Now that has entered into its new "Breaking Through" strategic phase, many scholars and practitioners wonder if the IIRC ever achieved it previous strategic goals. With financial support of the IIRC Network falling and a lack of take-up in key strategic markets, is the IIRC doomed to fail as Flower (2015) predicted from the onset, or do we see a new strategic revival?
IIRC has little influence but it is important to remember that the UK has an active Financial Reporting Council and some other countries have the same. They are developing IR but it is a slow step at a time
IR is slowly getting traction, as the great challenge is to first insert the correct concept and the general idea of multi-capital value creation and integrated thinking in the board rooms and management floors. We are still in a phase where mandatory reporting is giving the pace and the value of forward thinking models as IR is not yet recognized, as many companies find it a struggle to respond to growing demands of social and environmental reporting. Once ESG-reporting flows naturally, it will be the logical next step to provide an interconnected sight which both accountants and more sustainability oriented stakeholders consider a the model that will provide them much more than performance information. Maybe the breakthrough will be slowly, but constantly and irreversible.
John C Dumay The value creation process is not really clear. How do you measure value? There is no specific metrics in measuring value but the IIRC have seen proudly mentioning value creation over and over again. It could be frustrating to the practitioners and the financial reporting preparers (aka Chartered Accountants) when finding themselves preparing the and hoping to deliver VALUE but finding themselves producing a fancier version of the Annual Report and Sustainability Report combined in a sophisticated manner. Further to that, there are claims saying that the is not a combination of the Annual Report and the Sustainability Report. To add on to this challenge, the measurement of the items stated in the Framework published by the IIRC in 2013 is not stated anywhere. Accountants being 'bean counters' are usually fascinated at measuring anything that they can get hold of but looking at the Framework would be a challenge when dealing with the qualitative nature with no measurement indicators in sight.
Further to that, the 8 content elements could be a challenge to work with as the major issue would be only 2 items- the Business Model and the 6-Capitals which are duly a challenge to disclose to the public in a corporate report meant to be published for companies listed on the Stock Exchange.
The major question would be - why should I disclose my Business Model to the public? That is like giving away my trade secret.
Further to that the 6-capitals are split between two groups, which are the 3 human related capitals (Human, Social and Relationship & Intellectual) and 3 non-human related capitals (Financial, Manufactured and Natural) would be another challenge for large PLCs to disclose as the 3 non-human capitals could be...could be...but I am not really sure...are glorified Share Capital, Non-Current Assets and Intangible Assets respectively.
The 3 human-related capitals are practically impossible to disclose as these figures are usually kept private and confidential within the books of the Top Management.
Integrated Reporting will try adjoin between financial results, business responsibility reporting and sustainability reporting, along with Corporate Social Responsibility reporting. It will provide the required information to make better decisions.
Leana Esterhuyse I totally agree with you. I guess if the is portraying lesser quality and lesser quantity of information than what investors can get from the roads shows, private meetings, results release and investor days just to name a few (as what you mentioned earlier)....why do these investors need the ?
What is the supposed to tell the shareholders that the detailed and personalised private investor meetings can't?
It could boil down to the fact that nobody really knows how to prepare the real except the IIRC who are the founders of the and secondly the IIRC has great intentions to integrate an organisation via the but in essence the organisation itself is not integrated in the first place before preparing the .
If organisations are not integrated in thinking or integrated in their actions, then you will not be able to prepare a report such as the to reflect such integrated quality practiced on a day-day basis.
I am looking at the Framework published in 2013 and I still cannot digest on how the traditional financial statements (SOFP, SOCI, SOCIE, SOCF and the notes to the accounts) are supposed to link or 'integrate' with the 8 Content Elements.
Sanjeev Bansal, I think your views are typical of those who believe the IIRC's rhetoric. None of the claims made by the IIRC has been proven, and the research that alludes to research integrated reporting does not even consider whether the reports follow the IIRC guidelines, or are based on reports prepared prior to 2014. I think you need to read my latest paper in The British Accounting Review to understand the power of the rhetoric that you have been caught up in. Leana Esterhuyse has some excellent insights, and you should pay attention to them and open your mind and make a critical assessment. After all, a critical and realistic assessment of the IIRCs aspirations towards further promoting what former CEO Richard Howitt calls multicapitalism should guide you to the underlying ambitions of the IIRC. You only have to look at who is providing the money for the IIRC to operate, being the accountants and their mates in big business to understand that the not so hidden agenda is promoting multi-capitalism, not the well being of the planet and society.
I perceive a crisis within IIRC and I think it has been a reflection of its institutionalization difficulties. In Latin America very few companies use it. A small number of companies use it, but only partially. Even in the pioneer Latin American companies, today the IIRC criteria are used with very little depth.
Hi Hugo A. Macias , yes this is typical of most adapters (instead of adopters). I see 's light beginning to fade... I have seen some reports that actually use the Framework, and they are very confusing, so it is no wonder that there is normally partial use.
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