By Nancy Mancilla
The current definition of “integrated reporting” according to the IIRC, is “a process that results in communication, most visibly a periodic ‘integrated report’ about value creation over time. An integrated report is a concise communication about how an organization’s strategy, governance, performance and prospects lead to the creation of value over the short, medium and long term.” Essentially, the goal is to promote "integrated thinking" in a manner that tells the “corporate story” for investors on how financial and non-financial reporting line up and how true performance is determined by equating all features of day-to-day operations.
Like GRI’s principle-based methodology (Boundary, Content & Quality), the IIRC framework centers on specific principles; IIRCs six capitals include financial, manufactured, intellectual, social and relationship, human, and natural. The premise is that financial and manufactured capitals are already regularly reported, but if the other capitals are worked into the equation, “integrated thinking” will result in value creation.
Even as early as 2009, GRI had already started to take note of the practice in Europe. In recognizing the potential for global acceptance, GRI, IFAC and A4s launched the IIRC championed by the Prince of Wales in August 2010. Like GRI, the IIRC coordinates the development of the Framework on behalf of a wide range of interested parties, particularly from the accounting profession. In addition to a formal MOU signifying commitment from the two bodies to continue harmonizing efforts, GRI’s Board of Directors has already made the alignment a priority within the G4. We can expect to see the synergies, and differences, more clearly outlined. For the most part, GRI is much broader in scope; "materiality" includes all material sustainability impacts of an organization, its stakeholders and society, while IR is a specific story for investors.
Over the last few years, the integrated reporting development committee has publicly launched their draft document and has tested it on 65 organizations and 20 institutional investors, including several U.S.-based corporations such as Microsoft, Edelman, Cliffs Natural Resources, Coca-Cola, PAX World, Rockefeller Financial, and Calvert to name a few. Shortly after the final public consultation period closes on July 15th, the world will have access to what was confirmed.
We can already start to get a sense for what’s ahead. The Port of Rotterdam, in the Netherlands, is one organization that has already taken this a step further. After publishing an integrated report, they requested their assurance provider develop a supporting verification methodology.
Unfortunately, the current forecast for implementation in the U.S. is much like sustainability reporting was five years ago: pessimistic. According to a study released last month by the Investor Responsibility Research Institute, “disclosures by U.S. companies are largely not integrated in making the connection to the bottom line or presenting the information in the context of business strategies.” Though trailblazers exist, the bottom line is that we still have a long way to go and it’s collaboration that will smooth the path ahead.
In an effort to bring everyone up to speed, we will be reporting LIVE from Amsterdam with 3p and will be following up with a free one-hour webinar to brief everyone on those changes. We’ll also be tacking on a G4 bridging module to all ISOS scheduled courses through the remainder of 2013.
Disclaimer: The thoughts shared here should not in any way be taken as factual evidence supporting expected G4 changes. They are based on the thoughts of affiliates of GRI in the U.S. who are worthy of sharing perspectives of how possible changes may be implemented upon the release of the final G4 document at GRIs Amsterdam Global Conference on Sustainability & Transparency May 22-24, 2013. This piece is part 4 out of 5 in a series of weekly postings leading up to the global conference and will be revisited after the release of the G4.
Nancy Mancilla is Co-Founder of ISOS Group - a GRI Certified Training Partner and informed by Marjella Alma @ GRI US Focal Point.