The beginning of November in Tokyo marks the start of the autumn and the colouring of the leaves. This year, it also held key conferences and meetings on Integrated Reporting <IR>. For me, the highlight was the <IR> Roundtable where IIRC Council members met with senior Japanese members from companies, investors and policy makers to discuss the current challenges facing the capital market and business community, including short-termism of the capital market and resilience of the economy and society. The focus was on how corporate reporting can, and should, evolve in a way that will allow it to support and even drive sustainable value building a stronger economy. Discussion was very lively and, even more encouraging was the positive feedback I received after the roundtable.
In Japan, interest in, as well as expectation of <IR> is rapidly growing. It was not surprising that over 350 delegates, the majority from businesses, attended the Integrated Reporting Tokyo Forum. The concept of long-term value creation has attracted Japanese companies. Corporate executives have a strong trust in the long-term nature of Japanese businesses, and are frustrated by the short-termism of the financial market. There was a call for action in order to improve the attitude of investors in making investments and the time-horizon.
Many investors expressed their expectations of <IR>. Some fund managers pointed out the recent tendency of the investor community to focus too much on quarterly, and even monthly, financial performance and the decreasing competency to assess the long-term value of the companies with analysis of the fundamentals and corporate strategy itself. The importance of integrating extra financial and core business information was also emphasized, referring to the changing macro and socio-economic paradigm of the world economy.
Investors cautioned the continuing low performance of Japanese companies within the so-called “lost decades” and attributed it to the rigid structure within organizations and the insufficient governance and transparency. The difference between “long-term value creation” and “long-term lasting” was stressed. Some companies built on the point by emphasizing need for driving integrated thinking to overcome the silos within organization.
I personally sympathize with the view raised by Mr. Kazuhiko Toyama, Representative Director and CEO of Industrial Growth Platform, Inc. (IGPI), at the IIRC Council meeting on 2nd November. Japan is facing fundamental challenges which other societies have never experienced before. Our country is surrounded by emerging economies with the rapidly gaining competitiveness of industries. Successive and steep aging of the population structures are inevitable. The great earthquake that hit in 2011 confronted us with the reality of energy scarcity and need for decoupling economic growth and environmental adverse effects. However, we can take it as an opportunity by strategically adapting to, and solving, those challenges.
Without doubt, evolution in business and the capital market model is needed. I believe <IR> will drive our economy, and more broadly society, to achieve sustainable value creation in this new era. As the leaves change bringing with it the dawn of a new season, perhaps this last month has proven that <IR> can bring us the dawn of a new season for financial reporting.
 <IR> Tokyo Forum was jointly hosted by IIRC, JICPA and Tokyo Stock Exchange with official support by Japanese government, Financial Service Agency (FSA), Ministry of Economy, Trade and Industry (METI) and Ministry of Environment (MOE).
The JICPA is the sole organization for the CPA profession in Japan. It was originally formed in 1949 as a self-disciplinary association, and reorganized under the Certified Public Accountants Act in 1966. In order to practice as a CPA, a qualified person must register with the JICPA and join its membership. In this way the JICPA may effectively guide and supervise its members and maintain close contact with them for the maintenance of a strong and independent organization.