JOHANNESBURG—Governance reporting is increasingly necessary as stakeholders seek to hold companies accountable, but reporting is not sufficient for companies that want to demonstrate a real commitment to sustainability, the crowd at our third In2Summit Africa heard this afternoon.

During a discussion entitled “ESG with a hard focus on the ‘G’” sponsored by corporate and financial PR firm Instinctif Partners Africa and led by Frederic Cornet, the firm’s managing partner of capital markets, panellists saw considerable benefits to higher standards of reporting, but warned that a compliance mindset could lead to doing “just enough” and missing opportunities to do more.

Cornet pointed out that “in South Africa, the environmental, social and governance platform is driven by regulation and by the King Codex,” and asked panelists whether the impact of those regulations has been beneficial.

Annamarie van der Merwe, whose company iThemba consults on legal, compliance and governance issues and who was involved in the writing of the King Reports, warned: “We think we just have to comply and tick these boxes. But if you apply governance standards for the wrong reasons, it blows up in your face. It’s more dangerous to do it that way than not to do it all. We can write King Reports as long as we like, but until we have ethical, committed leadership, there will still be scandals and crises.”

James Brice, group CEO of EBS Advisory, an emerging markets sustainability adviser to institutional investors, agreed. “The problem with the compliance approach to governance is people do just what is required. It’s like paying taxes: you do as much as you have to and more. The problem with that is you miss opportunities. A company in this room was discussing transformation, and transforming the workforce, and talking in terms of CSR, when the real opportunity is that you are creating the kind of workforce you need to compete in the future.”

The Johannesburg Stock Exchange, he pointed out, “was the first market to require responsible reporting, but since then we have had a series of crises, so I don’t think those requirements have made things better.”

Jean Pierre Verster, equity portfolio manager at Fairtree Capital, brought the investor perspective: “As a capitalist, I am interested in long-term return, and if you want to make money in the long-term you have to be a sustainable business.” But at the same time, “As a reader and a user of integrated reports, there are some sections that seem to be a lot of fluff that you just skip over. I don’t want to see pretty pictures, I want to see tangibly what they are going to do, what their targets are and what the strategy is for achieving them.”

Investors, he said, were looking for authenticity, not spin.

But Brice pointed out: “Authenticity requires balanced reporting. You give the good news and the bad news. Nobody trusts perfection.” He cited the CEO of Novo Nordisk—a pioneer in governance reporting—who explained the company’s commitment to transparency on governance issues by saying it would give the company “permission to make mistakes.”

But to earn that, companies can’t afford to treat governance reporting as a once-a-year obligation.

“We talk integrated reporting but it has to start with integrated thinking. Integrated reporting means that once a year everybody goes off, everybody works late, and the job is done,” said van der Merwe. “This has to be a continuous process. This information should be on the radar constantly so they can monitor how the company is doing.”