Global Head of Assurance, Grant Thornton International
“Necessity is the mother of invention.”
Or, as Plato originally observed over 2,500 years ago in the dialogue Republic: “A need or problem encourages creative efforts to meet the need or solve the problem.”
When the IIRC came together in the wake of the global financial crisis in 2008, the necessity was to create a reporting framework that focused on how best to report on sustainability and value creation in the short, medium and longer term through principles, rather than a set of rules.
Mike Krzus, a partner in Grant Thornton US at the time, teamed up with Professor Bob Eccles from Harvard University to consider the likelihood of success in light of what had been learnt from the past and what might happen in a world that was becoming more and more digital. In early 2012 they published “One Report: Integrated Reporting for a Sustainable Strategy” and Don Tapscott in his foreword to the book noted:
‘Globalization, instant communications, organized civil society—and now a crisis in trust, have changed the rules of the game. Firms are being held to complex and changing sets of standards—from unrelenting webs of “stakeholders” who pass judgment on corporate behaviour—to regulations, new and old, that govern and often complicate everyday activities. In an ultra-transparent world of instant communications, every step and misstep is subject to scrutiny. And every company with a brand or reputation to protect is vulnerable.’
It is an observation that is as relevant today as when it was written. What is remarkable, and sometimes forgotten, is how quickly the IIRC produced its framework in 2013. Many would say that was because, from the outset, the IIRC garnered support from influential organizations around the world who recognized the need to rapidly solve the global business reporting issues of the day.
In countries like South Africa, the decision to require integrated reports from all entities listed on the Johannesburg Stock Exchange from 2010 onwards was made for them. It was a push strategy that, at the time, had its critics. But research confirms continuous improvement has resulted, in many unexpected and innovative ways, since that directive was made.
Elsewhere a pull strategy for the adoption of integrated reporting exists because stakeholders are demanding to know how an organization is responding to various environmental, social and governance matters. In many instances, providing an integrated report is an optimal response to a business imperative that is not well served under more conventional business reporting frameworks.
Telling an organization’s sustainability story in a succinct and coherent way for a wide range of stakeholders takes courage, creativity and a commitment to continuous improvement. A surprising consequence of this is almost every entity who has adopted integrated reporting now makes reference to ‘the journey they are on’ as they continue to further enhance both their thinking and processes and the relevance and decision usefulness of their integrated reports. Leaders in firms across our international network have witnessed some extraordinary transformations within organizations that have embraced integrated thinking as well as integrated reporting.
As the IIRC closes out its first 10 years against the backdrop of a global pandemic, necessity has once again become the mother of invention. No matter what the size of the entity, or the sector it operates in, telling the story of how value has been created, preserved or lost has become more important than ever. Initiatives with CDP, the Climate Disclosure Standards Board, Sustainability Accounting Standards Boards and Global Reporting Initiative and others in this space to create a shared vision will really help progress this. We wish the IIRC every success as it continues to further improve business reporting.