IIRC Newsletter

Improving outcomes and building trust in the public sector through Integrated Reporting

A new publication, 'Focusing on Value Creation in the Public Sector', which has been developed by the IIRC and CIPFA* with support from the World Bank's Governance Global Practice, has been released. It provides guidance for public bodies around the globe to help them think holistically about their strategy and plans, make informed decisions, and manage key risks in order to build stakeholder confidence and improve future performance. 

Public sector organizations from around the world are already using Integrated Reporting to improve understanding of the services they deliver and the value they create. This guide will build on these developments to enable more and more organizations to access these benefits.

Zinga Venner, Manager, Corporate Reporting and Analysis, World Bank Group, said, “Integrated Reporting provides us with the vehicle with which we can increase the visibility and transparency of how our organizations use their resources to create value over time. It also provides us with the ability to promote integrated thinking and management, and in so doing, change organizational behaviour and the manner in which resources are allocated, thereby leading to significantly improved outcomes, which not only benefit our organizations, but the world at large.”

Rob Whiteman, Chief Executive, CIPFA said, "We believe this report will help to improve decision making and illustrate how Integrated Reporting can be applied by public sector leaders so that they think more broadly about value creation in their organization and make the best use of the often restricted resources they rely on. Integrated Reporting will enable them to think about the outcomes they are aiming for - not only in financial terms, but also in terms of society, the natural world, and human and intellectual capital."

Professor Mervyn King, Chairman of the IIRC Council said, "Public sector organizations are increasingly challenged with maintaining or improving outcomes within the same or reducing resources. Communicating how, and how well prepared they are to achieve this is critical to public accountability." 

Public sector leaders are looking for tools and frameworks to help them demonstrate effective resource allocation, and accountability - communicating not just for the sake of ‘being transparent’ - but to ensure all stakeholders understand how their organization is creating value in the short, medium and long term.

CIPFA, the IIRC and their partners will use 'Focusing on Value Creation in the Public Sector' to ensure public sector leaders globally understand the value of adopting Integrated Reporting. This will be followed during 2017 by guidance that CIPFA is developing to further help public sector organizations implement the International <IR> Framework.

*The Chartered Institute of Public Finance and Accountancy

Using technology to support next-generation reporting and management

The <IR> Technology Initiative has released a guide for CFOs on using technology to drive multi-capital thinking. 'Technology for Integrated Reporting' offers practical insights to help CFOs collaborate with their Chief Information Officer (CIO) to ensure that technology can enable progressive business management and reporting practice. 

Abhijit Bhattacharya, CFO at Royal Philips, welcomed the guide saying in the publication's foreword, “In today’s business environment, the use of technology to integrate data to deliver actionable insights plays a larger role than ever as a driver of organizational value and competitive advantage. It is therefore essential for CFOs to ensure that technology investments are fully aligned with strategic plans to drive business performance while addressing social and environmental trends.” 

Jyoti Banerjee, Programme Lead, <IR> Technology Initiative, said, "Technology enables the creation of an information architecture that can support management and investor decision-making. Such an architecture is needed because the modern business landscape poses a new set of challenges. Telling the story of how an organization creates value over time - and across multiple capitals - requires connected, rapidly changing information to flow into management reporting, analysis and decision-making. The data underpinning the value creation story therefore needs to be collected, integrated and processed in the right way."

The CFO owns these issues in many organizations and so it is increasingly the CFO's responsibility to make sure that the right architecture is put in place to take forward the management of multiple capitals across multiple periods of time. Mastering the big shift in technology for reporting requires a deepening partnership between the CFO and the CIO, as well as other stakeholders. The scope and depth of integrated thinking means this partnership needs to extend across an organization’s controls, operations, strategy and reporting.

This guide shares some of the practical things that companies are already doing to change the way they work, and introduce a new information culture that can help them successfully navigate the fast-changing business environment. 

<IR> Technology Initiative participants developed this publication. The Initiative is a multi-year programme convened by the IIRC that seeks to build a deep understanding of how technology can be applied to help progressive report preparers and users achieve their goals. It considers how the evolution of corporate reporting is impacting - and being impacted by - technology. 

This document will be followed in early 2017 by a technology blueprint for integrated thinking and reporting aimed at the CIO.

The IIRC and BSR (Business for Social Responsibility) are hosting a roundtable about integrated thinking and value creation in the technology industry in San Jose on 26 October 2016. Panellists from investors such as BlackRock and CalPERS, as well as technology executives from HP Inc, Oracle and SAP will dissect value creation in the sector, as practiced by the companies themselves and their investors. To register for the event email Johanna Poschwatta: poschwatta@bsr.org 

IIRC publishes its Integrated Report 2015

The IIRC is pleased to communicate its annual performance, for the first time, in the form of an integrated report. As part of our market-based philosophy, our Board and Council believe it is important that we follow the principles we advocate. Our continued progress towards achieving the objectives of our Breakthrough Phase strategy features centrally throughout the report.

Paul Druckman, CEO, IIRC said, "This is our first integrated report and I am proud of the end product. We will build on this experience to improve how we communicate our value creation story, as well as our commitment to operating in an integrated way. We are especially proud of our value creation diagram, which connects the outcomes of our business model to the value created for the IIRC and the broader public. The diagram also illustrates how organizations can influence certain capitals that they themselves do not use. Our business model, for instance, does not rely on natural capital; however, raising the profile of planetary constraints in capital market decisions is a core outcome of our work.”

He continued, "In many ways, we hope these elements will be seen by the market as leading practice. There is no doubt we can strengthen our performance reporting through more rigorous data collection and tracking; however, we will get there and have made significant strides during this calendar year."

We have tailored the capitals approach to our own circumstances, as encouraged by the International <IR> Framework. In particular, we focus on only those capitals that significantly influence our ability to create value.  Our terminology and categorization also reflect our own interpretations and purposes.

In preparing our inaugural integrated report, we have realized some of the key benefits of integrated thinking, which, despite our small size, are considerable. We aim to convey these benefits in the report through a concise account of our strategy, governance, performance and prospects.

2016 edition of Reporting Matters indicates 'the effectiveness and quality of integrated reports when done well'

The World Business Council for Sustainable Development (WBCSD) has released its fourth review of WBCSD members' sustainability and integrated reports. Four of the top ten reports are integrated - with 28% of reports demonstrating some elements of integrating their reporting process. The report states, "Self-declared integrated reports score higher on average than both stand-alone sustainability reports and combined reports against our principles and content criteria".

Other key findings include 76% of companies improving their overall score, with Peter Bakker, President and CEO of WBCSD saying, "Non-financial reporting has reached a critical turning point and is now heading towards the mainstream." WBCSD report that the most effective reporters provide a clear description of the materiality process and present the outcomes of their analysis. They also have a clear strategy in place for meaningful stakeholder engagement and discuss relevant trends and prospects, demonstrating an understanding of how these might impact their business model by creating risks and opportunities. 

Writing in the foreword Karim Hajjar, Chief Financial Officer and Member of the Excutive Committee, Solvay, said, "In general, pension schemes and savers ultimately own a significant proportion of public company shares and thus have a vested interest in ensuring that long-term success is not undermined by short-term priorities. It dawned on me that value can no longer be just about earnings, cash and returns. Reporting needs to evolve and encompass the right extra-financial indicators."

IIRC strengthens collaborations

To coincide with the launch of World Intellectual Capital/Asset Initiative's (WICI) framework the IIRC has signed a joint statement of collaboration with WICI. The statement sets out how WICI and the IIRC advocate for the evolution of the management and reporting of an organization's value creation story, with a distinctive focus on intellectual and associated capitals.

The IIRC has also strengthened its collaboration with professional services firm, Da-Strategia, which has committed to supporting the adoption of Integrated Reporting in Russia by raising awareness through its networks and channels.

WICI and the IIRC will continue a collaboration that started in June 2013 on the basis that reporting on intellectual and other associated capitals forms an essential component of Integrated Reporting and the value creation processes of organizations, while both recognizing their complementary roles. WICI and the IIRC are working together to ensure more meaningful corporate reporting in relation to these capitals. We believe that the outcome of this will be to encourage corporate behaviours and capital allocation to be more aligned to wider goals of financial stability and sustainable development.

WICI's framework, which has been released following an international public consultation throughout 2016, will be useful to organizations that are working towards Integrated Reporting. The framework aims to help organizations better reflect many of today's business models, where value is generated through knowledge, technology, patents and know-how. This is in addition to an organization's strategy, procedures, governance, quality of human capital, brand and reputation, and its relationships with customers and business partners. WICI's framework is intended to support organizations who wish to report and communicate on how they utilize intangibles for their value creation processes, thus addressing a 'corporate reporting gap'.

Da-Strategia’s active endorsement in Russia of Integrated Reporting - as an important evolution in corporate reporting - will help the IIRC achieve its mission, which is to ‘align capital allocation and corporate behaviour to the wider goals of financial stability and sustainable development through the cycle of integrated reporting and thinking.’

Da-Strategia will build on the existing activities of the Russian <IR> Network that it convenes and will enable Russian organizations to engage further with the international <IR> Business Network. Da-Strategia will also convene regular events and workshops for Russian organizations that are interested in learning more about Integrated Reporting.
Marina Galushkina, Director of the Department for Corporate Transparency and Integrated Reporting, Da Strategia said, “For five years we have been engaged in the research of transparency and reporting in Russian companies. Transparency makes companies more attractive to investors, enables better cooperation with stakeholders, and gives companies a social license to operate. In other words, it contributes to the sustainable development of not just a company but the Russian economy in general. Integrated Reporting has an important role to play in bringing this about, by ensuring providers of financial capital understand how the organization will create value now and in the future.”

A great line up of speakers has been announced for the IIRC / ICGN Conference this December 2016. It is set to be a fascinating and insightful event. Register today to avoid missing out.
Recent blogs:

'The Use and Usefulness of Integrated Reporting'

by Yen-pei Chen, Corporate Reporting and Tax Manager, ACCA


'How valuable is Integrated Reporting? Insights from best practice companies

by Dr. Kristin Köhler, Center for Corporate Reporting and Prof. Dr. Christian Pieter Hoffmann, University of Leipzig


'Six ideas for improving reporting - and by extension, corporate governance

by Paige Morrow, Head of Brussels Operations, Frank Bold


'A change agent to build trust for institutions'

by F.Müjde Çetin and Fatma Öğücü Şen, Argüden Governance Academy


'The future of reporting: Five steps towards Integrated Reporting in business

by Darren Clare, CEO, Stratton Craig
Contact: juliet.markham@theiirc.org
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