The International Integrated Reporting Council’s (IIRC) latest report says there has been overwhelmingly positive support for the idea of corporate reports that bring together the strategy, the financials, and the social and sustainability issues. But while the goodwill is there, more work needs to be done to explain how such one-stop-shop corporate reports can be all things to all people.
The organization is tasked with leading the development of integrated reporting, a developing framework for corporate reporting that connects strategy, governance, and financial performance with the broader social, environmental, and economic backdrop against which it operates.
A discussion paper, Towards Integrated Reporting — Communicating Value in the 21st Century, was issued in September 2011 with comments due in by mid-December. A summary of the submissions is expected imminently, while an exposure draft is due later this year.
The Dutch Accounting Standards Board agreed in its submission to the IIRC that “the focus should be on creating a better understanding of causes and effect relationships between, for example, financial and sustainability performance and thus reducing complexity, limiting disclosure to material items only and at the same time resisting the tendency to just add more information in each reporting area.”
More than 60 companies, well over half from Europe, are taking part in a pilot program to test the principles of integrated reporting. One, AB Volvo, says the framework is “a good vision.” But it’s not all as easy as that: the company says in its submission to the IIRC that “significant changes” in the regulatory environment need to be brought about for integrated reporting to work, as well as changes to the international financial reporting standards disclosure requirements. “Thus it is not expected that the benefits described can be realised for many years to come.”
Andrew Sawers is editor of CFO European Briefing, a CFO online newsletter.