JSE companies’ financial reporting getting worse

The quality of JSE-listed companies’ integrated reports has steadily declined over the past decade, with nearly 60% of the top 100 JSE-listed companies achieving only an ‘Average’ or ‘Progress to be made’ rating.

This is according to the EY 2023 Excellence in Integrated Reporting Awards, released on Tuesday, 19 September.

These awards benchmark standards of excellence in the quality of integrated reporting published by listed South African companies for their investors and stakeholders. 

The top 100 JSE-listed companies, based on market capitalisation as of 31 December 2022, were included for consideration, while pure holding companies were excluded. 

Only 22 companies achieved an ‘Excellent’ rating this year, while only 21 earned a ‘Good’ rating.

57 of the 100 companies included achieved an ‘Average and Progress to be made’ rating. 

A decade ago, in 2013, 28 companies’ reports were ‘Excellent’, 30 were ‘Good’, while only 42 were rated ‘Average and Progress to be made’.

According to the report, the 57 companies that were not rated ‘Excellent’ or ‘Good’ are “not making a serious attempt to produce an integrated report that complies with the International Integrated Reporting Framework”.

However, it should also be noted that 21 of the 100 companies in the survey did not produce an integrated report as they have their primary listings on stock exchanges other than the JSE and are, therefore, not required to prepare an integrated report.

Of the company reports rated ‘Excellent’, 3 issued a separate remuneration report, 7 issued a separate governance report, and 8 issued a separate report on climate-related matters.

Broken down by industry, 50% of all companies classified as ‘Good’ or ‘Excellent’ operate in the technology, media and telecommunications, financial services, and consumer products and retail sectors.

In addition, 60% of mining sector companies are in the ‘Excellent’ and ‘Good’ categories, while 40% of the companies operating within the insurance industry are in the ‘Excellent’ or “Good’ ratings.