Gabrielle Habberton looks at the standards measured for good practice in governance by the King reports.
GreaterCapital has a long history of evaluating governance practices as a key indicator of an organisation’s capacity to responsibly and effectively utilise funds allocated for social or impact investment purposes. Since we first started applying due diligence to social investment decision-making and recommendations in 2006, governance has been one of the elements in our organisational capacity assessment. Almost ten years ago now, the concepts of ‘social profit’, ‘social investment’ and indeed, even applying due diligence to the philanthropic sector, were considered revolutionary.
We are pleased to see that these concepts and practices are now widely used and have become an industry standard in the changing landscape of more sceptical and savvy donors and investors. The pressure to demonstrate quantifiable impact has led to more rigorous requirements for all investment types (social or purely financial). Within the context of fierce competition for an ever-decreasing pool of available resources, governance remains prominent as a consideration across the social investment continuum (from purely social through blended value to purely financial returns).
South Africa maintains a leading role in setting the agenda and standards for good practice in governance through the King reports developed for the past 20 years. King III[1] is due to be succeeded in 2016 with King IV – an updated code is currently in development, and expected to become effective mid-2017. The Institute of Directors Southern Africa (IoDSA), who are responsible for facilitating and publishing King IV, has articulated what we can expect from King IV.
We believe this is excellent news for the development sector, as well as for the much-needed cohort of small and medium size companies in South Africa. Both of these sectors felt their interests were not addressed directly in previous iterations of King. With a focus on accessibility and co-creation, King IV promises to provide clear principles, supported by recommendations for how to realise those principles in practice for a range of types and sizes of organisations.
Relevant, practical and implementable guidelines will certainly assist in supporting sound governance and in turn more sustainable organisations. We furthermore believe that it is critical to have a consistent set of principles that are common for all types of organisations. Although the specific practices implemented in relation to those principles may vary depending on the type and purpose of organisation, the principles themselves should be a unifying normative code.
The emergence of different standards, codes and guidelines can ultimately create more confusion and fragmentation than good. In short, it is encouraging to see broader participation and collaboration around existing and accepted practices, rather than a plethora of different standards being developed by a range of parties, often with limited applicability and sector specific interests.
We recommend that you join the conversation around governance and stay abreast of the developments around King IV, looking out for public comment drafts. You can find out more about the background to King IV at King IV: Questions and Answers.
[1] Institute of Directors in Southern Africa and the King Committee on governance. 2009. King Report on Governance for South Africa and the King Code of Governance Principles (collectively referred to as King III). Institute of Directors in Southern Africa.
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