03 December 2019

IIRC: Changes to corporate reporting are essential - the question is how quickly can we move to international standards to solve the problem

With many possible ways forward, enhancing corporate reporting in a globally-uniform and coordinated way will be vital to a transition. Working closely with investors, directors, sustainability professionals, and the accountancy profession, the IIRC can be a catalyst for systems change. But it will need to move quickly to shape the system and standards toward achieving the aims of integrated reporting.

The IFRS might be the right answer, but following the IIRC Council, there is a need to recognize and agree on some key matters including

1. Global and unified action is critical:  It is important to prevent regional and jurisdictional measures for capital markets becoming entrenched. Financial reporting needed reliability, consistency and comparability and this was driven through international standards. Something must give in order to achieve a global position that different stakeholders can rally around.
2. The overall big picture: Agreeing what the corporate reporting system is in its entirety and whom it needs to serve, and with what “products” and “tools”, will help highlight the need for global standards and approaches. Currently, we have many jigsaw pieces with no overall picture and roadmap. ESG does not represent most of the picture; intangible assets largely remain hidden or unexplained. Do the International Integrated Reporting Framework and its 6-capitals value creation model provide the basis for the big picture? Our belief is that it broadly does provide an “umbrella” Framework.
3. Data is not knowledge: The principles and key concepts of integrated reporting need to form the basis of standards and drive forward the quality of information. Standardized metrics in themselves are not the answer. Companies will always need to think about what is relevant to them and what information is needed to achieve their purpose and objectives.
4. Integrated thinking in the boardrooms of all companies: Reporting as a compliance exercise detached from how the organization operates will not be a desirable outcome for investors, companies and society. The main point of integrated reporting is to help companies drive change from within.

Full press release on IIRC

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