Jonathan Labrey, chief strategy officer at the IIRC, talks about the EU non-financial directive and the proliferation of integrated reporting.
What impact do you expect the EU non financial directive requiring mandatory reporting will have on corporate behaviour and investments?
I can see four impacts. One is that it enables businesses to improve long-term decisions and prepare for the future. Evidence shows that when linking non-financial and financial performance a business can position itself better over the long term because a lot of the non-financial indicators, like human and natural capital, are actually leading indicators of future value. By testing that information against strategy, you are future-proofing it. Managing financial performance, by contrast, is about historical performance.