The future of corporate reporting

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The future of corporate reporting is Integrated!
??????? ?????? Relationships Manager International
Integrated Reporting Council (IIRC) ?????? - 18
?????? 2012
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Agenda

• What is Integrated Reporting (IR) and why do we
  need it?
• Evolving reporting trends where are we going?
• About the IIRC and IR Pilot Project
• Russian engagement needed!

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The global context is changing!
Greenhouse gas emissions keep rising
The world could be running out of some resources
Driving increased demand for disclosure!
Environmental degradation jeopardises peoples
quality of life
Our footprint is growing!
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Our choice

• Window dressing
• Business as usual reporting

• Strategic accounting for integration
• of all impacts
• Strategic resource allocation

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The importance of reporting

• Influences decisions and actions of management
• An essential element of corporate governance
• Influences decisions and actions of
  shareholders and
• other stakeholders
• Affects resource allocation (financial, natural
  and
• human resources) in society
• Critical for investor confidence
• Influences perceptions of the companys
  customers,
• vendors, and employees
• Shapes how a company sees itself

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Challenges
Non-financial
Financial

• Lack of standards
• Lack of common terminology
• Definition of materiality
• Underdeveloped audit methodologies
• Controversial role of the Global Reporting
  Initiative
• Competing standard setters

• Complexity
• Meaningful narrative information
• Reporting on risk, executive compensation and
  corporate governance
• Auditing for fraud

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Corporate Reports Increasing length and
complexity
Prudential annual report pages 1850-2008
Source Investis research - PwC
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Corporate reportinghas got too big, too
cumbersome and incomprehensible
Source Tomorrows Corporate Reporting A
Critical System at Risk CIMA and PwC
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INTEGRATED REPORTING IS...
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The evolution of Reporting
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Integrated Reporting the Future
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IR Elements
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Central themesBusiness model value creation
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The IIRC - some of the participating organisations

• Chairman - Professor Mervyn King, King report on
  corporate governance
• Deputy Chairman - Christy Wood, Chairman ICGN
• Chief Executive Officer - Paul Druckman
• Chairman of the working group - Ian Ball, CEO IFAC

• Corporate networks
• UN Global Compact
• BSR
• CERES
• Global Alliance
• WEF
• Companies
• RosAtom
• Rosneft
• Microsoft
• GE
• Natura
• 100 Group
• Novo Nordisk
• China Light Power
• Nestlé
• HSBC
• EnBw

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The IIRC more stakeholders

• Regulators, Standards Setters
• IASB
• FASB
• GRI
• CDSB
• Stock Exchanges
• IOSCO
• Tokyo Stock Exchange
• London Stock Exchange/100 Group
• Financial Stability Board (observer)
• Investor networks
• UN PRI
• UNEP-FI
• ICGN
• INCR
• Investors
• Aviva Investors
• APG
• EFFAS

• IGOs
• UNCTAD
• World Bank
• IFAC
• ACCA
• JICPA
• SAICA
• Accounting
• ICAEW
• PwC, EY, GT
• Deloitte, KPMG, BDO
• Civil Society
• Transparency International
• WWF
• WRI
• A4S
• Academia
• Harvard University
• University Sao Paolo

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About stakeholder expectations (1)

• On reading a corporate report users should be
  able to tell that
• The company has not profited at the expense of
  the environment, human rights, a lack of
  integrity or society
• There are adequate controls in place to monitor
  and manage material risks and opportunities

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About stakeholder expectations (2)

• Remuneration is linked to overall performance
  which includes social, environmental and
  financial aspects
• There is an interactive communication with the
  stakeholders who are strategic to the companys
  business and
• The company is conducting a sustainable business

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• 82 international companies have joined the
  Integrated Reporting Pilot Programme which
  launched in October 2011
• Pilots will explore ltIRgt in the context of their
  organisations and be critical to the development
  of an Integrated Reporting Framework
• Leading companies and investors developing and
  exchange good practice in this two year programme

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Current reporting - what is an IR?
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Actual and expected benefits of ltIRgt so far

• Two primary benefits identified
• reporting against KPIs which align to the
  corporate strategycooperation and collaboration
  across the business
• Numerous other benefits include
• telling the story about what the core business
  does
• risk assessment focused on material risks
• wider knowledge of non-financial business drivers
• discussing the future considering finance and
  sustainability
• knowledge across the business and sharing best
  practice

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Our Future Direction

• Continue developing the IR Framework
• draw on Pilot Programme experiences
• Exposure Draft in 2012
• Work with others on measurement and reporting
  relevant to IR
• Explore with regulators etc opportunities to
  harmonise reporting requirements within and
  across jurisdictions
• Conduct regional roundtables and other engagement
  and communications activities public
  consultation regarding ongoing governance of
  Integrated Reporting
• G20 Moscow 2013 support for mandatory, global
  standard development

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• IR Framework needs Russian input to be truly
  global!
• RosAtom and Rosneft are leading the way will
  other corporates
• follow?
• Corporate Governance and transparency issues
  can be covered
• by adopting IR
• MIRBIS demonstrating the importance of academia
  and educational
• involvement development of future skill
  sets
• We welcome you to join the IR Pilot Programme,
  IIRC working
• groups and get the word out about IR!

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C??????
Please contact us Henning Dräger _at_
henning.drager_at_theiirc.org Mobile [phone]
37 Work 38 044 393 26 87 www theiirc.org