The release of a highly anticipated proposed framework heralded a new chapter in the evolution of corporate reporting.
The International Integrated Reporting Council (IIRC) made public a framework consultation draft—a blueprint for how the group hopes businesses will communicate with stakeholders. The draft is available at tinyurl.com/c6dml9s.
Developed with input from business, investors, standard setters, accounting bodies, and nongovernmental organizations, the framework is designed to build on existing practices in financial and nonfinancial reporting.
The proposed framework describes fundamental concepts of integrated reporting, guiding principles, and key elements such as organizational overview, opportunities and risks, strategy, performance, and future outlook.
An integrated report (IR) is a concise communication about how an organization’s strategy, governance, performance, and prospects, in the context of its external environment, lead to the creation of value over the short, medium, and long term.
Integrated reporting, as described by the IIRC, aims to:
- Achieve a more cohesive and efficient approach to reporting.
- Inform capital allocation decisions.
- Enhance accountability and stewardship.
- Support integrated thinking.
Corporate reporting has not kept pace with the risks of financial instability and unsustainability that threaten the livelihoods of communities across the world, Mervyn King, the IIRC chairman, said in a news release. Integrated reporting gives businesses the responsibility to communicate how they create value over time.
“[Integrated reporting] will lead to changed behavior, a focus on the future as well as the past, and a reporting model that reflects and communicates the reality of business, its operations, and its impacts, in the 21st century,” King said.
Comments on the proposal, which can be made through the IIRC website at tinyurl.com/c9xrnx8, are due July 15.