The Role of Integrated Thinking in Changing Corporate Behaviour
| Published date | 01 November 2015 |
| Author | Mervyn E. King |
| Date | 01 November 2015 |
| DOI | http://doi.org/10.1111/1758-5899.12205 |
The Role of Integrated Thinking in Changing
Corporate Behaviour
Mervyn E. King
Chairman of the International Integrated Reporting Council
The roots of sustainable capitalism lie in the inclusive
approach to governance as opposed to the exclusive
approach which was practised for approximately
100 years. The latter led to the doctrine of shareholder
primacy and the myth that the shareholder was the
owner of the company. The shareholder has a conglom-
eration of very important incorporeal rights such as the
appointment of directors, the removal of directors and
dictating the purpose for which
the company is formed. But no
person can be owned.
Shareholder primacy led to a
focus on shareholder value and
the definition of value through
the financial lens of the pres-
ent value of discounted future
cash flows. This was almost
irrespective as to how the cash
flows were created.
The company has always been a critical part of society.
Business is at the junction of the economy, society and the
environment. The impacts of how the company makes its
money and its product or service on these three aspects
creates value if they are positive and destroys value if they
are negative. The creation of total value is when the posi-
tive impacts are enhanced and the negative impacts are
eradicated or ameliorated. In other words, value creation is
the process that results in increases, decreases or transfor-
mation of resources which are caused by the company’s
business activities, outputs and outcomes.
Inclusive governance involves the board identifying
the company’s key stakeholders and taking account of
their legitimate and reasonable needs, interests and
expectations of the company, but making a decision
always in the best interests of the company for the maxi-
misation of total value.
Value creation can only be sustained if the sustainabil-
ity issues are embedded in the organisation’s long-term
strategy and the impacts of how the company makes its
money and its product on resources are positive. The use
of resources and the organisation’s relationships with its
stakeholders are interconnected and interdependent,
both functionally and operationally.
The above embraces the concepts of integrated think-
ing and creating value over the
longer term and if adopted
changes corporate behaviour.
The outcome is the integrated
report.
Reporting does influence
behaviour. To have done an
integrated report the board
would have had to adopt inte-
grated thinking.
Author Information
Mervyn E. King, Senior Counsel and former Judge of the Supreme
Court of South Africa. He is Professor Extraordinaire at the University
of South Africa on Corporate Citizenship, Honorary Professor at the
University of Pretoria and Visiting Professor at Rhodes University. He
is Chairman of the King Committee on Corporate Governance in
South Africa, which produced the King I, II and III reports.
Mervyn King is Chairman of the International Integrated Reporting
Council in London, Chairman Emeritus of the Global Reporting Initia-
tive in Amsterdam and member of the Private Sector Advisory
Group to the World Bank in Washington. He has been a chairman,
director and chief executive of several companies listed on the Lon-
don, Luxembourg and Johannesburg Stock Exchanges. He has con-
sulted, advised and spoken on legal, business, advertising,
sustainability and corporate governance issues in 53 countries and
has received many awards internationally.
Inclusive governance involves the board
identifying the company’s key stakeholders
and taking account of their legitimate and
reasonable needs, interests and expecta-
tions of the company, but making a decision
always in the best interests of the company
for the maximisation of total value.
Global Policy (2015) 6:4 doi: 10.1111/1758-5899.12205 ©2015 University of Durham and John Wiley & Sons, Ltd.
Global Policy Volume 6 . Issue 4 . November 2015 477
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