Editor's Note

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The Steinhoff debacle is far from over, but the main contours of the problem have become clear. It was always a human problem stemming from a particular type of organisational psychology centred around a corporate strongman possessed of a certain charisma, even genius, but unscrupulously willing to charm and bully not only subordinates but also the board into doing his bidding. Such is the thrust of James-Brent Styan's Steinhoff: Inside SA's Biggest Ever Corporate Crash.

Would investors have made different decisions had they been privy to this particular form of non-financial information? More importantly, will they be more circumspect in investigating the management style of the "man at the top" in future? After all, a great deal of fund manager research work centres on investment style (see "How do fund managers think?" in this issue). Perhaps more research into corporate psychology in addition to the financials would prevent another Steinhoff from happening.

Certainly, investors worldwide are demanding credible, relevant and reliable non-financial information to make capital allocation decisions, according to a report issued by PwC and the World Business Council for Sustainable Development (WBCSD). Investors want information outside of financial statements including environmental, social and governance (ESG) metrics. Jayne Mammatt, Director of Sustainability and Climate Change at PwC South Africa, is quoted as saying: "Globally, there has been a surge in the amount and variety of information reported to investors outside of financial statements. Investors want companies to show how NFI is integrated in their strategic decision-making and are looking for material information to be underpinned by controls and processes on a par with those used for financial information.

“Investors need this information because time has shown us that companies who understand and manage their NFI performance are more resilient to external pressures and change, and there is a growing body of evidence that suggests such companies outperform their peers when it comes to long term shareholder value.”

Transparency and sustainability are clearly linked. Investors should push for more of both.

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This edition

Issue 72