Integrated Reporting will challenge thinking on value creation – WBCSD

The launch of the Consultation Draft of an Integrated Reporting (IR) framework is set to challenge the status quo of value creation and transparency in financial reporting, according
to the World Business Council for Sustainable Development (WBCSD).

Businesses and organizations worldwide are being urged to take part in WBCSD workshopsheld during a 90-day consultation period to review and provide input to the International Integrated Reporting Council’s (IIRC) IR Consultation Draft Framework.

Peter Bakker, President of WBCSD and Deputy Chair IIRC, said business feedback is essential to improving the Consultation Draft to arrive at a workable framework for business.

“This is the next step in the evolution of reporting financial and sustainability performance in an integrated and transparent way,” said a statement.

“…We believe that what gets measured gets managed. Investors need to take a more holistic view of an organization, not just the financials. This is the start of the journey to better corporate reporting.”

IR is currently voluntary for business. The IIRC has designed the Consultation Draft with investors as the primary user, setting out the principles for a business to follow, linking strategy with financial and non-financial capital streams.

IR will describe and disclose how an organisation’s business model uses financial and non-financial capital in producing value. The Consultation Draft will not provide rules for an integrated report but a framework so that that an organization can determine how it should disclose its value creation in the short, medium and long term.

Bakker urged senior management to embrace IR and to ask management boards to look at how they can improve the linkage between strategic intent and performance.

“Financial capital is disproportionate in the way in which a company is valued. Social and environmental impacts are not recognized to the extent they need to be in investment and capital allocation decisions. This is short sighted,” he explained.

“IR is also about giving credit where credit is due. A company that leaves the environment and the community better off than when it started should have this reflected in its true value proposition.”

The World Business Council for Sustainable Development provides a forum for its 200 member companies – who represent all business sectors, all continents and a combined revenue of more than $7 trillion – to share best practices on sustainable development issues and to develop innovative tools that change the status quo. The Council also heads a network of 60 national and regional business councils and partner organizations, a majority of which are based in developing countries.

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