The International Integrated Reporting Council (IIRC) has set out its guidelines for companies considering adopting an integrated approach to their financial reporting, paving the way for it to become common practice.
The guidelines are included as part of the IIRC’s International IR Framework, which sets out requirements that should be applied to a company’s reporting if they are to be considered integrated. It does not, however, make any demands regarding key performance indicators or suggest any measurement techniques to ensure compliance.
The framework sets out seven guiding principles, including the adoption of a ‘strategic focus’, considering the connectivity of information disclosed, the formation of stakeholder relationships and a firm appreciation for materiality. It also sets out to define financial, manufactured, human, intellectual, social and natural capital, and how the impact of each on short, medium and long-term value should be considered.
According to the IIRC’s CEO, Paul Druckman, the framework has risen ‘organically’ out of market pressures and practices over the past three years. ‘Today, we have fired the starting gun on a period of global adoption that will begin in early 2014,’ he writes in the IIRC’s document.
The document also follows a three-month global consultation period led by the trade body earlier this year, which prompted more than 350 responses from companies, and was trialed in 25 countries in July.
Nina Eisenman, president of Eisenman Associates, says that while the benefits of adopting integrated reporting are easy to see, IROs could be put off by the ‘roadblock’ of what looks like more work or a large shift in the way their departments operate.
‘There are, however, many potential upsides for IROs or corporate communications professionals – and their companies – who embrace integrated reporting, which is, at heart, strategic communication,’ adds Eisenman. ‘It puts IROs at the center of the action and offers them the potential to gain a seat at their company’s strategic decision-making table.’
Eisenman is set to host a webinar with the IIRC’s communications director, Jonathan Labrey, next week as part of an initiative to educate IROs in how they can ‘uncover new ways to create value throughout their organizations.’ The online discussion, entitled An Introduction to Integrated Reporting, will also allow IROs to ask their own questions about the framework in a Q&A with Eisenman and Labrey.
‘I’m going to start with a 15-minute overall introduction to integrated reporting: what it is, what it means to investor relations and corporate communications professionals, why it is relevant right now, who the target audiences are and how integrated reports differ from traditional annual reports, 10Ks and sustainability or CSR reports,’ Eisenman explains.
She adds that, as part of a half-hour interview with Labrey, she hopes to ‘address the challenges and benefits of adopting integrated reporting and cite some examples of companies that have already made the transition.’
Users can register for the free webinar here: http://eisenman.com/ir-registration.
