IIRC Newsletter – Highlights from 2016

Richard Howitt, CEO, IIRC reviews a year which has seen a number of breakthroughs for Integrated Reporting and looks forward to 2017.

2016 has been an important year for Integrated Reporting and the IIRC as an organization. It was my great honour to be appointed by the Board to succeed Paul Druckman as CEO on 1 November, a day that was also marked by the launch of the King IV Corporate Governance Code in South Africa – named, of course, after our Council Chairman, Professor Mervyn King. The King IV Code embeds the principle of Integrated Reporting in South African corporate governance, while creating the first outcomes-based governance system in the world.

In South Africa – and also Japan – we have seen phenomenal take up of Integrated Reporting during the year as it becomes established as a key element of the corporate governance system in those two economies. Indeed the Nikkei newspaper estimated recently that the number of businesses practicing Integrated Reporting in Japan alone would rise to 320 in 2017.

We have also seen important breakthroughs in other markets. We are delighted that China’s Ministry of Finance has joined our Council and expressed support for Integrated Reporting in the Ministry’s recently released five-year plan. In the European Union, the non-financial reporting directive has been established as a stepping stone to Integrated Reporting, a point made by the Commission itself when it released the Directive. A recent conference in Malaysia drew commitments from over 20 companies to begin their Integrated Reporting journey. South Africa. Japan. China. The EU. Malaysia. Different cultures and different models of adoption – some soft, some harder instruments of regulation, but all pointing in the same direction. The question this forces me to ask as I build on the success of the team and establish a clear path for 2017 is: why?

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A clear theme that emerged during 2016 is the interest from investors in broader information to support their decision making. Delegates at the ICGN-IIRC Conference were emphatic: they are calling for innovation in investor decision making tools so that they can factor in information on longer term value creation. Furthermore, they pointed to Integrated Reporting as a focal point for better dialogue between investors and companies.

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The Financial Stability Board’s Task Force on Climate-Related Financial Disclosures provides the latest call for greater alignment of the corporate reporting landscape. It is an important reminder that, whatever the strengths of individual corporate reporting frameworks and standards, the market can sometimes be confused or alarmed by the apparently fragmented approach. It is why the Corporate Reporting Dialogue has been such an important innovation to share insights, develop a landscape map and begin to articulate shared viewpoints and policy perspectives. Dialogue is the bridge to a more cohesive and relevant corporate reporting system.

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Increasing numbers of organizations used the <IR> Framework during 2016 to help them deliver clear, concise, integrated information that explains how all of their resources are creating value. Globally, 1,500 organizations are now doing some form of Integrated Reporting with over 1,200 participants in <IR> Networks around the world.

Examples of leading practices from around that world have emerged throughout the year – some recent examples that have been highlighted on the <IR> Examples Database include: UBS, United Utilities, Tata Steel and FMO. The database highlights leading practices across all key principles of Integrated Reporting and includes a section for reports recognized by a reputable awards process or through benchmarking. Your suggestions and recommendations for others not yet on the database can be submitted here.

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