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Burgess COMMENTARY Peter Burgess | |||||||||
'A leap forward' - The IIRC publishes 2018 integrated report with assurance
The International Integrated Reporting Council (IIRC) has published its 2018 integrated report with, for the first time, assurance from an independent auditor. The IIRC Board's decision to seek assurance reflects its determination to follow the principles the IIRC advocates, as it works to build robust and effective reporting globally. Assurance is also an effective tool for ensuring the IIRC's key stakeholders can have confidence in the IIRC's value creation story. Obtaining assurance over integrated reports is an emerging trend, with the IIRC receiving what is referred to as ‘limited’ assurance on this 2018 report. The auditor reviewed the report to assess whether it had been prepared in line with the guiding principles of the International The IIRC will now continue this journey and work towards obtaining ‘reasonable’ assurance, where the auditor looks at whether the strategy, business model and performance presented in our integrated reports are an accurate reflection of how the IIRC operates. The report evaluates progress the IIRC made in its mission to mainstream integrated reporting during 2018, as the IIRC moved from the 'breakthrough phase' to the 'momentum phase' of its strategy. Third party research showed continued significant growth of adoption in markets such as Japan and Australia, and EY’s 2018 global investor survey indicated that investors now consider integrated reports the most useful source of non-financial information. 2018 also saw the launch of the Corporate Reporting Dialogue’s ‘Better Alignment Project’. Convened by the IIRC, the initiative is working to bring greater consistency, coherence and clarity to the corporate reporting landscape, a major objective of the IIRC’s momentum phase strategy. The initial report of the Better Alignment Project will be launched this month (September 2019) during Climate Week NYC. Commenting on the decision to obtain limited assurance on the IIRC’s 2018 Integrated Report, Barry Melancon, Chair, IIRC Board said: “The IIRC has long recognized the role assurance can play in building trust and confidence in integrated reports and this trend has been reflected by developments we are seeing in the market. We believe the lessons we learned in obtaining assurance will help us in our conversations with businesses around the world that are also embarking on the journey to provide investor-grade information in their integrated reports. “Our Commenting on the publication of the report, Charles Tilley, Interim CEO, IIRC said: 'We learned a lot during the process of receiving assurance on our 2018 integrated report. It ensured we were all thinking about the materiality of the information we included, as well as its robustness. The process helped us develop our integrated thinking, ensuring the Board were applying their collective mind to those factors the management team consider material to our ability to create value in the short, medium and long term.In introducing integrated reporting to new markets and building momentum therein, focus has been placed on addressing the information needs of diverse stakeholders. This is achieved through the release of the integrated report in multiple mediums. The development of the digital content, the comprehensive end-to-end HTML on-line annual report and an executive summary for mobile devices was produced in partnership with Smart Media The Annual Report Company. The online HTML version provides readers with an overall view of the organisation and its strategic direction while the mobile summary is succinct and complete. Commenting on this approach, Chairman of Smart Media, Dr. Vijith Kannangara said, “As digitisation has taken root in the way stakeholders consume information, it’s important to ensure that the online HTML and mobile versions are interactive as well as comprehensive and concise'.Blog: Integrated thinking is a game changer for sustainable corporate governance By Olivier Boutellis-Taft, CEO, Accountancy Europe Since the industrial revolution, the market economy has propelled prosperity, well-being, life expectancy, cultural creativity and personal fulfilment. However, our economy is also aggravating natural resource depletion, deadly pollution, over-consumption and growing social concerns ranging from income inequality to climate migrations. A plethora of global studies support one of the largest scientific consensuses ever: the ecosystem that supports humankind and its business is in crisis. The only way forward is to change how the economy operates. This starts with changing how businesses are run. Corporate governance is an instrumental tool to shift towards a sustainable economy. The essential change that will make this shift possible is making sustainability the basis of business decisions at every level. It is no longer just about doing good and making the world a better place: it is about staying in business and having a place to live. This article is a preview of our publication 10 ideas to make corporate governance a driver of a sustainable economy. The paper suggests changes in boards’ roles and practices; and proposes legislative and non-legislative actions by EU and national policymakers and regulators. It outlines the critical importance of integrated thinking and reporting. {1} Integrated thinking provides the key To make these changes, we need to think and act in an integrated way. This means not only taking into account financial capital but also the other capitals used in the Businesses: adopt integrated thinking Boards need to integrate the environment as a consideration at all levels of the business and to take a fully integrated approach to strategy and management. This can be done with a comprehensive approach to strategic planning, including scenario analysis. Boards can also manage change inclusively and efficiently through experimentation, decentralization and empowerment To get there, businesses need to put in place mechanisms to ensure that the business operates in a wholly connected and consistent way. Decisions can no longer be based on financial factors alone or considered in a time-frame that doesn’t match the impacts of the business. Furthermore, connecting information helps to make more informed decisions, with improved awareness of externalities. It thus leads to a more efficient and productive allocation of the different capitals needed by business both within an entity and on markets. Businesses should report on their performance in an integrated way using the IIRC’s integrated reporting Accountants: drivers of change Boards need to assess the skills and characteristics necessary to support their collective functioning and efficiency. Most boards have been centred around financial performance, controls and risk. It is in boards’ interest to reorganize themselves and review the roles, duties and competences of directors, without waiting for regulatory prescriptions. Since value creation encompasses more than financial gain, new roles are necessary, and the board has a strategic responsibility to create them. These roles are necessary to take a broader perspective on value creation and fully integrate environmental, social and governance (ESG) factors with financial performance, to ensure that the business model shifts towards sustainability. Many qualified accountants, including those currently acting as CFOs and CEOs, have the education and skills to take up such new roles. In their different capacities, accountants play a key role at all stages of corporate governance. Good business decisions start with reliable information. As businesses change their benchmarks for success, accountants contribute by: measuring impacts, disclosing information, and certifying what is reported. The accountancy profession has leveraged its expertise in the field of non-financial reporting and now has long-standing experience on how to help companies make the right changes to reduce their environmental footprint – and costs. Act now, act swiftly Corporate governance is the prime instrument to drive change. It needs to take an integrated and holistic approach to consider all aspects of doing business. It must prioritize the transition to a circular economy as this increasingly appears as the only option in a finite world. The private and public sector need to work together more, at local, national, European and global levels. The IIRC has positively contributed to this discussion in their Corporate Reporting Dialogue. Policymakers must also play a leading role and help the internalization of negative externalities into business costs. Adopting the Change starts today! Now that you have a first glimpse, we invite you to read the full publication: 10 ideas to make corporate governance a driver of a sustainable economy, which aims to inspire debate, so we welcome your feedback. Send your thoughts and opinions on how corporate governance needs to evolve to iryna@accountancyeurope.eu by 1 October 2019. Corporate Reporting Dialogue report launches during Climate week On 24 September 2019, the Corporate Reporting Dialogue's Better Alignment Project Report will be launched at an event hosted by the World Economic Forum during Climate Week in New York City. The report will be published on the Corporate Reporting Dialogue website: www.corporatereportingdialogue.com New report explores integrated reporting in the US context US think tank, The Conference Board, has published a report on 'The Emergence of Integrated Reporting' recommending steps report preparers can take to enhance their integrated reporting, as well as exploring why interest in integrated reporting is growing rapidly. As the way businesses think about value evolves, the report sets out the rationale for integrated reporting and the benefits of using a multi-capital framework. Companies in the US producing integrated reports include General Electric, Intel, Pfizer, American Electric Power and Clorox. With a growing interest in the benefits of implementing integrated thinking, including how it can be used to reorient a business towards the long term, the report has been published at a time when increasing numbers of businesses are turning to the International The report looks at some of the myths about integrated reporting that might have caused businesses to be hesitant about producing integrated reports, including a perceived lack of interest from investors or the belief that current reporting standards are robust enough. The IIRC will be holding its next Council meeting in New York City on 7 November 2019, during the week the IIRC team will be engaging with the market to discuss the evolution of reporting in the US, as it evolves to reflect the increasing importance of intangible value. Financial and non-financial reporting frameworks share common founding principles of transparency and accountability The world’s leading financial and non-financial corporate reporting frameworks have the same common foundations, based on the key objectives of transparency and accountability, according to a position paper published by the Corporate Reporting Dialogue. The position paper sets out the seven key principles report preparers should follow for achieving such transparency and accountability. Participants of the Corporate Reporting Dialogue identified transparency and accountability as critical to achieving high quality governance mechanisms and empowerment of stakeholders in modern societies and markets. Furthermore, such transparency and accountability enables better decision-making by market parties and serves the public good. In the paper, entitled “Understanding the value of transparency and accountability”, CDP, the Climate Disclosure Standards Board, the Global Reporting Initiative, the International Accounting Standards Board, the International Integrated Reporting Council, the International Organization for Standardization and the Sustainability Accounting Standards Board set out seven principles of transparency and accountability that they commonly believe are fundamental to corporate reporting: materiality, completeness, accuracy, balance, clarity, comparability and reliability. The paper states, “These common principles are a reminder that the Dialogue participants have similar expectations from companies in preparing and disclosing information. This implies an alignment at the fundamental level of the frameworks.” The position paper acknowledges a commonly agreed need for companies to go beyond disclosure and demonstrate accountability to stakeholders, stating, “…transparency needs accountability in order to drive effective behaviour or performance: disclosing in itself is not enough if those holding to account do not have the power to influence the behaviour or performance.” Participants of the Dialogue have committed to promoting the application of these principles for the wider reporting landscape in future interactions or partnerships, as part of their commitment to providing greater clarity to the reporting landscape on how to use the individual frameworks of Dialogue participants to achieve effective, holistic reporting. IIRC Stakeholder Survey: Look out next week for our annual stakeholder survey, through which we will ask for your insights into the progress the IIRC is making internationally. Integrated reporting in India: 2019 Vrushali Gaud, IIRC Have your say on recommended SDG Disclosures Carol Adams, Durham Business School Evidence that the IIRC's momentum phase is taking off Delphine Gibassier (Audencia Business School), Carol Adams (Durham Business School) and Tiphaine Jerome (University of Grenobles Alpes) Your frequently asked questions about integrated reporting answered - visit the IIRC website. Website Website Twitter Twitter LinkedIn LinkedIn YouTube YouTube Contact: juliet.markham@theiirc.org Copyright © 2019 International Integrated Reporting Council, All rights reserved. unsubscribe from this list update subscription preferences IIRC Privacy Policy The Corporate Reporting Dialogue 53 views•Published on Sep 18, 2019 IntegratedReporting On 24 September 2019, the Corporate Reporting Dialogue's Better Alignment Project Report will be launched at an event hosted by the World Economic Forum during Climate Week NYC. The report will be published on the Corporate Reporting Dialogue website: www.corporatereportingdialogue.com Category Film & Animation
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