Introduction
The International Integrated Reporting Council (IIRC) is a global alliance of representatives from the corporate, investment, accounting, regulatory, academic, and standard-setting sectors. The IIRC aims to promote integrated reporting (IR), a new form of financial reporting that combines non-financial aspects of a company’s performance with key financial information to provide a comprehensive view of how an organization creates value over time.
Historical Context
The IIRC was founded in 2010 in response to the growing need for a more comprehensive approach to corporate reporting that includes non-financial factors. The council’s first significant publication was its draft Framework on Integrated Reporting, released in 2013. This document provided a structure for companies to follow when creating their integrated reports.
Key Events
- 2010: Foundation of the IIRC.
- 2011: Launch of the Pilot Programme.
- 2013: Publication of the International
Framework. - 2015: Release of the Assurance on Integrated Reporting.
- 2021: Merged with the Sustainability Accounting Standards Board (SASB) to form the Value Reporting Foundation.
Framework and Principles
The International
- Strategic Focus and Future Orientation: Reporting should provide insight into the organization’s strategy and its ability to create value in the short, medium, and long term.
- Connectivity of Information: Reports should show the interdependencies and trade-offs between the capitals that affect the organization’s ability to create value over time.
- Stakeholder Relationships: Reports should highlight how an organization understands and responds to stakeholders’ legitimate needs and interests.
- Materiality: Reports should disclose information about matters that substantively affect the organization’s ability to create value over time.
- Conciseness: Reports should be concise.
- Reliability and Completeness: Reports should include all material matters, both positive and negative, in a balanced way without material error.
- Consistency and Comparability: Reports should be consistent over time and comparable with others.
Importance and Applicability
Integrated reporting is crucial in today’s business environment, where stakeholders demand more transparency and accountability from organizations. It is particularly important for:
- Investors: Provides a holistic view of how an organization creates value over time, going beyond traditional financial metrics.
- Corporate Executives: Helps in strategic planning and risk management by integrating financial and non-financial factors.
- Regulators: Facilitates better oversight and regulation by providing a comprehensive picture of an organization’s performance.
Examples
Many leading global companies have adopted integrated reporting, including:
- Unilever: Combines financial and sustainability performance in one report.
- Tata Steel: Provides a detailed account of its financial performance and sustainability efforts.
- HSBC: Offers insights into its strategy, governance, and risk management alongside financial metrics.
Related Terms
- Global Reporting Initiative (GRI): An organization that provides standards for sustainability reporting.
- Triple Bottom-Line Accounting: An accounting framework that includes social, environmental (or ecological), and financial performance.
- Sustainability Accounting Standards Board (SASB): Provides industry-specific standards for sustainability reporting.
FAQs
Q1: What is integrated reporting?
Integrated reporting is a holistic form of reporting that combines financial and non-financial information to provide a comprehensive view of an organization’s performance.
Q2: Why is the IIRC important?
The IIRC plays a crucial role in promoting integrated reporting, helping organizations provide a more complete picture of how they create value over time.
Q3: Who should adopt integrated reporting?
Organizations of all sizes, especially those looking to improve transparency and accountability with their stakeholders, should consider adopting integrated reporting.
Summary
The International Integrated Reporting Council (IIRC) has been instrumental in advancing the practice of integrated reporting, providing a framework that helps organizations present a complete picture of their performance. By combining financial and non-financial aspects, integrated reporting enables better decision-making for investors, regulators, and corporate leaders, ultimately contributing to a more sustainable and accountable business environment.
References
- IIRC Official Website: Integrated Reporting
- “The International
Framework”, International Integrated Reporting Council, 2013. - “Assurance on Integrated Reporting”, IIRC, 2015.
Inspirational Quote
“The greatest wealth is to live content with little, for there is never want where the mind is satisfied.” - Lucretius
Proverbs and Clichés
“Transparency breeds trust” - A cliché often used in corporate governance discussions.
By embracing integrated reporting, organizations can better navigate the complexities of today’s business world, ensuring that they remain sustainable, accountable, and transparent to their stakeholders.
