Joint Finance, Accounting and Strategy Cluster Seminar: Carol Adams
This paper develops a conceptual framework to explain the complex interrelationships which influence the ability of firms to create value for their stakeholders. In doing so it examines the inter-relationships between: Environmental, Social and Governance (ESG) risk; delivering on corporate strategy; non-financial corporate reporting; and, board oversight. The framework is developed from prior literature and various forms of engagement work. It is refined through interviews with Board Chairs and Non-Executive Directors of large listed companies on the Johannesburg Stock Exchange (JSE) (where Boards are required to have a Social and Ethics sub-committee and approve integrated reports which have been mandatory since 2010) and the Australian Stock Exchange (ASX) (where Board directors’ liability legislation results in Boards being reluctant to adopt integrated reporting which is voluntary). The research finds that contemporary (integrated) reporting influences cognitive frames enhancing Board oversight and assisting organisations in managing complexity. This results in increased awareness of the impact of ESG issues together with a broader view of value creation despite investor disinterest. The research assists the development of practice and policy by articulating and enhancing our understanding of linkages, which loosely fall under the vague practitioner term ‘integrated thinking’. The conceptual framework can inform national and global discussions on the appropriateness of corporate reporting and governance models to achieve sustainable development. The paper conceptualises emerging and complex interrelationships. The cross country comparison allows an assessment of the extent to which different national social contexts with differing governance and reporting frameworks lead to different perspectives on value creation.