Integrated Reporting: can it solve the sustainability information gap? Most firms these days produce glossy sustainability reports chock full of nirvanic eco images and number charts which mostly trend up and to the right. But is this reporting exercise of practical use to anyone beyond the PR set who have a stake in keeping the merry go round turning? Can stakeholders use the information to make capital investment decisions whether financial, human, intellectual, social or natural? And while we're at it, lets question the public utility of current public financial disclosure practice with its narrow boundaries and slavish focus on compliance.
It's hardly been successful in alerting the public before the global banking crisis and other corporate scandals of recent years overtook. According to the IIRC, at the heart of the problem is an asymmetry of information for stakeholders due to a lack of information integration or connectedness: Here's my take on the opportunities and challenges for a CFO undertaking a more integrated reporting approach.
Opportunities: The Prince's Accounting for Sustainability Project: Embedding sustainability into decision-making and reporting processes. IIRC | INTEGRATED REPORTING. GE Citizenship » Integrated Reporting | Features & Articles | GE Citizenship. Integrated reporting—which merges traditional financial reporting with sustainability reporting—has shot up the global agenda quickly, emerging from relative obscurity two years ago. As cofounder of the Global Reporting Initiative (GRI), a multistakeholder organization that established sustainability reporting standards through an exhaustive consultation process in the late 1990s and early 2000s, I see parallels in the development of integrated reporting, and its promise to help shift our economy toward sustainability, justice and prosperity.
At this point, integrated reporting is more of a concept than a practical reality—a kind of vision that flows from intuition, rather than a specific set of steps. The basic premise of integrated reporting is that current financial accounting standards and practices fail to capture all of the information necessary to manage firms effectively in the 21st Century. Bob Massie for US Senate. Amsterdam GRI Conference. 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 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. Environmental, social and governance performance. said Professor Mervyn King, Chairman of the GRI.
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