Global Chairman, PwC
Our world today faces some serious challenges. The COVID-19 pandemic has accelerated major forces that were already in play, which PwC calls the ADAPT framework: asymmetry in the distribution of wealth; technological and climate disruption; age and other demographic pressures; polarization driven by nationalism and populism; and declining trust in institutions. This moment in time also presents an opportunity for leaders to work together to create and advance to the world we want to see. What’s needed now is more action and accountability.
Both investors and wider society expect companies to respond to the challenges facing our world and play their part in creating a better tomorrow. And the best way to know about the substance of that response is through reporting that goes beyond financial metrics alone. That’s why there has never been a better time for companies to focus on integrated reporting.
The growing consensus that reporting has to robustly include economic, environmental, social and governance information is a testament to the impact of the IIRC. Companies and investors are recognizing that they operate in a multi-capital environment and that they need to manage and report on a broad range of capitals – not just financial capital. By bringing stakeholders together to understand integrated reporting, the organization helped initiate a sea change.
Our support of the IIRC and its founding concepts goes back many years to our Value Reporting Framework, published in 1999, which recognized the need for more holistic reporting models. The IIRC took thinking like this forward and continues to be immensely successful in convening leaders from business, investors, the accounting profession and governments to drive a focus on broader value creation.
Great progress has been made since the start of the IIRC. The IIRC has played a key role in raising awareness about the need for more sustainable business models. Today, the thinking behind the International <IR> Framework is at the heart of many governance and reporting codes and stock exchange listing recommendations across the globe. As this pervasive impact demonstrates, the IIRC is not alone in its focus on integrated reporting – and has an important role to play in working with stakeholders and other like-minded organizations to accelerate the changes needed to benefit society.
The core principles of integrated reporting have never been more important. The concept of value creation for the organization and for broader stakeholders, and the emphasis on strategic focus and future orientation have a critical role to play in our capital markets as we transition to a more inclusive capitalism that delivers for broader stakeholders. What’s more, there is no time to lose: speed is of the essence, as the opportunity is there today and the world needs, wants and expects us to seize it. Let’s not pass it up.
Looking ahead, we believe integrated reporting will become even more important. A process is underway that will reset the rules of the economy to reinforce the link between societal benefits and economic performance. Whether you look at the Green Deal in Europe or the emphasis on diversity in the US, you can see a shift - where stakeholders, including shareholders, expect businesses to perform on more dimensions than financial. And the only way to know how companies are performing is through broader disclosures. This means reporting on value creation across a broad range of capitals and measures. And, as businesses get better at doing this, we’ll see more transparency, which in turn, will help create the conditions for progress and increased trust.
We value the IIRC’s contribution very highly. And we have greatly valued being part of the IIRC, benefitting from its pioneering journey over the past decade. Building on the progress to date, we look forward to continuing to be an active participant in the movement, taking the agenda of value creation reporting forward into the future.