June, 2014. Call with Prof. Mervyn King for one hour. He is in Johannesburg, South Africa and his first words are about the 2 degrees Celsius temperature they are facing there this Autumn. I try to imagine his house up in the hills, and the townships in the valleys, in these temperatures…
The conversation is about a short paper I have written to start a conversation with thought leaders on future trends in reporting. I want his perspective on “how sustainability challenges to be faced by society in the next decade will shape business agenda and corporative reporting.”
He takes time to explain that he is confident it will become usual that company’s economic, social and environmental impacts are part of all types of metrics and standards related to companies’ performance and valuation methods. He also believes that the definitions of the six capitals and their interconnections will offer the best framework to express performance and value in the future.
Currently, he says, the only reporting framework using these concepts is the Integrated Reporting Framework, which was designed to be supported by standards that will offer the appropriate metrics for this topic. “The effort to integrate financial and sustainability performance, understanding the interconnections between them, is the best exercise for those that want to get ready for the future.”
In his vision, in 10 years from now, “executive and boardrooms will be applying their minds to understand and describe value creation and destruction, through the six capital concept.” This is what he – and others – calls “integrated thinking.” “This what can really promote change and sustainable innovations so urgently needed!”
How will we prepare boardrooms for that? I asked.
“Not too difficult, Nelmara, particularly because we are going through a generation transition in the boardrooms, but to answer that we need to set another call.”
To be continued…
Ps: for more on the biography of this very unusual South-African judge, who became an expert in corporate governance and corporate arbitration see link.
by Nelmara Arbex