1. The future of corporate reporting is Integrated!
Хеннинг Драгер
Relationships Manager
International Integrated Reporting Council (IIRC)
МИРБИС - 18 апреля 2012

2. 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!

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

4. Our choice… “Window dressing” Strategic accounting for & integration
Business as usual reporting
Strategic accounting for & integration
of all impacts
Strategic resource allocation

5. 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 company’s customers,
vendors, and employees
Shapes how a company sees itself

6. Challenges Non-financial Financial Lack of standards Complexity
Meaningful narrative information
Reporting on risk, executive compensation and corporate governance
Auditing for fraud
Lack of standards
Lack of common terminology
Definition of “materiality”
Underdeveloped audit methodologies
Controversial role of the Global Reporting Initiative
Competing standard setters

7. Corporate Reports: Increasing length and complexity
Prudential annual report pages
Key point: …even though it is trying (quantity over quality)
Undue focus and commitment of effort on financial aspects of model
Lacking in strategic focus (wood for trees)
Increasing length, complexity and clutter in reports (haphazard evolution)
External reporting increasingly separate from internal management information
Governance reporting (last place to look)
Sustainability reporting - often a stand alone silo
Uncertainty on what's audited
Source: Investis research - PwC

8. “Corporate reporting…has got too big, too cumbersome
and incomprehensible …”
Source: Tomorrow’s Corporate Reporting : A Critical System at Risk – CIMA and PwC

9. INTEGRATED REPORTING IS...

10. The evolution of Reporting…

11. …Integrated Reporting – the Future

12. IR Elements

13. Central themes Business model & value creation

14. 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

15. 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
Hermes EOS
General Commissioner, France
Railpen
IGOs
UNCTAD
World Bank
IFAC
ACCA
JICPA
SAICA
Accounting
ICAEW
PwC, E&Y, GT
Deloitte, KPMG, BDO
Civil Society
Transparency International
WWF
WRI
A4S
Academia
Harvard University
University Sao Paolo
University New South Wales
Volans

16. 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;

17. 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 company’s business; and
The company is conducting a sustainable business

18. 82 international companies have joined the Integrated Reporting Pilot Programme which launched in October 2011
Pilots will explore <IR> 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

19. Current reporting - what is an IR?
We didn't define what IR is, we come back to this in the technical update. 30% think they will publish one - understanding what this is will help development of Framework.

20. Actual and expected benefits of <IR> so far
Two primary benefits identified:
reporting against KPIs which align to the corporate strategy cooperation 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
Overwhelming comments on the 2 primary benefits
There were also other benefits, this is just the main ones

21. 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

22. 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!

23. @: henning.drager@theiirc.org
Please contact us:
Henning Dräger @:
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www: theiirc.org