New Framework for Integrated Reporting
Wednesday, 11th December 2013 at 10:22 am
A new global framework has formalised and standardised the principles of an emerging form of corporate disclosure: integrated reporting (IR).
Global coalition, the International Integrated Reporting Council (IIRC), which brings together regulators, investors, companies, the accounting profession and NGOs, released the final version of the International Integrated Reporting Framework this week following a three-month global consultation.
The Council says the integrated report on company performance takes a holistic approach, extending beyond traditional financial metrics to include environmental and social issues.
Australia’s first member of the IIRC Council and CPA Australia chief executive, Alex Malley, said the release marks a new era in the way companies report on their performance.
“Integrated Reporting is the way of the future when it comes to reporting on company performance. By looking beyond purely financial measures and accounting for social and environmental performance as well, it can be a key component in a company’s armory of best practice corporate governance and disclosure,” he said.
“This new framework follows an extensive, international consultation and provides a clear roadmap for companies to begin taking a more transparent and holistic approach to the way they measure and report on performance.”
“As with any innovation of this kind, there will doubtless be some complexities that individual organisations will have to work through in order to apply this new approach to corporate reporting, however the framework provides an excellent starting point for comprehensive take-up over time.”
The new framework formally defines IR principles, which are intended to bring greater cohesion and efficiency to the reporting process.
“The IIRC’s long term vision is a world in which integrated thinking is embedded within mainstream business practice in the public and private sectors, facilitated by Integrated Reporting (<IR>) as the corporate reporting norm,” the framework specified.
“Integrated thinking is the active consideration by an organisation of the relationships between its various operating and functional units and the capitals that the organisation uses or effects.
“The cycle of integrated thinking and reporting, resulting in efficient and productive capital allocation, will act as a force for financial stability and sustainability.”
IR is currently being trialled in over 25 countries, 16 of which are members of the G20, the group of nations focused on strengthening the global economy.
A recent report produced by CPA Australia in collaboration with the Global Reporting Initiative (GRI), found that while uptake on Integrated Reporting in Australia is relatively low, compared with companies in the United Kingdom and Hong Kong, Australian companies disclose most on the environment.