The International Integrated Reporting Council (IIRC) released a draft outline foreshadowing the full framework that it hopes will eventually guide businesses toward reporting combined financial and nonfinancial data such as social and environmental impact.
The outline is a small step forward in the IIRC’s goal to make integrated reporting more commonplace. But it offers the latest glimpse into how chapters in the full document would appear, with summaries on each. The final document is scheduled for completion by the end of 2013.
“Integrated reporting is a market-led initiative, driven by business and investor needs to gain greater insights into how a company’s strategy creates and preserves value over the short, medium and long term,” Paul Druckman, the IIRC’s chief executive, said in a statement. “The concept of ‘integration,’ embedding value-relevant financial and nonfinancial information into strategic decision-making and a company’s reporting cycle, is gaining momentum as a vital step in the evolution of corporate reporting globally.”
The IIRC project began with the release of a discussion paper in September 2011. A more detailed outline with more technical content is expected to be released later this year, followed by a draft for public comment in the early to middle part of 2013.
Last fall, the IIRC began a pilot programme of more than 70 companies and 20 investors globally to test the principles and practical application of integrated reporting. The goal of the programme, scheduled to end in October 2013, is to apply knowledge gained to the final version of the framework.
Some of the companies taking part in the programme, such as Danish pharmaceutical giant Novo Nordisk, were already incorporating integrated reporting into their annual documents. Novo Nordisk is required by law, as one of Denmark’s largest companies, to report nonfinancial data.
Countries have varying standards for integrated reporting. South Africa, for example, requires companies listed on the Johannesburg Stock Exchange to publish an integrated financial report. The United States has been slower to adopt most tenets of integrated reporting.
German sports apparel maker Puma has taken steps to quantify environmental impact in its profit-and-loss statement. Jochen Zeitz, the executive chairman of Puma, said the reason for adding such information was simple.
“The problem in business is that, if we don’t put a figure on something, then we don’t manage it,” Zeitz told CGMA Magazine.
—Neil Amato (namato@aicpa.org) is a CGMA Magazine senior editor.