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IIRC INTEGRATED REPORT 2017 / From our leadership

From our leadership

Richard Howitt

Chief Executive Officer

Mervyn King

Council Chair

Barry Melancon

Board Chair

Jane Diplock

GAN Committee Chair

The process of trial and error, and finding something new and innovative through experimentation were the bedrock of our previous awareness Creation Phase. We have now harvested myriad opportunities as well as challenges in the Breakthrough Phase. Thriving on both, they serve as a springboard for gaining momentum on our journey towards global adoption.

We welcome you to our third integrated report, which also marks another milestone on our integrated reporting journey. As we near the conclusion of the Breakthrough Phase it is time for an evaluation of our strategic progress, of our International Integrated Reporting Framework (<IR> Framework) and also of the effectiveness of our Board.

Evaluation of the Breakthrough Phase

After the release of the <IR> Framework in December 2013, the IIRC embarked on the Breakthrough Phase of its strategy, with the aim of bringing about a meaningful shift in the early adoption of the <IR> Framework. As we came towards the end of the Breakthrough Phase, the Board and the Council undertook an evaluation of our progress. The global picture that emerged illustrated a complex pattern of adoption and endorsement, with different markets moving at different speeds and for different reasons with differing levels of ‘quantity’ and ‘quality’ of integrated reporting.

We have had some signature successes on market penetration, but also some areas where we are still at the early stages of creating awareness and building support for adoption. In markets such as South Africa and Japan integrated reporting is already mainstream, while in other major capital markets including USA and China we are still at the awareness Creation Phase.

While we have achieved breakthroughs with some investor organizations (e.g. BlackRock, ICGN and CFA Institute) the integrated reporting message is not completely accepted by the majority of investor bodies globally. The message from the International Federation of Accountants (IFAC) that integrated reporting is ‘the future of corporate reporting’ is a major breakthrough in our global mission, but it is an idea that is still gaining traction.

While progress with individual stock exchanges and regulators (e.g. in the UK, Malaysia, India and Brazil) has been impressive, there is still further work to do to gain majority acceptance that integrated reporting will be the reporting norm of the future.

An assessment

This precludes a binary assessment of whether we have or have not achieved ‘breakthrough’. However, it was clear that, during this period, significant breakthroughs have been achieved –

  • Integrated reporting adoption in 64 markets, including every G20 economy.
  • Integrated reporting embedded in international accountancy curricula guaranteeing a pipeline of new finance professionals ready to implement integrated reporting.
  • Corporate governance codes starting to refer explicitly to integrated reporting and International Organization of Securities Commissions (IOSCO) Principle 16 beginning to be used to advocate for integrated reporting adoption.
  • Increasing support from pension funds and growing interest in integration of ESG factors within mainstream investment.
  • The <IR> Framework accepted as a permanent feature of corporate reporting, described as an ‘umbrella’ and the future of corporate reporting by internationally respected bodies.

These achievements are a sample of the 29 breakthroughs identified as part of our comprehensive review of this strategic phase, and summarized under ‘Breakthrough moments’ (pages 6-7), which together serve as a springboard for our long-term ambition of global adoption.

<IR> Framework review

In March 2017 we launched a formal global consultation to hear from market participants and learn from their experience with integrated reporting (pages 8-9). From the extensive feedback gathered it was clear that the <IR> Framework stands up well to the challenges of implementation, and that a revision in the near future is not required. However, the exercise did clarify areas where further guidance and research is needed to aim implementation – for which we have developed a comprehensive technical work programme.

Board effectiveness

Our governance remains fundamental to how we create value. Having reviewed our governance structure in previous years, we looked at governance effectiveness in 2017, specifically our Board of Directors. Drawing feedback from current and past Directors, Council, Governance and Nominations (GAN) Committee, the management team and auditors, the overall view was of a well-functioning Board, with the report making recommendations for specific incremental changes to improve the Board's effectiveness further.

Acknowledgements

Ours is a symbiotic collaboration with multiple stakeholders. We thank them all, in particular our Board, our Council, Ambassadors and the global team. We thank CIMA for the generous hosting of our London office and our many partners, supporter organizations and network participants for their continued enthusiasm, financial and in-kind contributions and generous secondments of staff.

Richard Howitt
Chief Executive Officer
Mervyn King
Council Chair
Barry Melancom
Board Chair
Jane Diplock
GAN Committee Chair

00 June 2018

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