The Prince’s Accounting for Sustainability Project (A4S) and the Global Reporting Initiative (GRI) announced today the formation of the International Integrated Reporting Committee (IIRC).
The world has never faced greater challenges: over-consumption of finite natural resources, climate change, and the need to provide clean water, food and a better standard of living for a growing global population. Decisions taken in tackling these issues need to be based on clear and comprehensive information; but, as The Prince of Wales has said, we are at present "battling to meet 21st century challenges with, at best, 20th century decision making and reporting systems."
The IIRC’s remit is to create a globally accepted framework for accounting for sustainability. A framework which brings together financial, environmental, social and governance information in a clear, concise, consistent and comparable format – put briefly, in an "integrated" format. The intention is to help with the development of more comprehensive and comprehensible information about an organization’s total performance, prospective as well as retrospective, to meet the needs of the emerging, more sustainable, global economic model.
The IIRC brings together a cross section of representatives from civil society and the corporate, accounting, securities, regulatory, NGO, IGO and standard-setting sectors. It comprises a Steering Committee and a Working Group.
The Steering Committee is chaired by Sir Michael Peat, Principal Private Secretary to TRH The Prince of Wales and the Duchess of Cornwall, with Professor Mervyn King, Chairman, King Committee on Corporate Governance and Chairman, Global Reporting Initiative, as Deputy Chairman.
The Working Group has co-chairmen: Paul Druckman, A4S Executive Board Chairman, and Ian Ball, Chief Executive Officer, International Federation of Accountants. The role of the IIRC is to respond to the need for a concise, clear, consistent and comparable integrated reporting framework, reflecting the organization’s strategic objectives, governance and business model, and integrating both financial and non-financial information.
Every publicly listed company is required to file an annual report on its financial performance in compliance with, in most cases, either International Financial Reporting Standards (IFRS) or U.S. Generally Accepted Accounting Principles (U.S. GAAP). Increasingly companies are also producing, mostly on a voluntary basis, corporate social responsibility or sustainability reports but these can vary widely in terms of relevance and quality, largely because there is no global standard for measuring and reporting on environmental, social and governance performance.
"To make our economy sustainable we have to relearn everything we have learnt from the past. That means making more from less and ensuring that governance, strategy and sustainability are inseparable" said Professor Mervyn King, Chairman of the GRI. "Integrated Reporting builds on the practice of Financial Reporting, and Environmental, Social and Governance – or ESG – Reporting, and equips companies to strategically manage their operations, brand and reputation to stakeholders and be better prepared to manage any risk that may compromise the long-term sustainability of the business."
Sir David Tweedie, Chairman of the International Accounting Standards Board, said "The case for globally consistent financial reporting standards is well understood and accepted. It is appropriate to apply the same global approach to other aspects of corporate reporting. This initiative represents an important step on that journey."
Ian Ball, CEO of the International Federation of Accountants said "The goal of the IIRC is not to increase the reporting burden on companies and other entities. Rather, it is to help them and all their stakeholders make better resource allocation decisions. All of us have a stake in a sustainable society. While integrated reporting alone cannot ensure sustainability it is a powerful mechanism to help us all make better decisions about the resources we consume and the lives we lead."
Jane Diplock, Chairperson, Executive Committee of the International Organization of Securities Commissions, said, "I believe we will look back on the creation of this Committee as a turning point in the development of corporate reporting."
A list of the members of the Steering Committee and Working Group is attached and further information on the IIRC can be found at http://www.integratedreporting.org/.