Communicating value in the 21st century
Today the International Integrated Reporting Committee ("IIRC") launched its long awaited discussion paper on integrated reporting entitled “Towards Integrated Reporting – Communicating Value in the 21st Century”. It’s been a long time in the making because at its heart is the need to engage a broad range of stakeholders from across both our economic and social systems. For this fact alone, its value to the future of reporting cannot be under estimated.
The IIRC discussion paper is enormously complementary to the report PwC launched at the end of May with Tomorrow's Company and CIMA entitled - "Tomorrow's Corporate reporting - a critical system at risk". This report highlights the behavioural and structural challenge of changing the reporting system and includes a "road map for change". In my launch speech I mentioned the need to create a clear blueprint for the future of reporting and I believe the IIRC's discussion paper is a critical starting point for this work. No one believes the framework it contains is the end game, but it provides a platform on which progress can be achieved.
As an IIRC working group member I have been actively involved in helping to create this paper. For those whom are active in the reporting space, there may not be a lot that is new, but it provides some important insights into the way reporting needs to change if it is to remain relevant in a changing world.
I'd encourage you to read the discussion paper and most importantly email your feedback to firstname.lastname@example.org or online through the IIRC website. The paper makes the case for change, explains how reporting has evolved and sets out a high level framework which can support the development of reporting into the future. For me there are some critical differences to the model being proposed from where reporting is today:
• Firstly, the model focuses more on the business model and how value is created. It also highlights that, to understand value creation, we need to focus more on the resources consumed, including those which have no monetary value in the way our economic system has evolved to date. Many historical positions and views on these issues are changing both through market pressures and regulation, and our reporting model needs to be able to respond
• Secondly, the model recognises that, for meaningful reporting to occur, resource usage and the risks and opportunities associated with business have to be considered across the value chain and cannot be constrained to the legal entity or the accounting definition of control. This creates significant challenges for how we report, but we are seeing examples, such as the recent environmental P&L created by Puma, of companies breaking the traditional reporting mould for competitive advantage.
Moving this agenda forward is, I believe, critical to the well being of our economic system and for society more broadly. It needs many parties to come together to effect change and I believe the last chapter provides a useful reminder of who needs to be involved and why they have a reason to engage.
Do read this paper, and also our paper Integrated reporting: What does your reporting say about you? and engage with the debates and discussions which will emerge.