Non-Executive Director, AGL Energy Limited
My interest in integrated reporting started as CFO of a large corporate where I became increasingly frustrated as a preparer of external reports. So much volume and so much complexity had led to a lot of work with little apparent usefulness for readers. Most only focused on one stakeholder – investors, if they bothered at all to cope with the volume and complexity.
In an attempt to have better business reporting, several interested colleagues set up a Business Reporting Leaders Forum. The aim was and still is to have better reporting that is useful to all stakeholders. Coincidentally this happened ten years ago when integrated reporting emerged. Integrated reporting was essentially the answer. It addressed volume and complexity, being not an additional report but an opportunity to integrate a number of reports, including sustainability reporting.
An integrated report, done properly, became useful for all stakeholders:
And demonstrated how the use of all capitals can contribute to value creation or not.
Good companies start with integrated thinking and how that translates into outcomes is in the integrated report.
What that has meant is those businesses that have adopted integrated reporting are thinking about the impacts on all stakeholders of their business strategy, the risks and the mitigations required. Again, done well and reported well this has resulted in a huge potential to restore corporate trust.
Those who have adopted integrated reporting are reaping internal and external benefits. The last ten years has seen improvements in reporting by adopters. As the benefits become known many more are adopting integrated reporting.
While good progress has been made in global adoption, integrated thinking and reporting is still far from well understood and adoption needs to be driven harder.
There is still a need for a rationalization of reporting and to continue the drive for meaningful useful and easy to comprehend reporting. This can be seen by the number of groups that have formed or are forming to solve the above-mentioned problem. Many are looking for convergence.
Integrated reporting has a central role in transparency. It is the ideal mechanism to connect the reporting of financial and non-financial information including sustainability metrics. The way ahead is about fewer, but standardized metrics while leaving choice to businesses to choose the most relevant industry/sector metrics to best inform all their stakeholders about their business. Perhaps choosing the most relevant from a standard set is the answer.
All this leads to some form of umbrella reporting body that can oversee the standards for both financials and non-financials applied to an overarching reporting framework to bring the right information to all stakeholders in an integrated way.
I believe the International <IR> Framework is the framework that can lead us to the much sought after convergence, transparency and accountability on all aspects of business activity
This approach is what the IIRC needs to pursue as it will lead to more resilient markets, sustainable development, better informed stakeholders and integrated thinking. It must not take another ten years to get to this outcome. It must be done as quickly as possible.
In ten years’ time, we should be well practiced in a converged and integrated report that satisfies the needs of all stakeholders.