Reflecting on the first four weeks into my new role as Head of Relationships, East Asia and Australasia, never did I expect to get off to such a flying start. Having spent several years of my professional career focussed on corporate reporting, I am astounded at the momentum now gathering, and the seeming inevitability that <IR> will happen.
With my first week on the job spent in Tokyo, ostensibly to attend the IIRC Council Meeting, meet my fellow IIRC Secretariat members, and attend a number of <IR> conferences, it was a wonderful opportunity for me to see tangible evidence of how <IR> is being embraced in other countries around the world. For the last two weeks, I’ve been fortunate enough to accompany our CEO, Paul Druckman to his various meetings with many of the influential stakeholders in the Australian reporting landscape .
The fact we were able to get Paul into the diaries of these key stakeholders truly reflects the level of interest in <IR> in this part of the world. We’ve met with the Chairs of our regulator, standard setters, Financial Reporting Council (the senior advisory body to the Federal Government on all financial reporting matters), a Treasury Minister, a Deputy Secretary to the Treasurer, and members of the APEC Business Advisory Council. The CEO of the Institute of Company Directors and the Chief Compliance Office of the Securities Exchange were also on the agenda. All eyes will be on Australia for the G20 meeting in 2014, and we are quietly optimistic that based on the inroads made on this trip, the actions requested over the next few months and the interest of the key stakeholders, we are in a good position to achieve a significant global outcome in 2014
Australians are known as early adopters and many corporates are quite sophisticated reporters, having been on the path towards Integrated Reporting for several years. Our meetings with the Australian IIRC Pilot Programme participants (nab, bankmecu and Stockland) revealed true advocates of the benefits of <IR> as a tool to break down internal silos, create more cohesive organizations, and effect more meaningful reporting. While the pilots admitted they were not reporting a lot of new information one year into the programme, the way they reported had changed dramatically. For example, information previously buried deeply in the financial statements was being bought to more prominence, and data was now being reported against strategic plans.
Reflecting on the past two weeks reveals some common global concerns, as well key issues that need to be addressed. It is widely acknowledged that financial reporting has become more complex and voluminous, and subsequently less relevant and useful – the concern that we have become “hostage to the technicians” was made in several meetings. The increasing cost burden of compliance is also a very real challenge for companies.
Australia is one of the more advanced territories in terms of general awareness of <IR>, thanks largely to the efforts of our Business Reporting Leaders Forum and its inspired members, but it is obvious there is still an significant education piece needed to ensure there is understanding what <IR> is, and how it forms part of the solution to enhanced reporting. My view is that the key audiences that need educating are directors and investors. Positive actions such as ensuring clarity and consistency of messaging about <IR> will help, as will the advocacy efforts of the Investor Network.
Whilst the IIRC’s goal is to produce a conceptual framework that is embraced on a global basis, we still need to ensure there is flexibility to be able to implement the framework within individual jurisdictions. For example, there are nuances in the Australian reporting landscape that must be acknowledged, such as a Business Judgement Rule that has not been properly tested and a Continuous Disclosure regime, but we must ensure they are hurdles to be cleared, rather than barriers that stop us. The issue of directors’ liability, while not unique to Australia, is also an extremely sensitive topic due to recent court cases and must be addressed head on.
I am excited by the events of the past two weeks and owe a huge thanks to Paul for paving my way as the IIRC’s Australian representative. I relish the challenges ahead of me to help position Australia as a leader in <IR> . . . watch this space.