s content elements 11 The relationship between the seven guiding principles
and the eight content elements is that they both provide general rules or guidelines on how to prepare
an integrated report. Both the seven principles and the eight content elements are contained in the IIRC
framework and are both referred to by the adjudicators of the EY Excellence in Integrated Reporting
survey when allocating marks to the participating reports.
While the EY Excellence in Sustainability Reporting mark plan is guided by the GRI guidelines, it is
similar to the current EY Excellence in Integrated Reporting mark plan. The mark plan for integrated
reports is guided by the Integrated Reporting Framework, and both the seven principles and the eight
content elements are incorporated into the mark plan to evaluate integrated reports.
3.4.2. SRI index ratings
The JSE’s SRI index is identified for this study on the basis that its ratings are credible and the process
of rating disclosures is undertaken on a yearly basis. The criteria for rating a company via the SRI
index is based on key ESG issues. These include climate change, air pollution, water pollution, waste
and water consumption. A score is allocated after a company’s impact is assessed according to these
criteria. In other words, an assessment of the impact of each company is made according to the key
criteria and a score for each criterion is allocated for each company depending on the impact the
company makes in each of the key areas. Each participating company is profiled in terms of its impact.
Mining and metals are classified as activities having a high impact on the environment. Companies
classified as high impact should include an environmental policy in their reports.
Each of the three ESGs is divided into key issues in which a score is allocated for each key performance
item. The score is presented as either high, medium or low; low – indicating a low impact on the
environment – is the most desirable score (Sonnenberg and Hamann 2006: 307). There are five key
issues and a score ranging from high to low is allocated to participating companies. This exercise is
expected to test whether there is a relationship between these scores and integrated reports.
High impact Medium impact Low impact
Policy All five core indicators Four indicators, at least Policy statement must
plus one desirable. three of which must be include at least one core
core. or desirable indicator, or
meet either the
11
Extracted from the IR framework 2013; available at http://www.theiirc.org.
37
management or reporting
requirement.
MGT/PERFO Six indicators, and Four indicators, or six Must have completed an
quantified targets, or indicators including initial baseline review to
five indicators documented quantitative identify significant
including documented objectives and targets. impact, or meet either the
objectives and targets in policy or reporting
all key areas. requirement.
Reporting The reporting must The report must cover The report must cover
cover the whole group the whole group and the whole group, and
and meet at least two include text of include text of
core indicators environmental policy. environmental policy or
(including text of Plus one other reporting management
environment policy). indicator. requirements.
Plus one other reporting
indicator.
Figure 3. SRI index minimum requirements. 12
The SRI index criteria are aligned to other international benchmarks and are designed to reflect the
performance of local companies in the South African business environment. The index has provided
both small and large companies the opportunity to effectively report on sustainability issues. Apart
from the awareness created by the SRI index, participating companies have also benefited from the
rating process which has strengthen their understanding of the triple bottom line concept (Sonnenberg
and Hamann 2006: 316). 13 The outcomes of this rating process add value to the ESG disclosure debate
and can indicate whether reporting is an effective tool in promoting good corporate governance.
The check list for each criterion provides a question, and the response to that question is allocated a
score. Both the SRI and EY have a checklist designed to rate listed companies (see figure 2 and 3).
The checklist serves to guide participating companies on the key aspects of a good report. The entire
stakeholder community gains insight on the critical features of a desirable report.
12
Extracted from JSE/SRI background and criteria from 2010.
13
The rules of the SRI are available at http://www.jse.co.za.
38
3.5. RESULTS
We now look at the data provided by EY and the JSE’s SRI index. This information will include the
two years under study: 2011 and 2018. Thereafter, I will evaluate the information to highlight any
significant changes to the quality of disclosures. Two tables are used to display the results: figure 4
and figure 6. Results prepared by EY are displayed in Figure 4 and those from the SRI index are
displayed in Figure 6. The scores achieved by each participating company are indicated next to the
name of the company.
Figure 4 below displays the EY Excellence in Integrated Reports for the years 2011 and 2018. We can
see that changes in the quality of ESG disclosures has deteriorated over time, with Lonmin showing
the most significant drop.
Integrated report scores 2011 Integrated report scores 2018
Company Score Rating Company Score Rating
1. Impala platinum Excellent 1 1. Impala platinum Good 2
2. Anglo Gold Ashanti Excellent 1 2. Anglo Gold Ashanti Good 2
3. Kumba Iron ore Top Ten 1 3. Kumba Iron ore Good 2
4. Exxaro Top Ten 1 4. Exxaro Merit 1
5. Lonmin Excellent 1 5. Lonmin Average 3
Figure 4. EY results for 2011 and 2018. 14
Figure 5 below displays results achieved by mining companies according to the JSE’s SRI survey. The
scores are indicated next to the name of the company. As before, results are for 2011 and 2018.
Integrated reporting scores 2011 Integrated reporting scores 2018
Company Score Rating Company Score Rating
1. Impala platinum Best performer 1 1. Impala platinum Top 30 1
2. Anglo Gold Ashanti Best performer 1 2. Anglo Gold Ashanti Top 30 1
3. Kumba Iron ore Best performer 1 3. Kumba Iron ore Top 30 1
14
The five companies in Figure 4 are all mining companies. The results are extracted from EY Excellence in Integrated
Reporting booklets for 2011 and 2018.
39
4. Exxaro Best performer 1 3. Exxaro Top 30 1
5. Lonmin Best performer 1 4. Lonmin Top 30 1
Figure 5. SRI index scores for 2011 and 2018. 15
The SRI index scores, as captured in figure 5 above, show a clear comparison between 2011 and 2018.
(The above results do not however show a difference in performance with regards to the quality of
ESG disclosures.)
The bar graph below indicates the number of companies rated between 2011 and 2018 by the EY
Excellence in Integrated Reporting survey. Each year in the graph illustrates the number of companies
that achieved a rating of ‘excellent’. The excellence rating is the best possible rating according to the
EY Excellence in Integrated Reporting survey. This study can make a general assessment of the quality
of companies’ integrated reports since the EY awards were initiated in 2011.
Excellent
35
31
29
30 28 28
27 27
NUMBER OF COMPANIES
25 23 23
20
15
10
0
2011 2012 2013 2014 2015 2016 2017 2018
YEARS
Figure 6: EY results for 2011 and 2018 (Ernst & Young 2019).
The bar graph below – figure 7 – plots companies that achieved a score of ‘good’ in the EY
Excellence in Integrated Reporting survey for the period between 2011 to 2018.
15
These results are available at http://www. jse.co.za.
40
Good
40
35
35 33 32
29 30
30 28
NUMBER OF COMPANIES
27
24
25
20
15
10
0
2011 2012 2013 2014 2015 2016 2017 2018
YEARS
Figure 7: EY good results for 2011 to 2018 (Ernst & Young 2019).
The graph in figure 8 below represents the companies that achieved a rating of ‘average’ between 2011
and 2018.
Average and Progress to be made

60
53
49
50
44
42 42 41
NUMBER OF COMPANIES
39
40 36
30
20
10
0
2011 2012 2013 2014 2015 2016 2017 2018
YEAR
Figure 8. EY average results for 2011 to 2018 (Ernst & Young 2019).
The line graph in Figure 9 below shows a trend in the ratings of integrated reports as per the EY
Excellence in Integrated Reporting survey for 2011 to 2018. The graph shows the number of companies
with a rating of excellence, good and average.
41
EY Ratings from 2011 to 2018

60
50
40
30
20
10
0
2011 2012 2013 2014 2015 2016 2017 2018
Excellent Good Average
Figure 9. EY overall results for 2011 to 2018 (Ernst & Young 2019).
In 2014, a total of thirteen mining companies were rated by the EY Excellence in Integrated Reporting
survey. Four of them were rated as excellent, five were rated as good, and one was rated as average;
three were included in the top ten (Ernst & Young 2015: 8).
In 2015, a total of elevel mining companies were included in the EY Excellence in Integrated Reporting
survey. Five of these were rated in the excellence category, five were rated as good, and one was rated
in the average category (Ernst & Young 2016: 6).
In 2016, thirteen mining companies were identified for the survey. Six of them achieved a rating of
excellent, six achieved a rating of good, and one was included in the top ten (Ernst & Young 2017:
10).
In 2017, a total of thirteen mining companies participated in the survey. Six were rated in the
excellence category, 6 rated in the good category, and one mining company was rated as average (Ernst
& Young 2018: 16).
In 2018, eleven out a total of fourteen mining companies were ranked in the top three categories of the
survey; that is excellent, good and average. Five of them were included in the excellence category,
four in the good category, and two rated as average (Ernst & Young 2019: 16).
The above summary for the years 2011 through 2018 serves to illustrate the scores of mining
companies since the introduction of integrated reports. Figure 7 shows the yearly scores of
participating companies and the categories of achievement for each year.
42
The EY survey is undertaken every year and includes one hundred top companies listed on the JSE. In
the year 2018, a total of fourteen mining companies were identified for the survey (Ernst & Young
2019: 6). An analysis of the EY survey for 2018 indicates that over 70% of the mining companies
included in the survey were rated in the excellent and good category (Ernst & Young 2019: 16).
3.6. DISCUSSION
Results captured in figure 9 do not support the assumption that integrated reporting is a new platform
that holds the promise of more thorough and complete ways of reporting. We saw in chapter 2 of this
study that the topical literature is in favour of integrated reports and that the transition from
sustainability reporting to integrated reporting was a positive development. However, the EY
Integrated Reporting survey results for 2011 through 2018 do not confirm this. Nor do they show
significant progress with regards to the quality of ESG disclosures. These results are therefore
inconsistent with the conclusions of the literature review in chapter 2.
With specific reference to the mining industry, figure 4 shows that Impala Platinum mine achieved a
score of 1 in 2011 but dropped to a score of 2 in 2018. Anglo Gold mine also declined from a score of
1 in 2011 to a score of 2 in 2018. Kumba Iron ore mine was rated in the top ten in 2011 but declined
to a score of 2 in 2018. Lonmin declined more than all mining companies from a rating of 1 in 2011
to a rating of 3 in 2018. Exxaro mine is the only mining company that maintained its rating of 1 for
both 2011 and 2018. The lack of stakeholder engagement in the mining industry, as discussed in
chapter 2, is plausibly one of the reasons for this decline in ESG disclosures.
Regarding all EY rated companies, figure 9 shows that since 2011 the number of reports with an
excellent rating did not increase consistently between 2011 and 2018. As noted, this is inconsistent
with the literature. Figure 9 also shows that the number of reports that achieved the second best rating
of good did not increase between 2011 and 2018. This too is at odds with the assumptions drawn from
the literature. Figure 9 also indicates that more companies received a rating of average in 2018
compared to 2011.
Although it is claimed that the quality of integrated reporting is improving on a continuous basis (Ernst
& Young 2019: 13), the data does not support this claim either for the mining companies specifically
or the companies rated. EY (2019: 13) claims that integrated reporting has registered great
improvements in quality and that the United Nations sustainable development goals are now neatly
blended with the financial goals of businesses. The comments made by the EY adjudicators suggest
that the quality of reports has generally improved and that ESG disclosures in particular have improved
significantly. This creates the impression that such improvements are due to integrated reporting. It is
43
stated that integrated reports have improved in the following respects: (1) improved disclosures of
output and outcomes, (2) increased use and application of the United Nations development goals, and
(3) the disclosure of risk (Ernst & Young 2019: 13). However, the data suggest that disclosures have
not improved over time. Literature on integrated reporting also supports the view expressed by the
adjudicators of EY even though the yearly results of the survey do not support this impression. What
is interesting however is that the mining companies rated via the SRI index do not show a decline in
terms of the quality of reporting from 2011 to 2018. This suggests that different rating instruments
may focus on different areas of ESG disclosures and that this leads to different conclusions regarding
the quality of disclosures.
In summary, the research findings based on the EY index do not support the narratives in the literature
regarding the impact that integrated reporting has had on the quality of disclosures. While reporting
may have become more rigorous as sustainability reports have transitioned to integrated reports, one
would have expected an increase in the quality of disclosures under integrated reporting. This is
because of the increased emphasis on integrated reports (in King IV and elsewhere) and because
integrated reporting indices have become the reporting standard over the last ten years. The research
results suggest that, while integrated reporting allows for reliable longitudinal data on companies’ ESG
disclosures, there is still much room for improvement regarding the substantive content of these
reports.
That said, a limitation of this study is that it was impossible to undertake a direct comparison of the
quality of disclosures under sustainability reporting versus integrated reporting. This is because the
two types of reporting are assessed via different matrixes (even when using the same index). A further
limitation is that the data used in this study provides a very high-level analysis of the quality of
reporting. A more granular analysis is needed to tease out the ESG dimensions of integrated reporting
specifically. Nevertheless, and despite these limitations, the purported benefits of integrated reporting
for the quality of ESG disclosures is not evident from the data analyzed. As such, future research
should employ more refined methodological frameworks to further assess the supposed benefits of
integrated reporting for ESG disclosures.
Further avenues for future research include (1) studies on why the quality of ESG disclosures in South
Africa – especially in the mining industry – have declined over time, (2) critical reflections on whether
the International Integrated Reporting Council Framework is user-friendly in its current format, and
(3) a comparative analysis of different rating instruments to ascertain why there is a difference in
outcomes.
44
3.7. CONCLUSION OF THE STUDY
In this study, I investigated shifts in reporting on ESG matters and the subsequent effects these shifts
have had on the quality of ESG disclosures. The main shift concerns the move from standalone
sustainability reports to integrated reports. I conducted a review of the literature in chapter 2 including
a review of King III and IV. I also discussed the International Integrated Reporting Framework and
the Global Reporting Initiative (GRI). The literature suggested that these institutions provide essential
guidelines on how to prepare integrated reports. The literature also shows that integrated reports are
viewed by stakeholders as a new platform having the potential to achieve transparency and
inclusiveness in the business community.
I also reviewed theories that underpin integrated reports. These include stakeholder theory and
legitimacy theory. The literature reveals that integrated reports are strongly supported by stakeholder
theory and legitimacy theory, and that the completeness and accuracy of reports serve the entire
stakeholder spectrum. My literature review also revealed that integrated reports are a step in the right
direction when it comes to accountability regarding, not only profits, but also environmental and social
matters. The literature also indicates that mining companies in South Africa did not engage
stakeholders on a regular basis and that such a disconnect was hurting stakeholder relations in the
mining sector.
In chapter three, I employed EY‘s Excellence in Integrated Reporting survey to test the relationship
between integrated reports and ESG disclosures. I used results from 2011 and 2018 to determine if the
quality of ESG disclosures were improving due to the introduction of integrated reports. Although no
difference in the quality of disclosures within the mining industry was noted in the SRI index report,
the EY Excellence in Integrated Reporting survey results show that the quality of disclosures is not
generally improving. Mining companies have, in fact, not registered an improvement since 2011. This
is inconsistent with the dominant narrative in the literature concerning the benefits of integrated
reporting. Further investigation is needed to establish a possible cause or explanation for this
inconsistency.
REFERENCES
AACA, IIRC. 2013. Capitals – Background paper for <IR>. [Online] Available:
http://www.integratedreporting.org
Abeysekera, I. 2013. A template for integrated reporting. Journal of Intellectual capital, 14 (2): 227–
245.
45
Abhayawansa, S., Joshi, M., Vu Hugnh, A. and Setia, N. 2015. Integrated reporting in South Africa:
Some initial evidence. Sustainability Accounting Management and Policy Journal, 7 (2): 190–224.
ACCA, FTSE. 2007. Improving climate change reporting. [Online] Available:

http://www.accaglobal./research
ACCA, GRI. 2009. High impact sectors: the challenge of reporting on climate change. [Online]
Available: http://www.accaglobal.com
Aggarwal, P. 2013. Sustainability reporting and its impact on corporate financial performance: A
literature review. Indian Journal of commerce and management studies 4, (3): 51–59.
Agle, B. R., Mitchell, R. and Wood, D. J. 1984. Toward a theory of stakeholder identification and
salience: Defining the principle of who and what really counts. The academy of management review,
1997 (4): 853–886.
Alves, H., Raposo, M. and Mainardes, E.W. 2011 Stakeholder theory to resolve. Emerald insight, 49
(2): 226–252.
Amnesty International. 2016. Smoke and mirrors: Lonmin’s failure to address housing conditions at
Marikana South Africa. [Online] Available: http://www.amnesty.org
Amoako, K., Lord, B. R. and Dixon, K. 2017. Sustainability reporting: Insight from the website of five
plants operated by Newmont Mining Corporation. Meditari Accountancy Research, 25 (2): 186–215.
Amouroux, D., Cukrowska, E. M., Makiiese, J. G., Tessier, E. and Weiersbye, I. 2013, The impact of
post mining on Mercury pollution in the West Rand region, Gauteng South Africa. Journal of
Geochemical exploration, 134 (1): 111-119.
Aras, G. and Crowther, D. 2009. Corporation sustainability reporting: A study in disingenuity? Journal
of Business Ethics, (87): 279–288.
Ashanti Gold Fields. 2012. 2012 celebrating 125 years of history. [Online] Available:
http://www.goldfields.com/pdf/media/publications/group/2012/september-golden-age.pdf
Association of Chartered Certified Accountants. 2012. Integrated reporting: The influence of King III
on social, ethical and environmental reporting. [Oneline] Available: http://www.accaglobal.com
Atkins, J. and Maroun, W. 2015. Integrated reporting in South Africa in 2012: Perspective from South
African institutional investors. Meditari Accountancy research (Emerald insight), 23 (2): 197–221.
Baleni and Others v Minister of Mineral Resources and Others [2019]. Case No. 73768/2016.
46
Bauer, J. 2007. The factors of production: Helping caregivers work smarter instead of harder. Journal
of healthcare information management, 21 (4): 4–5.
Beck, C., Dunny, J. and Frost, G. 2015. In pursuit of a ‘single source of truth’: From threatened
legitimacy to integrated reporting. Journal of Business Ethics, (141): 191–205.
Bendickson, J., Davis, P. E., Lignori, E. and Muldoon, J. 2016. Agency theory: times, they are a-
change. Management decision, 54 (1): 174–193.
Bennie, A. 2011. Question for labour on land, livelihoods and jobs: A case study of the proposed
mining at Xolobeni wild coast. South African Review of sociology, 42 (3): 41–59.
Bennie, N. M. and Tweedie, D. 2015. Entitlements and Time: Integrated Reporting’s double-edged
agenda. Social and Environmental Accountability Journal, 35 (1): 49–61.
Bernardi, C. and Stark, A. W. 2016. Environmental, social, and governance disclosures integrated
reporting and the accuracy of analyst forecasts. The British Accounting Review, (50): 16–31.
Bezuidenhont, G. A. Eksteen, J.J. Van Beek, B. 2011. Cracking a hard nut: An overview of Lonmin’s
operations directed at smelting of UG2-rich concentrate blends. The Journal of the Southern African
Institute of mining and metallurgy, (111): 681-690.
Bohringer, C., Rivers, N. and Yonezawa, H. 2016. Vertical fiscal externalities and the environment.
Journal of Environmental Economics and Management, (77): 51–74.
Braford, M., Earp, B., Showalter, D. S. and Williams, P. E. 2016. Corporate sustainability reporting
and stakeholder concerns: Is there a disconnect? Accounting horizons, 31 (1): 83–102.
Brundtland, G. 1987. Report of the World Commission on Environment and Development: Our
common future [online]. Available: http://www.un-document. net/our-common-future.pdf
Buchholtz, A. K. and Carroll, A. B. 2008. Business and society ethics, sustainability management, 9th
edition. Cengage Learning.
Business Call to Action, GRI. 2016. Measuring impact: How business accelerates the sustainable
development goals. [Online] Available: http://www.businesscalltoaction.org; http://www.undp.org
Carroll, A. B. 2009. Business ethics: Brief readings on vital topics. Routledge.
Casadei, A. and Gianfelici, C. 2015. The relevance of nationality and industry for stakeholder salience:
An investigation through integrated reports. Journal of business ethics, (150): 541–558.
47
Chariri, A. and Januarti, I. 2017. Audit committee characteristics and integrated reporting: Empirical
study of companies listed on the Johannesburg stock exchange. European Research Studies Journal,
20 (4B): 305–318.
Cheng, B., Eccles, R. G. and Saltzman, D. 2010. The landscape of integrated reporting: Reflections
and next steps. [Online]. Available: http://www.thecaq.org
Corno, L. and de Walque, D. 2012. Mines, migration and HIV/AIDS in Southern Africa. Journal of
African Economics, 21 (3): 465–498.
Crane, A. and Ruebottom, T. 2011. Stakeholder theory and social identity: Rethinking stakeholder
identification. Journal of Business ethics, 102 (1): 77–87.
De Colle, S., Freeman, R. E. and Harrison, J. S. 2010. Stakeholder theory: The state of the art.
Cambridge University press.
Deloitte. 2011. Integrated reporting: A better view? [Online]. Available: http://www.iasplus.com
Deloitte. 2015. Integrated reporting as a driver for integrated thinking? [Online]. Available:
http://www2.deloitte.com
Drury, C. 2004. Management and cost Accounting, 6th edition. Thomson Learning.
Earthlife, Oxfam International. 2009. Climate change, development and energy problems in South
Africa: Another world is possible. [Online]. Available: http://www.earthlife.org.za
Eccles, R. G. and Krzus, M. 2010. One report: Integrated reporting for a sustainable strategy. [Online].
Available: http://www.hbs.edu
Englander, E. and Kaufman, A. 2011. Behavioral economics, federalism and the triumph of
stakeholder theory. Journal of Business ethics, 102 (3): 421–438.
Ernst & Young. 2011. Excellence in Sustainability reports. [Online] Available:

http://www.integrtaedreportingsa.org
Ernst & Young. 2016. Excellence in Integrated reports. [Online] Available

http://www.integratedreportingsa.org
Ernst & Young. 2017. Excellence in Integrated reports. [Online] Available

http://www.integratedreporting.org.
Everingham, G. and Kana, S. 2008. Corporate reporting, 8th edition. Juta and Co Ltd.
48
Exxaro limited. 2019. Exxaro Resources Limited consolidated mineral resources and mineral reserves
report. [Online] Available: http://www.exxaro.com
Exxaro limited. 2018. Integrated report. [Online] Available: http://www.exxaro.com
Fassin, F. 2012. Stakeholder management reciprocity and stakeholder responsibility. Journal of

Business Ethics, 109 (1): 83–96.
Fassin, Y. 2011. A dynamic perspective in Freeman’s stakeholder model. Journal of Business Ethics.
96 (1): 39–49.
Financial Executive. 2014. Integrated reporting: The new annual report for the 21st century. [Online]
Available: http://www.thefreelibrary.com
Forker, J. J. 1992 Corporate governance and disclosure quality. Accountancy and Business Research,
22 (86): 111–124.
Freeman, E. 1994. The politics of stakeholder theory: Some future directions. Business Ethics
Quarterly, 4 (4): 409–421.
Freeman, E., Gilbert, R., James, A. and Stoner, F. 1995. Management, 6th edition. Prentice Hall
International.
Freeman, R. E. 1984. Strategic management: A stakeholder approach. Pitman.
Getz, K. and Oetzel, J. 2012. Why and how might firms respond strategically to violent conflict?
Journal of International Business Studies, 43 (2): 166–186.
Friedman, M. 1970. The social responsibility of business is to increase its profits. New York Times
Magazine, 13 September.
Friedman, M. 1962. Capitalism and freedom, 40th anniversary edition. University of Chicago Press.
Global Reporting Initiative. 2016. Consolidated set of GRI sustainability reporting standards. [Online]
Available: http://www.globalreporting.org/standards
Global Reporting Initiative. 2016. A new phase: The growth of sustainability reporting. [Online]
Available: http://www.globalreporting/standards
Gocejna, M. M. 2016. The relationship between corporate social responsibility and corporate financial
performance: Evidence from empirical studies. Comparative Economic Research, 19 (4): 67–84.
Groom, B. and Turk, Z. 2021. Reflections on the Dasgupta review on the economics of biodiversity.
Environmental and Resource Economics. 79 (1): 1–23.
49
Gupta, M. C. 2016. Disclosures in integrated reporting: A review. Splint international Journal of

professionals, 111 (1): 38–40.
Hamann, R. and Sonnenberg, D. 2006. The JSE socially responsible investment index and the state of
sustainability reporting in South Africa. Taylor and Francis Journal, 23 (2): 305–320.
Higgins, C. and Stubbs, W. 2014. Integrated reporting and internal mechanisms of change. Accounting
Auditing and Accountability Journal, 27 (7): 1068–1089.
Hill, N. and Maroun, W. 2015. Assessing the potential impact of the Marikana incident on South
African mining companies. Sajems NS, School of Accountancy Wits University.18 (4): 586–607.
Humphreys, M., Moon, J. and Vigneau, L. 2013. How do firms comply with international
sustainability standards? Process and consequences of adopting the global reporting initiative. Journal
of business ethics,131 (2): 469–486.
Implats Limited. 2020. Mineral resources and mineral reserve statement. [Online]. Available:
http://www.implats.co.za
Institute of Directors of South Africa. 2016. King IV report on governance for South Africa. [Online].
Available: http://www.iodsa.co.za
Institute of Directors of Southern Africa. 2009. King report on governance for South Africa. [Online].
Available: http://www.iodsa.co.za
Integrated Reporting Committee of South Africa. 2011. Framework for integrated reporting and the
integrated report (discussion paper). [Online]. Available: http://www.sustainabilitysa.org
Integrated reporting committee of South Africa. 2014. Preparing an integrated report: A starter’s guide.
[Online]. Available: http://www.integratedreportingsa.org
International integrated reporting council. 2013. The international <IR> framework. [Online].
Available: http://www.integratedreporting.org
International Integrated Reporting Council. (2011). Towards Integrated Reporting communication

value in the 21st century. [Online]. Available: http://www.integratedreporting.org
Ioana, B. R. 2016. Key performance disclosures by the integrated reporting indicators. Annals -
Economy Series. 1 (1): 151–157
JSE Limited. 2014. SRI index Background and criteria, 2014. [Online]. Available: http://www.
jse.co.za
50
KPMG 2011. International survey of corporate responsibility reporting. [Online]. Available:

http://www.upj.de
KPMG, GRI, UNEP and Stellenbosch University. 2010. Carrots and sticks promoting transparency
and sustainability. [Online]. Available: http://www.carrotsandsticks.net
Kretzschmar, L., Prinsloo, F., Prozesky, M., Rossouw, D., Sander, K., Siebrits, J. and Woermann, M.
2013. Ethics for accountants and auditors, 3rd edition. Oxford University Press.
Kumba Iron Ore Limited. Annual report, 2007. [Online]. Available:

http://www.angloamericankumba.com
Lingenfelder, D. and Thomas, A. 2011. Stakeholder inclusiveness in sustainability reporting by mining

companies listed on the Johannesburg securities exchange. African Journal of business ethics. 5 (1):
1–13.
Maledu and Others v Itereleng Bakgatla Mineral Resources (Pty) [2018]. Case CCT 265/17.
Marx, B. and van Dyk, V. 2011. Sustainability reporting at large public sector entities in South Africa.
South African Journal of Accounting research, 25 (1): 103–127.
Mintz, S. M. 2011. Triple bottom line reporting for CPAs: Challenges and opportunities in social
Accounting. CPA Journal, 12 (1): 26–33.
Mohammed, S. A. S. and Muhammed, J. 2017. The relationship between agency theory, stakeholder
theory and shariah supervisory board in Islamic banking: An attempt towards discussion. International
Journal of ethics and systems, 33 (1): 75–83.
O’Donavan, G. 2002. Environmental disclosures in the annual report: Extending the applicability and
predictive power of legitimacy theory. Accounting, auditing and accountability journal, 15 (3): 344–
371.
Perrauit, E. 2015. Name and faces approach to stakeholder identification and salience: A matter of
status. Journal for Business Ethics, 146 (1): 25–38.
South African Institute of Chartered Accountants. 2015. Integrated thinking: An exploratory survey.
[Online]. Available: http://www.integratedreporting.org
South African Institute of Chartered Accountants. 2016. Integrated thinking: An exploratory survey.
[Online]. Available: http://www.integratedreporting.org
Santana, A. 2012. Three elements of stakeholder legitimacy. Journal of Business Ethics, 105 (1): 257–
265.
51
Slager, R. 2015. SRI indices and responsible corporate behavior: A Study of the FTSE4 good index.
Business and Society., 54 (3), 386–405.
Sorensen, P. 2011. Mining in South Africa: A mature industry. International Journal of Environmental
Studies, 68. (5): 625–649.
Thomas, A. 2017. Changes in stakeholder dynamics and salience during a mining disaster. South
African Journal of Business Management, 48 (4): 71–82.
Tweedie, D. and Martinov-Bennie, N. 2015. Edged agenda. Social and Environmental Accountability
Journal, 35 (1): 49–61.
Ungerer, M. 2017. A comparative analysis of strategy disclosure reporting trends in South Africa in
2010. South African Business Review, 17 (3): 27–56.
World Commission on Environment and Development. 1987. Our common future. Oxford University
Press
United Nations. 2003. A systems approach to sustainability and sustainable development. [Online].
Available: https://digitallibrary.un.org/record/492505?ln=en
Van Zyl, A. 2013. Sustainability and integrated reporting in the South African corporate sector.
International Business & Economics Research Journal, 12 (8): 903–926.
Weiss, J. W. 2006. Business ethics: A stakeholder and issues management approach, 4th edition.
Thomson South western.

Dube Reports 2021

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Dube Reports 2021

Uploaded by

Copyright:

Available Formats

i

An assessment of the relationship between integrated reports and

Supervisor: Prof. M. Woermann

Copyright © 2021 Stellenbosch University

All rights reserved

CHAPTER 1: INTRODUCTION AND BACKGROUND TO THE STUDY ................................ 1

1.1. INTRODUCTION ....................................................................................................................... 1

1.2. SUSTAIANABILITY REPORTS............................................................................................... 2

1.3. INTEGRATED REPORTS ......................................................................................................... 2

1.4. PURPOSE OF THE STUDY ...................................................................................................... 4

1.5. AIMS OF THE STUDY .............................................................................................................. 5

1.6. METHODOLOGY ...................................................................................................................... 5

1.7.STRUCTURE OF THE THESIS ................................................................................................. 6

CHAPTER 2: LITERATURE REVIEW........................................................................................... 7

2.1. INTRODUCTION ....................................................................................................................... 7

2.2. THEORETICAL FRAMEWORK .............................................................................................. 7

2.2.1. Agency theory and ESG disclosures .................................................................................... 7

2.2.2. Stakeholder theory and ESG disclosures.............................................................................. 8

2.2.3. Legitimacy theory and ESG disclosures............................................................................. 15

2.3. REPORTING FRAMEWORKS ............................................................................................... 16

2.3.1. Global reporting initiative framework (GRI) ..................................................................... 16

2.3.2. International integrated reporting framework (IIRC) ......................................................... 20

2.3.3. Integrated reporting committee of South Africa ................................................................ 24

2.3.4. King Report recommendations ........................................................................................... 25

2.4. SUMMARY OF CHAPTER ..................................................................................................... 26

CHAPTER 3: METHODOLOGY, FINDINGS, DISCUSSIONS AND CONCLUSIONS ......... 28

3.1. INTRODUCTION ..................................................................................................................... 28

3.2. SAMPLING OF COMPANIES ................................................................................................ 29

3.3. CHOICE OF YEARS ................................................................................................................ 30

3.4. INDICES ................................................................................................................................... 30

3.4.1. Ernst & Young Excellence in Integrated Reporting survey ............................................... 30

3.4.2. SRI index rating.................................................................................................................. 36

3.6. DISCUSSION ........................................................................................................................... 42

3.7. CONCLUSION OF STUDY ..................................................................................................... 44

Figure 3: SRI index minimum requirements .................................................................................... 36

Figure 5: SRI index scores for 2011 and 2018 ................................................................................. 38

Figure 9: Ernst & Young overall results for 2011 to 2018............................................................... 41

Table 1: Category of stakeholders ...................................................................................................... 9

CHAPTER 1: INTRODUCTION AND BACKGROUND TO THE STUDY

1.2. SUSTAINABILITY REPORTS

1.3. INTEGRATED REPORTS

Everingham and Kana state that

1.4. PURPOSE OF THE STUDY

1.5. AIMS OF THE STUDY

1.7. STRUCTURE OF THE THESIS

CHAPTER 2: LITERATURE REVIEW

2.2. THEORETICAL FRAMEWORK

2.2.1. Agency theory and ESG disclosures

2.2.2. Stakeholder theory and ESG disclosures

Category Stake owner Stake watcher Stake keeper Stake seeker

Attribute Stakeholder Pressure group Regulator

Legitimacy Normative Derivative Mixed Self-proclaimed

Dependence Mutual Firm Independent Independent

Influence Mutual On the firm/ On the firm/ Indirect

Loyalty Natural Limited Neutral Opportunistic

Responsibility Of the firm None Externally None

Fairness Natural Expected Expected None existent

Reciprocity Implicit Expected Neutral Arbitrary

Table 1: Categories of stakeholders

In conclusion, stakeholder value as a body of knowledge highlights a significant source of conflict in

2.2.3. Legitimacy theory and ESG disclosures

2.3. REPORTING FRAMEWORKS

2.3.1. Global reporting initiative (GRI)