Pity the corporate reporting team who has to choose between a dizzying array of sustainability, non-financial and integrated reporting standards to satisfy growing stakeholder and investor demands for clarity and comparability in reporting. It’s not an easy or straightforward task.
Enter the Corporate Reporting Dialogue, a coalition of major international corporate reporting standard-setters and framework providers. Earlier this month, they announced a groundbreaking, two-year project focused on driving better alignment in the corporate reporting landscape.
“Businesses are choking on the so-called ‘alphabet soup,'” Richard Howitt, CEO of the International Integrated Reporting Council (IIRC), which convened the Corporate Reporting Dialogue, wrote in Accounting Today.
The two-year project brings together financial reporting standard-setters (the International Accounting Standards Board and the Financial Accounting Standards Board) and the four most comprehensive and global of sustainability frameworks—the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), the Climate Disclosure Standards Board (CDSB) and CDP. They will work together on a quest for clarity, coherence, consistency and comparability between the different reporting frameworks.
“It is still a lot of acronyms, but one that holds out a real prospect that we can ‘cut the clutter’ in business reporting,” Howitt wrote.
A poll of audience members at a World Congress panel on framework alignment demonstrated the need to bring the frameworks together. They were asked: "Do you find, either as a preparer or as a user of reports, the corporate reporting landscape easy to navigate?" Almost three-quarters of respondents—coming from a variety of nationalities and organizations, but all in professions related to accountancy—answered no.
“The market told us it wanted greater alignment between frameworks, and this project sends a clear reply that this message has been heard and is being acted on,” Howitt wrote in Accounting Today.
The clarity will be welcomed by companies, with an ever-growing number making the decision to do non-financial reporting. According to the Governance and Accountability Institute, 85 percent of the companies in the S&P 500 Index published sustainability or corporate responsibility reports in 2017.
This will not be an internal technical exercise between the frameworks, Howitt promised, but an open process with structured communications, outreach, and stakeholder engagement “to seek to ensure the market is ready, excited and prepared to engage with the results,” he wrote.
An important aspect of the project is to achieve the ultimate aim of integrating financial and non-financial reporting. Today, 1,600 global companies have already adopted integrated reporting.
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