Now more than before, with the publication of the King V report on corporate governance, public, private and nonprofit South African entities cannot simply claim to be led ethically and effectively — they have to prove it.

The King report, sometimes criticised as rubber-toothed because it is a voluntary framework and not legally enforceable, takes its most robust form in King V: simplified and restructured for better accessibility and easier application, introducing double materiality and artificial intelligence (AI) governance, and incorporating concepts such as ubuntu-botho and systems value creation.

However, its most important development is certainly the inclusion of a standardised disclosure framework to drive accessibility, transparency and accountability. This is where an organisation’s claim to good corporate governance will stand, or fall.

Since 1994 the King report — in its various iterations — has been South Africa’s gold standard for corporate governance, and it is also recognised on the global stage. Despite its voluntary nature, its principles can be found in some of our country’s most important statutes, not least the Companies Act, and it provides a solid governance benchmark for our courts and regulatory authorities.

I was privileged to serve on the King committee for 13 years and was part of the team responsible for developing King IV; I have also been a technical contributor to King V. One of the most exciting aspects of the King report is how it has metamorphosed over the years to meet the ever-changing challenges faced by the leadership of organisations, in the process becoming a leading governance framework worldwide.

Over the years the King report has been a trailblazer in incorporating elements such as a stakeholder-centric approach, sustainable development and integrated thinking that lead to integrated reporting and ethical, effective governance of organisations.

While I’m the kind of governance nerd who will find this sort of document absorbing reading before bed, I’ll be the first to admit that it hasn’t been so for most others. But this time I’m hoping things will be different and others will enjoy working through it too.

That is because King V has been designed to be the clearest, easiest-to-apply framework yet for any organisation seeking the following governance outcomes in the pursuit of long-term sustainability: ethical culture; performance and value creation; conformance and prudent control; and legitimacy.

What are the most fundamental changes that should make King V so compelling for a broader leadership audience?

Simplified code and principles

King V employs plain language, with less jargon, to be clearer and more accessible. This continues a trend throughout the King report’s history, with this iteration the clearest yet.

In addition, the 17 principles of King IV have been condensed to 13, and expressed more simply and clearly. These fundamental principles underpin the four governance outcomes listed above and are universally applicable to all organisations operating in South Africa.

Structural change

To improve usability and accessibility even further, King V isn’t one big document. Instead, it has been deconstructed into four interconnected documents: King V Foundational Concepts; the King V Code; the King V Disclosure Template; and the King V Glossary.

Each supports the other, and it is necessary to absorb all four. For example, you cannot properly read the code if you don’t first grasp the foundational concepts and the glossary.

Double materiality

Materiality is the filter that determines what information is important enough to be disclosed. Single materiality generally comprises financial information pertinent to investors and capital providers. Impact materiality refers to an entity’s impacts on the economy, society and the environment (and thus a broad range of stakeholders).

King V recommends both: integrating disclosure of information that is material from financial and impact perspectives.

AI governance and committee requirements

In keeping with its requirement to move with the times, King V introduces guidelines for the adoption of disruptive technologies such as AI by organisations, particularly regarding human oversight. It emphasises ethics and recommends independent members in risk and ethics committees to assist in fulfilling this task.

Disclosure framework

The most important of all the changes is the inclusion of the King V Disclosure Framework. It entails a fresh approach to information disclosure, one that promotes consistency and transparency and is meant to be more meaningful to stakeholders.

The disclosure framework will become a vital tool for assessing whether an organisation has practised sound corporate governance, and to hold its leadership accountable. Any organisation that claims to apply King V to its activities will be required to use the framework.

Foundational to King V are its key philosophies:

• Ethical leadership: Integrity and accountability are essential to effective and ethical leadership.
• Systems value creation: Organisations must create value for shareholders and the socio-ecological systems in which they exist; it follows that if the system is unhealthy, the business will suffer.
• Integrated thinking: Holistic governance recognises interdependencies between strategy, stakeholders and sustainability.
• Community and inclusivity: The ubuntu-botho philosophy, now included in the King V code, and corporate citizenship support commitment to community and stakeholder engagement.

Well-governed, ethical corporate citizens can make a positive, sustainable difference in our world. But will King V drive a genuine shift in governance behaviour or are its detractors correct when they point out that it is voluntary and there is no-one to enforce it?

I, for one, believe that it works regardless. We have many effective and ethical leaders who are guided and inspired by principles of good governance. I know this because I work with them daily — and without them, we’d have had a lot more Steinhoffs, Tongaats, EOHs and Ayos.

Regarding whether King V will drive even better behaviour in the boardroom, I certainly live in hope. Ultimately, its success doesn’t depend on enforcement; it always comes down to behaviour and the people who apply it.

• Van der Merwe is executive chair of FluidRock Governance Group. She was a member of the committee that developed King IV and contributed technically to King V

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