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December 11, 2020 06:11 PM

Where the integrated reporting begins? - following the Global Events 2020

Posted by Anna Vysotskaya

During the recent events organised by EAA, IFRS, IIRC, the main issues raised by speakers go in line with the global needs for sustainable development as a one of the key challenges.

Broader value creation, how companies can contribute to our future, evolution of the concept of materiality - these are the key issues to address nowadays by business society.

The world is rapidly switching from Traditional to Integrated Reporting and therefore we will no longer be able to focus only on financial information, nor we will be able to afford a retrospective view with limited disclosures.

In contrast, companies are changing their practice to a future-oriented view with more strategic focus and those that haven’t start the process yet, will face this need in near future.

During the conference sessions, several views were presented in terms of where to move to while developing sustainability. Some model based on Capitals Value creation Inputs, Performance, Risk management, Strategic focus and resource allocation and External environment were represented according with the samples of most advanced integrated business models and reports, including Borsa Istanbul (Turkey), Goldfields (Australia), Sanford (Australia), United Utilities Group PLC (UK), Munich Airport (Germany), etc. All those are examples of quite advanced reports while standing for authentic.

In this sense, companies are required to tell their own value creation story and this story must be convincing, making investors to understand the whole model so that they come to the decision to have particular shares.

There are still many unresolved questions that need further attention by both, practitioners and academia (not exhaustive):

-          How to move to a system that will go through the all capitals?

-          Should the disclosures be integrated in the life of the company?

-          Is there sense in globally harmonized standards for Integrated reporting?

-          How to reflect investor’s relations through the reporting language?

Another branch of discussions in terms of Integrated reporting refers to the Materiality, as a core principle of corporate reporting. IIRC’s Global Conference included a special session held by Dr. Laura Girella on the materiality as an absolutely necessary factor for the report preparers as well as for the report users. The session highlighted the importance of the understanding that there is no information overload and/or information noise. After the decades of changes in reporting standards and practice, we can now conclude that today there are at least four different concepts of materiality (financial, ESG, value, double materiality). All those are happened to be differently followed by various reporting organizations.

Therefore, most of the academics and practitioners will agree that the voice of progressive business is crucial and should be followed up by the academic society.

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About Anna Vysotskaya

Higher School of Economics
Associate Professor

Anna is an Associate Professor at the School of Finance, Higher School of Economics. Anna has teaching and research experience in Accounting and Finance in Russian and foreign Universities. Being an experienced director of acodemic resources, Anna...

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