Advocacy is a powerful means of increasing the status of <IR>, especially when it comes from influential organizations, and especially their leaders. We have benefited from a movement of diverse voices and insights, who can articulate <IR> in a way that resonates most with different audiences and organizations.
Indeed, many participants and other partners across the <IR> movement are advocating for and developing initiatives that seek to create a more aligned corporate reporting system or to engineer wider change that shifts horizons of business and investment cycles and introduces a wider view of value creation.
We recognize that accelerating advocacy and alignment will expand the reach of the global <IR> movement.
In this blog, I cover four examples of advocacy and alignment that were highlighted at the recent IIRC Council meeting that illustrate very well the power of this approach.
- Advocacy from leaders including accounting professionals: The International Federation of Accountants (IFAC) is a clear exemplar of the power of advocacy. The comments set out by Fayez Choudhury, CEO, IFAC at the IIRC Council meeting confirmed their desire to see <IR> flourish. IFAC has been core to the development of <IR> over many years and has taken a step further to endorse it in its policy paper on Enhanced Organizational Reporting. The paper says IFAC ‘believes that the integrated report can be used as an “umbrella” report for an organization’s broad suit of reports and communications, enabling greater interconnectedness between different reports.’ The IFAC policy was developed to ensure a wider view of value creation is embedded in organizations. IFAC have led many projects over the years to further the debate and understanding around <IR>, including an <IR> Network for Professional Accountancy Bodies to build skills in accountancy bodies around the world on <IR>. Fayez Choudhury, CEO, IFAC is a firm supporter of <IR>: ‘IFAC believes that Integrated Reporting is the means to bring about a more coherent corporate reporting system. We believe this can aid trust and transparency in business and a better understanding of value creation over time.’
- Alignment in corporate reporting standards and frameworks: The IIRC is committed to working with other standard setters and framework providers to ensure reporting develops as a more aligned system. Hans Hoogervorst, Chair, IASB presented at the IIRC Council meeting in April 2017. He said, ‘Since the publication of our Management Commentary Practice Statement in 2010, the world has moved on. Interest in Integrated Reporting is rapidly increasing. The primary purpose of an integrated report is to explain to providers of financial capital how an organization creates value over time. I believe this focus on value creation and the capital providers as the audience for integrated reporting are essentially compatible with the broad definition of the Board’s objectives. My conclusion is that there is considerable common ground between financial and integrated reporting.’ The IIRC welcomes this as a very good example of alignment in the corporate reporting system.
- Convening influential organisations: The <IR> Commission in Brazil – convener of the largest single <IR> Network in the world – provides a fantastic example of bringing together leading institutions and stakeholders from across the corporate reporting landscape to pursue an aligned agenda. As Vania Borgerth, Advisor to the CEO, BNDES says, ‘Advocacy for Integrated Reporting and alignment in the corporate reporting system sum up well the approach we have taken in Brazil. We have brought together leading institutions under the <IR> Commission which has developed the largest <IR> Network in the world, and we are making progress through our desire to increase transparency and better information for investors.’
- Regulatory endorsement to encourage greater adoption from the mainstream: Endorsement by regulators will become an increasing focus as we develop our strategy. The former Chairman of SEBI, Mr UK Sinha, focused on the enabling factors of enhancements to corporate governance in India. Mr Sinha demonstrated the role regulators can play to encourage a wider group to adopt aligned developments in governance and reporting, moving beyond the early innovators. As Chairman of SEBI, UK Sinha called on the Confederation of Indian Industry to develop a roadmap towards <IR> saying as early as 2014, ‘Whether Integrated Reporting should happen or not is no longer a question.’ SEBI also recently wrote to its largest 500 companies asking them to adopt <IR>.
These are just a few examples of how through our Council and partners we are making very real progress in ensuring that corporate reporting evolves to meet the needs of the 21st Century. This is the best way to ensure <IR> is adopted in a way that is relevant to reporting practice and wider goals for economies and societies around the world. This context was well presented by Hans Hoogervorst when he said, <IR> places ‘emphasis on interconnectivity among elements of an integrated report; for example, how developments in the external environment have affected a company’s business model and strategy’. It can ‘address more clearly resources that are not included in financial statements. The increasing awareness that environmental and societal restrictions have an impact on long-term value creation is also clear.’
We thank all our partners for their continued advocacy and look forward to working with them closely as the next stage of our strategy – the global adoption phase – becomes a reality.