While internal auditors digest the implications of King III, its author is already thinking about what might appear in King IV. Any fourth report would seek to ensure that governance and internal auditing evolve to match the changing nature of business, he says.

“The milieu in which companies operate has changed completely,” King says. Companies now face three crises: the financial crisis, climate change crisis, and environmental crisis, in which two-thirds of the world’s ecosystems and biodiversity are being degraded. “Companies that work on the basis of the economic model that we have had for 150 years — that natural capital is limitless, and that the planet can absorb waste on an unlimited basis — I’m afraid will not be sustainable over the next 10 or 15 years, simply because the planet cannot sustain them,” he says.

 

That means companies will have to consider financial, human, environmental, social, and technological concerns when setting their strategy. “If you don’t do that, if you don’t change your mind-set from the top, and strategically plan the future of your company, then you are going to fall behind,” King says. 

 To comment on this article, e-mail the author at neil.baker@theiia.org.

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