Rio+20 - a step towards <IR> | Integrated Reporting

Rio+20 – a step towards <IR>

As you will appreciate, natural and social ‘capital’ are essential parts of the integrated reporting <IR> framework, two of the six capitals, and these were the focus of the Rio+20 summit. I have just returned from this hugely energising and encouraging ten days at the UN Conference on Sustainable Development in Rio (Rio+20) which was attended by representatives from over 190 nations. Immediately prior to the intergovernmental conference, which resulted in a whole series of practical actions (admittedly, some were more concrete than others), the IIRC participated in a series of events in partnership with, among others, UN Global Compact, UNCTAD, UNEP-FI, TEEB for Business Coalition, Accounting for Sustainability (A4S) and the World Business Council for Sustainable Development (WBCSD).

We used these events to make the case for Integrated Reporting, built awareness of its value to business and investors and increase support. I was truly delighted by the reaction. You had to be there to see, hear and be part of the discussions; integrated reporting was referred to in all sorts of debates, speeches and conversations. We are part of this sustainability/ESG landscape and seen as part of the solution by that community, in fact in both key conference plenary concluding sessions integrated reporting was referred to as a significant development that is welcomed..

For readers of this blog, the headline news from Rio+20 on reporting is that governments reached agreement (paragraph 47 – see below) to encourage companies to integrate sustainability into their reporting cycle and to work through the UN to develop best practice models based on existing frameworks and facilitate action. We now know that the governments of Denmark, South Africa, France, and Brazil are planning to form a “Group of Friends of para 47” which will advance matters in the governmental process. This is of course an important step towards Integrated Reporting.

One of the key outcomes was around natural capital accounting. Rio+20 provided the place for all the initiatives on this area to coordinate and start to collaborate. International Finance Corporation (IFC), a division of the World Bank, has taken a lead through its 50/50 programme of 50 countries with 50 companies.

In addition the UK Government has gone a step further, announcing that it will adopt Natural Capital Accounting and include natural capital within the UK’s system of national accounts by 2020. As UK Deputy Prime Minister Nick Clegg said, such a move will ensure that natural resources are properly reflected in decision-making. It has also announced that all listed companies will be required from next year to report on their Greenhouse Gas emissions, a move broadly welcomed by business organisations. Significantly, Mr Clegg said that sustainability reporting “should eventually lead to a global framework” – the legacy being integrated reporting.

So far, so good – but what comes next?

First, we will stay engaged in the process. We will communicate with the UN and national Governments to encourage swift implementation of the agreed actions.

Second, we will stay focused on producing a high quality Integrated Reporting Framework capable of global acceptance by the end of 2013. We will produce the prototype framework in autumn 2012 and publish a draft framework in mid-2013.

Third, we will agitate for even bolder change and ensure momentum is maintained. We will build an understanding of the interdependence between the six ‘capitals’ we have identified that contribute to value creation and a more sustainable global economy.

We were clear from the outset that Rio was one of several intergovernmental processes that the IIRC should engage with to get our voice heard and create awareness for the benefits for Integrated Reporting. We have succeeded in doing that. Now the hard work begins.

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Paragraph 47 of the Outcome Statement in full:

We acknowledge the importance of corporate sustainability reporting and encourage companies, where appropriate, especially publicly listed and large companies, to consider integrating sustainability information into their reporting cycle. We encourage industry, interested governments as well as relevant stakeholders with the support of the UN system, an appropriate, to develop models for best practice and facilitate action for the integration of sustainability reporting, taking into account the experiences of already existing frameworks, and paying particular attention to the needs of developing countries, including for capacity building.