Global perspectives

David Nussbaum

IIRC Board Member

Chief Executive, The Elders

Senior Independent Director, Drax Group plc


When the IIRC was in the course of its formation, one illustration of the need for change in corporate reporting was the scale of the discrepancy between companies’ market capitalisation and the value of shareholders’ funds on their balance sheets. This signalled the extent to which financial markets valued things that were not being recognised in corporate accounting. But it was also clear that some negative corporate impacts – on people, relationships and nature – were also not being recognized in financial statements.

The IIRC recognized that answers were to be found not just in changing traditional accounting and reporting, but in a more fundamental shift of mindset. What was required was integrated thinking, which connected a range of factors which contributed to the creation of value, and could be communicated in the form of an integrated report. Focusing on ‘capitals’, six of them as the IIRC framework sets out, enables management, corporate boards, the providers of financial capital and other stakeholders to evaluate corporate performance more thoroughly.

Integrated reporting provides an overarching framework into which detailed reports can be placed. Reports on financial and manufactured capital can be connected with sustainability reports, and linked with reports capturing the outcome of employee engagement surveys.

However, from the perspective of corporate reporters, and indeed those who read corporate reports, the disclosure and other requirements of financial statements are already stretching. Public expectations of business have been increasing, and the quantum and level of detail required to comply with other disclosure standards has exacerbated the strain. Integrated reporting could be misunderstood as yet another requirement to add to the burden. Fortunately, integrated reporting has two particular features which mitigate these pressures: firstly, it recognizes materiality as a critical factor in selecting what to report; and secondly, it provides a conceptual framework, or umbrella, under which reporting using other frameworks can sit. This helps preparers and consumers of corporate reporting alike to see the wood amidst the plethora of trees.

Looking ahead, I anticipate several likely developments affecting the nature of corporate reporting. Hopefully, recent initiatives to connect different kinds of non-financial corporate reports will prove successful, easing the burden on reporters, and making corporate reporting more communicative to its consumers. Secondly, reporting will become increasingly web-based: enabling reports to be read in multiple ways, with different cuts or views of the data being available, through many routes, depending on the interests of the user. In addition, data may increasingly be reported (online) as it becomes available, rather than in a specific annual report.

Looking ahead, I anticipate several likely developments affecting the nature of corporate reporting. Hopefully, recent initiatives to connect different kinds of non-financial corporate reports will prove successful, easing the burden on reporters, and making corporate reporting more communicative to its consumers. Secondly, reporting will become increasingly web-based: enabling reports to be read in multiple ways, with different cuts or views of the data being available, through many routes, depending on the interests of the user. In addition, data may increasingly be reported (online) as it becomes available, rather than in a specific annual report.

Integrated thinking and reporting can support enterprises to make their contribution, as the 2030 Agenda for Sustainable Development puts it, to “a world in which every country enjoys sustained, inclusive and sustainable economic growth and decent work for all … in which consumption and production patterns and use of all natural resources … are sustainable.”

Such a vision can support businesses to have a purpose worth financing, attractive to work for, and worthy of a continuing licence not just to operate, but to flourish.