I read in the Business Day that Mervyn King explained the market cap of a listed company as highly inclusive of non-financial items such as
brands, goodwill, the reputation of management, a company’s sustainability and the quality of its governance.
He added that a company’s market cap was no longer just related to its book value, especially in an age where social and environmental concerns were growing. Corporate governance is integral to the value of a company.
Those of us who have experience in the sustainability reporting ethos and King Code will naturally agree, and take heart from King’s affirmation. I take further interest (while wearing my Web hat) because you could have substituted the words corporate governance with “Web 2.0″, “online reputation management”, “CEO’s weblog” etc.
You see, Web 2.0 as applied to investor relations is about dissemination of information, access to information in various locations, reputation, communication and accountability. A blog by a board member and the related spinoffs (RSS, social bookmarking, comments, trackbacks) goes a long way to addressing previous corporate policies that were found wanting. Monitoring of the blogosphere and reacting to it, dissemination of corporate presentations, texts, videos, imagery through web and mobile are what it’s all about. Its governance by laying oneself bare, or naked reporting.
I’ll address this topic further in one of my talks or an article, its really important; Mervyn ought to blog.
Judge Mervyn King is the highly influential author of the King Code (I and II), advising to the World Bank and UN. He has dragged corporate South Africa and the JSE into being one of the leading exponents (as a country) in corporate governance reporting and the attendant practices of sustainability reporting and BEE.
Every listed company adheres to the JSE requirements of disclosing the practices by which they run the concern, and the trend of the last few years has been to examine the impact on the environment, social impact and economic impact (the triple bottom line) of their operations. In a resource-rich, large country like South Africa, one may think one can ravage the natural and human resources and damn the consequences (as evidenced in the last few centuries, the exploitation of the New World). Sustainability makes financial sense and moral safeguarding of an organisation’s impact.