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<IR> supporters call for more collaboration between investors and business

Posted 15 January, 2013

<IR> supporters call for more collaboration between investors and business

A better dialogue between company boards and their investors can lead to higher quality disclosures and a more informed capital market, a roundtable hosted by the International Integrated Reporting Council (IIRC) and corporate communications agency Black Sun has heard.

Tom Rotherham, Director of Hermes Equity Ownership Services (EOS), said that investors and businesses need to be “on the same page” in order to achieve a commitment to long-termism and that integrated reporting could help provide a better basis for discussion than current corporate reports.  Implicit in what is needed is a recognition by companies and investors that financial performance is a necessary but insufficient component of long-term success: the focus of a company should be to create value.  He said that businesses should prepare for discussions with investors by defining how they create value, understanding key risks and setting out how these will be addressed.  Investors meanwhile, should consider whether capital markets can be efficient in generating long-term returns without the active participation of owner-investors.

Discussion at the event reflected recently published research from Black Sun which shows that businesses, particularly those in the IIRC’s Pilot Programme, are actively seeking input to help raise the quality of board discussions and decision-making.

Paul Druckman, IIRC Chief Executive, believes that this behavioural change will lead to better quality corporate reporting:

“We are witnessing a fascinating change in the mindsets of some of the world’s leading businesses and investors.  Ultimately, this will lead to the adoption of a new language for communicating how value is created by businesses.  This language is Integrated Reporting.

“This is the first generation of business leaders dealing with the reality of living within planetary limitations. The global economy is increasingly underpinned by the value of knowledge and people, yet the standards and rules governing corporate behaviour haven’t yet caught up with this new reality.  The fact that investors and businesses are working together to inject much needed innovation in our reporting systems and processes demonstrates that market mechanisms can help to drive a change in thinking and behaviour that will improve decision-making and the operation of the capital market”.

The IIRC/Black Sun roundtable also heard from Helen Perkins, ACCA Head of Strategy Communications, and Stephen Pattison, ARM Holdings VP for Public Affairs, who provided their perspectives as part of the Pilot Programme, and Thomas Krantz, Advisor at Thomas Murray who shared his insight on capital markets.

Participants at the event expressed confidence that the International <IR> Framework, which will be published by the IIRC in 2013, will lead to a more comprehensive dialogue between businesses and their investors.

Notes to editors:

  • Established in 1991, Black Sun is one of Europe’s leading strategic corporate reporting consultancies, bringing together corporate reporting, corporate responsibility communications and digital communications to create powerful integrated solutions. Black Sun helps businesses build more valuable and engaging relationships with their investors and other corporate audiences through powerful strategic communications programmes. The company’s clients include HSBC, Rio Tinto, Tullow Oil, Taylor Wimpey and BAE Systems.
  • The International Integrated Reporting Council (IIRC) is a global coalition of regulators, investors, businesses, standard setters, the accounting profession and NGOs. Together, this coalition shares the view that communication about businesses’ value creation should be the next step in the evolution of corporate reporting. The mission of the IIRC is to create the globally accepted International <IR> Framework that elicits from organisations material information about their strategy, governance, performance and prospects in a clear, concise and comparable format. The Framework will underpin and accelerate the evolution of corporate reporting, reflecting developments in financial, governance, management commentary and sustainability reporting. The IIRC will seek to secure the adoption of <IR> by report preparers and gain the recognition of standard setters and investors.