First ever integrated reporting framework released following publication of outline, and international consultation
AN INTERNATIONAL BODY of the largest organisations and firms in the world have released in integrated reporting framework.
The International Integrated Reporting Council (IIRC), released the framework following a three month global consultation, which had more than 350 responses.
An outline was released in July which was trialed in 25 countries, 16 of which are G20 members.
The IIRC’s mission is to create a globally accepted integrated reporting framework that elicits from organisations material information about their strategy, governance, performance and prospects in a clear, concise and comparable format.
The move was widely accepted by the profession. EY’s Dr Jeremy Osborn, head of climate change and sustainability services, said integrated reporting will encourage companies to account for broad relationships and resources which will allow companies to lay strong foundations.
CEO of the ICAEW, Michael Izza, said he welcomed the framework and the incentive for companies to think about narrative reporting. But, he warned that the IIRC’s work isn’t over yet.
“We would urge the IIRC to respond to companies’ practical experience in applying the principles of integrated reporting and to continue in its efforts to engage with mainstream investors and analysts,” he said.
“This will not happen quickly, and we need to recognise that what lies ahead is a process of radical, long-term transformation of how businesses and other organisations report, and how they think.”
“It is time to move business reporting beyond merely a discussion of past financial performance. Integrated Reporting can play a key role in the drive for better business reporting.”
The firm’s head of integrated reporting, David Matthews, added it will help companies develop better dialogue with investors in the long-term.
The Financial Reporting Council said it moved the integrated reporting issue a step closer, having changed reporting law to include more narrative reporting.
The FRC issued guidance which stated that from 1 October, all annual reports have to include information about a company’s human rights approach, gender representation and greenhouse gas emissions.
The amendments will see the introduction of the so-called strategic report, which will replace the current business review. The change is designed to help companies “tell their story” which will include strategy, business model , principle risks and challenges the organisation has faced.
IIRC CEO, Paul Druckman (pictured) said, “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.”
The IIRC is a collection of representatives from the largest international companies, institutes and firms with former ICAEW president and ex-director of the Financial Reporting Council, Druckman, as its CEO.
Last month PepsiCo became the latest global company to sign up to the IIRC’s 100-plus strong business network, which includes HSBC, Unilever, Deutsche Bank, China Light & Power, Hyundai Engineering and Construction, National Australia Bank and Tata Steel.