• Register
Return to: Home > Comments > Letter to the editor: IIRC comment on the Maturity Institute report

Letter to the editor: IIRC comment on the Maturity Institute report

Integrated Reporting has been endorsed by the most serious policymakers, businesses and investors in the world.  Mark Carney, Chairman of the Financial Stability Board, sees it as a vital way of extending the conversation about value creation beyond financial capital so that business is accountable for social and other sources of value.  Over 1,600 companies across 62 capital markets are today adopting Integrated Reporting, including some of the most iconic organizations in the world - Tata Steel, Unilever, Mitsubishi Corporation and The World Bank.  The largest equity investor in the world, BlackRock, serves on the IIRC's global Council.

Integrated Reporting is about breaking out of the traditional box-ticking mindset - it is about understanding value creation and being accountable for performance across multiple capitals and time horizons.  One of the core principles of Integrated Reporting is the connectivity of information.  This is impacting corporate governance.  There is now a large body of research evidence which shows that Integrated Reporting by businesses leads to higher share price performance, a lower cost of capital and longer term investment.

The IIRC undertakes our own internal study of a representative cross-section of integrated reports, our partners ACCA undertake their own Report Critique project annually in partnership with us and we track the growth of integrated reporting internationally through our partnership with www.corporateregister.com. Each of these strands shows integrated reporting is growing across the globe - in quantity and quality.

Just this month we published the final report from a worldwide consultation on the implementation of the international integrated reporting framework, which showed that business focus has moved from issues of awareness and acceptance of integrated reporting three years ago, to questions of practical implementation today.

Take German technology giant SAP.  By valuing its human capital, it is able to better at managing recruitment and retention of staff, driving morale, productivity and financial performance. SAP is one of many global companies reporting on its human capital - just look at the reports of United Utilities in the UK which produces a human capital report specifically as part of its Integrated Reporting, as well as the likes of The Crown Estate and ARM Holdings.

The IIRC is fundamentally about changing behaviour, not just reporting, and this will take time. However, in recent years we have seen real leap forwards in the way business models are thought through and communicated, representing a new appreciation of how value is created by many business leaders around the world.

Is it true that some companies still interpret the framework as separate reporting of the six capitals, rather than genuinely integrated reporting? Yes, the IIRC would be the first to accept it does. But that number is reducing year by year, just as the overall numbers adopting integrated reporting are increasing.

Our guidance, technical programme and business networks play an active role in improving that understanding.

Your article gives us an extra opportunity to remind businesses that the <IR> Framework does not request them to report on all six capitals, but only on those genuinely material to how their organization creates value over time. Furthermore, we do not ask businesses to call them 'the capitals' so whilst there are many reports out there that look at human capital, they may not refer to it as such.

However that terminology has centred the debate not on accountancy alone, but on the desire of business leaders and investors to support long-term value creation, which is at the heart of supporting sustainable business in a fast-changing world.

Of course the practice of integrated reporting is still developing and improving. But when 85 per cent of business leaders say they have begun integrated reporting or expect to do so in the next five years, the achievements in adoption now should never be underestimated.

Top Content

    Time pressure: Facing up to mental health

    In an ‘always on’ culture, it is becoming increasingly difficult to manage a healthy work-life balance. While companies are beginning to address this problem by introducing different support systems, Joe Pickard finds more could be done to ensure the wellbeing of the professions workforce.

    read more

    Venezuela: the race for the dollar

    With a new currency following hyperinflation, large sections of the population emigrating to neighbouring countries, an economy on the brink of collapse and no apparent solution coming from the government, Jonathan Minter finds a profession struggling to stay afloat in Venezuela.

    read more

    Brazil: transparency and control

    Brazilian accountants have an optimistic view of the impact of more-regular reporting and the implications of audit controversies for the profession. Paul Golden reports.

    read more

    Argentina: looking for a clearer view

    The Argentine accounting profession continues to grapple with the impacts of a weak economy and a culture of financial corruption. Paul Golden takes a closer look.

    read more

    Blockchain: adapting to disruptive tech

    In the relatively few years since digital currencies first began using blockchain technology, the array of potential applications has grown significantly – and continues to expand. Dan Balla, Matthew Schell and Dave Uhryniak from Crowe look at how it impacts accountancy.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.