In December, the International Integrated Reporting Council (IIRC) which is a global coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs, released the much-heralded International Integrated Reporting (<IR>) Framework. This follows a three-month global consultation on a draft framework published in early 2013.
Integrated Reporting combines financial and non-financial information in one report. In Ireland and worldwide increasing numbers of companies are exploring ways of reporting on their sustainability strategies alongside financial performance, drawing on the Global Reporting Initiative in particular.
The IIRC <IR> process focuses on communicating an overall picture of value creation over time by encouraging companies to discuss six capitals in its periodic reports – financial, manufactured, intellectual, human, social and relationship, and natural. The purpose of the capitals is to encourage a business to think more broadly and to consider all potential sources of value in the course of explaining how it is creating value over the short, medium and long term.
According to the IIRC, the process applies principles and concepts that are focused on bringing greater cohesion and efficiency to reporting and adopting “integrated thinking” as a way of breaking down internal silos and reducing duplication. It improves the quality of information available to providers of financial capital to enable a more efficient and productive allocation of capital. Its focus on value creation, and the ‘capitals’ used by the business to create value over time, contributes towards a more financially stable global economy and is a force for sustainability.
The consultation process over the last three months elicited over 350 responses from every region in the world, the overwhelming majority of which expressed support for <IR>. Now, the Framework will be used to accelerate the adoption of <IR> across the world, where it is currently being trialled in over 25 countries, 16 of which are members of the G20, the group of nations focused on strengthening the global economy.
IIRC Chief Executive Officer, Paul Druckman, says that the process has grown organically and through market pressure over the last three years. “Today we have fired the starting gun on a period of global adoption that will begin in early 2014 by showcasing practical examples of reporting innovation, including how businesses are demonstrating value creation using the ‘capitals’ model and principles such as the connectivity of information,” he said.
His organisation will now promote examples of IR. He added: “It is the right time to participate in the journey towards a better, more cohesive reporting landscape that makes sense both to businesses and to the decisions of providers of financial capital, in this interconnected, complex and resource-constrained world.”
The Framework will be outlined in more detail at the forthcoming Business in the Community Ireland network meetings on February 11th (in KPMG, Dublin) and February 12th (in Janssen, Cork).
In addition, any companies interested in participating in a working group on the topic, hosted by Business in the Community Ireland and KPMG, should contact Elise McCarthy on firstname.lastname@example.org or 01-8743820. Please reference which aspects of integrated reporting would be of particular interest to your organisation.
The International <IR> Framework, along with supporting documents, The Basis for Conclusions and Summary of Significant Issues can be found here.