To create the globally accepted International <IR> Framework that elicits from organizations material information about their strategy, governance, performance and prospects in a clear, concise and comparable format, and within the context of its external environment.
For <IR> to be accepted globally as the corporate reporting norm.
The IIRC has developed an International <IR> Framework to govern the overall content of an integrated report. This comprises:
Fundamental concepts – The capitals (financial, manufactured, intellectual, human, social, and natural); business model; and the creation of value over time.
Guiding principles - Strategic focus and future orientation, Stakeholder responsiveness, Materiality and conciseness, Reliability and completeness, Consistency and comparability.
Content elements - Organizational overview and external environment; Governance; Opportunities and risks; Strategy and resource allocation: Performance; Future outlook
The framework is being tested in a global, cross sector consultation and pilot. The pilot will continue until September 2014, it currently comprises:
The Business Network with over 100 businesses across the globe from multinational corporations to public sector bodies (inc Danone, HSBC, M&S, Prudential, Sainsburys, Coca Cola, Tata Steel, Unilever)
The Investor Network with over 35 investors organizations (inc Deutche Bank, Goldman Sachs, Hermes)
Key findings (from the ongoing pilot) include:
Business model: Some companies are identifying new business models in terms of operating structures, brands and product or service offerings; Reporting on the business model in an integrated way can provide insight into how external factors drive risks and opportunities that define markets and influence value creation.
Value: There is growing recognition that a wide range of factors create value in the short, medium and long term; Recognising value creation more comprehensively can help identify value at risk.
The capitals: Many companies are initially strengthening measurements of corporate key performance indicators (KPIs) in relation to the capitals, as part of understanding their strategic significance to businesses; Finance departments are becoming accountable for more than financial information;
Connectivity: Connecting information can facilitate more productive dialogue between employees, break down ‘silos’ and lead to stronger cross-functional communications; Integrated decision-making can contribute to more meaningful dialogue with external stakeholders.
Materiality: Several investors have called for Annual Reports to clearly identify material risks and the financial and strategic implications of all the capitals; Materiality assessments can be useful to identify and prioritise issues that could be material to the organisation’s value in the short, medium or long term; Companies can connect internal and external information on all of the capitals to identify material issues that are relevant to strategy development.