An interview with Yoichi Mori, Technical Director, Professional Standards and Services, Japanese Institute of Certified Public Accountants (JICPA)
Why does your organization support <IR>?
We recognize that <IR> is the future direction of corporate reporting.
Current corporate reporting covers a limited extent of corporate value and focuses too much on the past financial value of a company. This leads to short-termism in the capital market and affects a business’s ability to create sustainable and inclusive value.
As history clearly shows, accounting and reporting has a key role – as a fundamental infrastructure of the economy and society – to link businesses to providers of financial capital and wider stakeholders.
Reporting needs to evolve as the economy, technology and business models do. Enhanced reporting leads to enhanced business and economy. Reporting will drive behavioural change in both the business and investor community.
As an organization of accountancy professionals in Japan, the third largest economy in the world, we have a responsibility to contribute to innovation in reporting.
Why should your members get behind <IR>?
In recent years, enhancing the productivity of companies through better corporate governance, investor stewardship and proactive engagement has been a key policy in Japan. As a result, the Corporate Governance Code and Stewardship Code have been released and companies and investors are working very hard to move forwards.
As we have highlighted from the beginning of these policy discussions, <IR> is seen as a reporting model that provides a foundation for engagement between companies and investors in Japan. Many Japanese companies have placed importance on a long-term and stakeholder oriented culture, which is also in line with the vision and concept of <IR>.
Our members, as accountancy professionals, need to play a key role in driving fundamental change and development in the market. It is therefore very important that they understand <IR>, link it to issues in practice from a holistic and long-term oriented view and drive innovation.
What campaign or approach has given you the best response? And what tip(s) would you give to other organizations?
We have worked very hard to develop and promote <IR> through a diverse array of approaches and activities, both internationally and locally, since the IIRC was established.
Our focus has been on making connections between local needs and international developments in the IIRC. We have constantly communicated with key stakeholders in the corporate reporting field, including companies and policy makers, to understand their expectations and needs. We tried to reflect these needs in the key elements of the <IR> Framework by actively participating in its development process, so that it can be useful and helpful for Japanese stakeholders as well as international audiences.
It is very valuable for organizations like ours to identify key policy developments where <IR> can be aligned. We have ensured fluid dialogue between the IIRC and Japanese leaders. I believe the IIRC Council’s first Tokyo meetings held in 2013 not only drove momentum towards <IR> in Japan, but also significantly enhanced understanding on both sides. It has become a foundation of <IR> expansion in Japan with 192 companies moving towards <IR> in 2015. <IR> is referred to as one of the key options to enhance long-term productivity of Japanese companies in the Japanese Revitalization Plan issued by the Cabinet Office.
There are still many challenges and issues that need to be overcome. Collaboration between the IIRC and members – including us – is key to best leverage our limited ‘capitals’ and lead innovation in corporate reporting so that it provides real ‘value’ to the economy and society at large.