Executive Director and Chief Financial Officer, Tata Steel Limited
The International <IR> Framework was a new concept to the world, which brought to the fore the interdependency of society and its resources, the corporation and the environment. Such interdependency helped trigger a reflection and introspection on the core purpose of a corporation and how it can efficiently utilise resources for the long-term sustenance of the corporation and the community at large. This framework is truly remarkable and much credit to the founding vision of the IIRC as this framework is truly shaping the future of corporate reporting globally.
As a principle-based framework, integrated reporting is not just a reporting architecture for a corporation to report performance across the capitals deployed in the business. In practice, it is a strategic pathway that helps the business to define its purpose in an integrated and holistic manner and address the needs and priorities of all stakeholders. As the pandemic has clearly demonstrated, we are living in an interconnected world and the need for integrated strategy and deployment is ever so important for future sustenance of not only the corporation but also stakeholders.
To me, climate change and climate risk is the next big global challenge and existential risk which needs coordinated action before it is too late. There is a lot of good work ongoing in this area by multiple bodies globally and we can see visible actions initiated to meet this challenge. The <IR> Framework is best suited to address the climate debate in a holistic manner and bring thought leadership on a common platform. This can aid companies to devise and implement strategy and address the issues of sustainability for all stakeholders.
The principles of the <IR> Framework should be the foundation of corporate reporting of the future. As more and more preparers adopt the framework, it will provide all stakeholders, be it the providers of capital, rating agencies, regulators, non-financial stakeholders or the wider community, an integrated assessment of a corporation’s financial and non-financial performance, the strategic outlook of the business and the risks and opportunities that the corporation faces. It is becoming very important that the <IR> Framework should be at the front and centre of the board agenda and the directors of the corporation are deeply aware of interplay of strategy and capital deployment, risks and opportunities, performance and outlook, impact and consequences in a consolidated and holistic manner. Stakeholder communication also needs to evolve to address the emerging requirements of reporting and disclosures.
And finally, as the IIRC enters the second decade of its existence there is a need to enhance the maturity of the <IR> Framework to the next level. This would require developing standards on the measurement of the capitals, disclosure templates, assurance on the disclosures and work with other standard setting bodies to integrate the corporate reporting platform for the future. It would be of great value for the preparers and stakeholders to look at harmonized and comparable disclosures, which focus on long-term stakeholder value creation holistically.