Chief Executive, Institute of Chartered Accountants in England and Wales
The corporate reporting landscape has evolved significantly over the past ten years. Concepts such as multi-capital reporting and integrated thinking might have been on the fringes a decade ago. They are now central to the debate and are critical factors when considering the future of corporate reporting.
The IIRC has been a trailblazer in this respect. The 2013 International <IR> Framework has been embraced by many jurisdictions around the world, either directly or as inspiration for the development of local practice or regulation on non-financial reporting. In the UK, the influence of ideas behind integrated reporting can be seen in the evolution of the content of the annual Strategic Report. The most recent Financial Reporting Council guidance on its preparation is well aligned with the guiding principles of the <IR> Framework. The July 2018 guidance requires, for example, the description of a company’s business model to explain how it generates and preserves value over the longer term, and points out that a critical part of understanding that business model is “understanding its sources of value”, that is the key resources and relationships that support the generation and preservation of value.
The work of the IIRC has been important too in promoting greater interconnectivity in the reporting ecosystem. Financial and non-financial reporting is starting to come together, both in terms of how businesses organize themselves internally and the resulting reporting output. Corporate reporting is no longer synonymous with financial reporting alone and instead encompasses a much wider range of issues. The Institute of Chartered Accountants in England and Wales (ICAEW) has been pleased to support the recognition of improved integrated thinking by companies around the world through the annual Finance for the Future awards.
There is still much work to be done. Yet the urgency of addressing global issues such as climate change and, more recently, the Covid-19 pandemic, means that we cannot wait another ten years for this to happen. ICAEW believes that it is time to actively pursue the goal of an international non-financial reporting framework closely connected with the International Financial Reporting Standards. We strongly support the ‘Statement of Intent to Work Together Towards Comprehensive Corporate Reporting’ issued in September 2020 by leading sustainability organizations, including the IIRC. The IIRC has an important role to play here. Its experience and expertise make it well placed to contribute to this vital process.
This is a critical juncture for corporate reporting, and ICAEW continues to support the work of the IIRC in this space. Happy birthday!