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Key Concepts of King IV ™
Because of the interdependence of organisations and wider society, board decisions
should not be made in isolation. Integrated thinking, where the board of directors
considers all issues affecting the organisation when making decisions (and not just the
economic bottom line), is fundamental to the long-term sustainability of the organisation
through the sustained creation of value for stakeholders. Integrated thinking reinforces
the way the company operates as an integral part of society, underpins sustainable
development, integrated reporting and the stake-holder inclusive approach.
Sustainable Development – an approach to development which balances the different,
and often competing needs of the company against an awareness of the environmental,
social and economic limitations of society. The board should develop a strategy which
includes accounting for sustainability issues and reporting these to stakeholders.
Corporate Citizenship – the company should be a responsible “citizen”, involved
with social, environmental and economic issues, respect for human rights, effective
management of stakeholder relationships, resource management with an eye on future
needs, and ensuring a positive impact on the community within which it operates.
Stakeholder-Inclusive Approach – the board should consider and balance the legitimate
needs, interests and expectations of all stakeholders in making decisions in the best
interests of the company. Active stakeholders play a crucial role in the governance
process because they are entitled to hold the board and the company accountable for
their actions and disclosures.
King IV ™ Principles of Good Governance
The board of directors should:
1. Lead ethically and effectively
2. Govern ethics and establish an ethical culture
3. Ensure responsible corporate citizenship
4. Appreciate that the company’s core purpose, its risks and opportunities, strategy,
business model, performance and sustainable development are all inseparable
components of the value creation process
5. Ensure that reports allow stakeholders to make informed assessments about the
organisation’s performance and its short, medium and long-term prospects
6. Serve as the focal point and custodian of corporate governance
7. Have the appropriate balance of knowledge, skills, experience, diversity and
independence
8. Delegate within the board to promote independent judgement, and assist with the
balance of power and effective discharge of duties
9. Evaluate board’s performance and support continued improvement and effectiveness
10. Appoint and delegate to management in a way that contributes to role clarity and
the effective exercise of authority and responsibilities
Source:
The King IV Report on Corporate Governance for South Africa 2016, Institute of Directors S.A.
For more information, see http://www.iodsa.co.za/?page=AboutKingIV”
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