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IIRC INTEGRATED REPORT 2017 / Increasing the pace and scale of integrated reporting adoption

Increasing the pace and scale of integrated reporting adoption

The review of our activities and performance in 2017 is structured around the six strategic themes or objectives of the Breakthrough Phase, while cutting across all key elements of our value creation model and governance.

Strategic theme 1:

Increasing the pace and scale of integrated reporting adoption

 

Material matters (pages 24-26)
  • Making the case for integrated reporting
  • Complex corporate reporting system
  • Investor demand for integrated reporting
  • Uptake of integrated reporting in USA and China
  • Business focus on sustainable development
  • Demonstrable momentum of adoption
  • Demonstrable momentum of adoption

Connection to governance

Investors on governance bodies inform our engagement with the investor community

 

Activities/outputs

<IR> Network and events

IIRC Networks organizations Dec. 2017 Dec. 2016 Dec. 2015
<IR> Network* 95 93 77
*Including Technology Initiative participants

New joiners to the <IR> Network included ABN Amro, ArcelorMittal, Dellas Diamond Tools, FarEasTone, Impala Platinum, ING, Rosneft, Schiphol Airport and Vancity.

We revised our <IR> Network recruitment model and have been developing an increased offering for companies that are maturing in their approach to integrated reporting. As well as the webinars and report critiques programme, we created the Financial Institutions Special Interest Group within the main network, with the launch of more special interest groups anticipated in 2018.

We collaborated with ACCA on a thought leadership paper on the high-level trends and learnings from the 2016 <IR> Network report critiques.

We held the 2017 Integrated Reporting Convention in Amsterdam, bringing together around 250 delegates from 31 countries around the world, galvanizing support for integrated reporting, with support from our partners in the Netherlands NBA and Eumedion.

We also hosted two Labs of the Corporate Leaders Group on Integrated Reporting, jointly organized with Global Reporting Initiative (GRI).

Regional/sector network partners

Our reach is expanded through collaboration with a number of partners around the world who convene regional and sector-specific integrated reporting networks. 2017 highlights included a Banking Network paper on how banks disclose their efforts around innovation, and an IFAC survey of its members in Professional Accountancy Organizations (PAOs) to understand their work on integrated reporting so that it can further develop the PAO network. We collaborated with IFAC who produced, ‘Creating Value for SMEs through Integrated Thinking: The Benefits of Integrated Reporting’. Also working with IFAC, we published another in our Creating Value series, ‘CFO Leadership in <IR>’.

Global and regional engagement

Our new US market lead set up a working group and an IIRC US Community in collaboration with Smarter-Companies, starting a series of webinars aimed principally at business. A seconded China market lead has not yet materialized, but we presented at a round-table for senior Chinese business leaders and hosted a delegation from the Ministry of Finance, with whom we have developed our strategy for the Chinese market in 2018.

We continued to visit numerous other markets, involving speaking engagements, participation at round-tables and bilateral engagement with key members of our stakeholder groups (pages 20-23) at the national level.

Engagement at the global level included addressing the Global Network of Director Institutes, where the concept of integrated reporting was welcomed warmly by member bodies; a global conference of national development banks at the invitation of the World Bank; and IFAC’s CEO Forum, which was followed by a further discussion at the Global Accounting Alliance.

Integrated Reporting Training Programme

We continued to grow the Integrated Reporting Training Programme, while maintaining the quality of training provided.

Training programmes 2017 2016
Training partners 13 8
Courses run 34 12
Participants 367 103
Average participant course score (out of 5) 4.0 4.1

Sustainable Development Goals (SDGs)

We met with the Head of the UN Global Compact, helping facilitate a workshop on business reporting on the SDGs with NBA, the national accountancy federation in the Netherlands.

We collaborated with Scottish accountancy body ICAS and the Green Economy Coalition on a report, authored by Prof. Carol Adams, to help organizations enhance their contribution to the SDGs through integrated reporting, with a foreword from the Chair of the Business Commission for Sustainable Development. We presented the report in the United States during ‘Climate Week’ in the United Nations.

We are the only reporting organization to be appointed to the new Sustainable Development Goals Platform, established by the European Commission. We are collaborating on the work of UNCTAD on target SDG 12.6 and are also on the advisory group of a project led by UN Global Compact and GRI on measuring the SDGs.

Evidence base

The Academic Research Support Group pulled together over three hundred published articles and research papers that will be shared publicly via a database in 2018.

Some examples of emerging academic evidence in this area include a publication showing that integrated reporting improves conditions for long-term investment (Harvard Business School), reduces cost of capital (National University of Singapore and separately, Stanford Business School) and improves shareholder value (Chuo Graduate School of Accounting, Japan).

While the evidence base is getting strong, we need to package the findings in a way that business audiences will find compelling.

Performance indicators

Integrated reporters

We updated our own database of the <IR> Framework-influenced reports, identifying 549 for the last annual cycle (i.e. predominantly 2017 year-ends), the vast majority of which referenced the <IR> Framework directly, with some included for clear use of the <IR> Framework methodology. A similar exercise we performed in 2015 identified 307 such reports, which indicates an 80% increase.

Our methodology is not perfect due to limited resources, so we also look to other studies to a wider perspective on adoption of integrated reporting.

Of the 4,900 companies surveyed in KPMG’s global report on corporate reporting 14% produced a (self-labelled) integrated report in 2017 – compared to 11% reported in their last survey in 2015. However, among just the world’s largest 250 companies, the percentage dropped marginally from 15% in 2015 to 14% in 2017.

Based on results from different market studies and our own market intelligence, we estimate that over 1,600 companies across 64 countries in total are on the journey towards integrated reporting worldwide.

This includes:

  • 279 companies in Japan (up from 205 noted in 2016)
  • A quarter of Australia’s biggest 200 companies now using the principles of integrated reporting (up from 14% in 2016).
  • 50 companies in Malaysia
  • One third of the UK FTSE 350
  • 55% increase in integrated reports by Dutch listed companies
  • Twenty of the top forty listed French companies with our partners Paris Europlace, the French markets authority, setting a targetof all forty within three years.

Endorsements

A major ‘breakthrough’ moment came with the International Federation of Accountants’ (‘IFAC’) paper, ‘Enhancing organizational reporting: Integrated reporting key’, which identifies integrated reporting as the future of and ‘umbrella’ for corporate reporting.

Institut Français des Administrateurs (IFA) released a report calling on Boards to produce an integrated report.

The Ministry of Finance, China, expressed support for integrated reporting in its 13th Five Year Plan – a significant signal to the market towards greater adoption.

The Pan African Federation of Accountants (PAFA) set up an Integrated Reporting Committee with the World Bank. Mainstreaming integrated reporting among member PAOs was one of PAFA’s top ten priorities for 2017.

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