Changing the way business is done – South African integrated reports

written by Carol Adams

Changing the way business leaders and their investors think is a prerequisite for real change towards social, environmental and economic sustainability.  A focus on the longer term and thinking about value in non-monetary terms, means thinking about people, relationships, know-how and the natural environment and how they create value, rather than just what they cost or how we impact on them. And a reading of the best South African integrated reports reveals a concerted effort to think about the business differently.

Citation for this article:  Adams, C A (2014) “Changing the way business is done: A critical review of two South African integrated reports”, The Sustainability and Integrated Reporting Handbook, Alive2Green Available here

The potential of integrated reporting to drive changes in the way business does business lies in its focus on long term strategic planning, the multiple capital concept and its potential to change how we define value.  A focus on short term financial value is increasingly being seen as bad for business, let alone society and our natural resources.

It is pleasing to see reports which highlight key non-financial performance indicators, along with financial indicators right up front.  For example, in Sasol’s case these include environment, safety and equity measures and, in the case of greenhouse gas emissions (only) a quantified long term (2020) target.  It is also exciting to see reports which talk about values and goals in broad terms and analyse the context in which the business is operating, its risks, including reputation risk, and opportunities.

Some of the reports available, such as Sasol’s 2013 annual integrated report, attempt to follow the IIRC’s consultation draft, but they all predate the recently released International <IR> Framework (IIRC, 2013 and Adams 2013).  Yet they provide many learnings for companies new to integrated reporting.

Sasol explicitly acknowledges the link between values and behaviour: Our shared values define what we stand for as an organisation and inform our actions and our behaviour. They determine the way in which we interpret and respond to business opportunities and challenges.” Sasol Annual Integrated Report 2013 p 7.

So what behaviours is Sasol aiming to nurture?  A focus on people, relationships and long term value for those connected with the company:

To grow profitably, sustainably and inclusively, while delivering value to stakeholders through technology and the talent of our people in the energy and chemical markets in Southern Africa and worldwide…our common goal To make Sasol a great company that delivers long-term value to its shareholders and employees; a company that has a positive association for all stakeholders”. (Sasol Annual Integrated Report 2013 p 6)

‘Sustainably’ in this case might mean both environmental sustainability and longevity:

We also remain acutely aware of the environmental impact of extending our operations to 2050. We are working on initiatives to mitigate greenhouse gas and carbon dioxide (CO2) emissions as well as on those related to air quality and water stewardship.” (Sasol Annual Integrated Report 2013 p 27.)

Social and environmental issues feature prominently in ‘top issues impacting our business’ (page 30), but neither here, nor in ‘Looking towards 2050’ (page 27) is there any mention of the carbon bubble.  Should there be?  Well, it has been getting quite a lot of attention, it may impact on value to investors (and employees and stakeholders) and integrated reporting requires identification of material issues and discussion of the context in which a company is operating including risks and opportunities.  So, yes, I think there should be a discussion on the likelihood of a carbon bubble impacting on future value.

Sasol appears to see the fight as being with regulators.

“Risk of climate change and related policies impacting Sasol’s operations growth strategy and earnings” is identified as a regulatory risk (page 47) with possible regulatory interventions identified as carbon taxes, product carbon labelling, carbon budgets and carbon-related border tax adjustments linked to bilateral agreements. Sasol discusses efforts to reduce Greenhouse Gas emissions, but also notes it is engaging in “co-ordinated regulatory intervention” (page 47).  In the context of its concern about the cost of such interventions, this would appear to mean trying to stop them, a move unlikely to be in the interests of protecting natural capital.

The report has been ranked highly (see EY, 2013) and indeed, I did get the feeling that there had been some considerable ‘integrated thinking’, demonstrated by the discussion on value, strategy and the business model.  But I was left wondering if all the reported activity around reducing carbon emissions was an attempt to hide the elephant in the room (the carbon bubble) and delay regulation.  Of course, I should not be surprised by this (see Adams, 2004 and Adams and Whelan, 2009), but I am disappointed to see integrated reporting used in this way.

On the positive side, Sasol has identified how each stakeholder contributes to value creation (pages 38-9) along with more commonly provided information on how they engage with each stakeholder group, what their expectations are etc.  The process of determining materiality set out at the front of the report involved consulting stakeholders amongst other steps.

The Standard Bank Group (SBG) does not suffer the same perception that the nature of its business is fundamentally unsustainable as some would have of Sasol, but banks come up against scrutiny with regard to the nature of the projects they fund.  And they are generally mistrusted by many.  Demonstrating a contribution to creating value for the societies they depend on and diligence with regard to the environmental impacts of the projects they fund is therefore critical for their long term success.  The Standard Bank Group appears to do this better than many.  The real proof of course comes in information about the nature of loans made.

The reader of SBG’s annual integrated report is left with the feeling that the bank sees its success as inextricably linked with its relationship to society.  For example, socioeconomic development and provision of sustainable and responsible financial services are identified as material issues.  The bank aims to embed sustainability thinking into its business processes, there are a number of determinants of materiality, including the bank’s values and accountability and responsibility for sustainable development rests with the board (page 46). The report includes a value added statement (page 49), information on stakeholder engagement processes and explains it approach to environmental and social risk screening.  Sustainability risk is explicitly mentioned alongside other operational risks (page 90).

Another strength of the SBG report is its disclosure on remuneration of it executives. Some are not so bold.

One of the Guiding Principles of the International <IR> Framework is ‘concisenes’.  At around 130 (Sasol) and 180 (SBG) pages, neither report examined here can be said to fulfil that, but they contain information, including financial and governance information which goes beyond the Framework’s content elements.


Adams, CA (2004). The ethical, social and environmental reporting – performance portrayal gap Accounting, Auditing and Accountability Journal (Volume 17, Issue 5): 731–757.

Adams CA (2013) Understanding Integrated Reporting:  The Concise Guide to Integrated Thinking and the Future of Corporate Reporting Dō Sustainability ISBN 9781909293847.

Adams CA and Whelan G (2009) Conceptualising future change in corporate sustainability reporting Accounting Auditing and Accountability Journal 22(1): 118–143.

EY (2013) Excellence in Integrated Reporting Awards 2013. Download here:$FILE/EY%20Excellence%20in%20Integrated%20Reporting.pdf

IIRC (2013) International <IR> Framework. Download here:

Citation for this article:  Adams, C A (2014) “Changing the way business is done: A critical review of two South African integrated reports”, The Sustainability and Integrated Reporting Handbook, Alive2Green Available here

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