The International Integrated Reporting Council (IIRC) has announced that it will release guidance to address implementation challenges of integrated reporting, following a global consultation.
The IIRC published the results from its global consultation launched in March 2017 on the Integrated Reporting <IR> Framework where respondents mainly criticised the multiple capitals approach, connectivity and integrated thinking.
The multiple capitals approach extends the notion of capital in a traditional economic sense to broader sustainability issues but it was described by respondents as too difficult to apply in practice and they expressed a need for guidance. Another issue brought up by the respondents was improving and resolving market understanding of the multiple capital approach, in particular for stakeholders.
Respondents also highlighted that the connectivity of information suffers from clear implementation challenges in practice. They added that experience and the senior management buy-in is vital to the successful adoption of integrated thinking. “Struggling with the foundational concept of integrated thinking could be a potential reputational risk for the IIRC,” one respondent said. Respondents argued for a stronger focus on integrated thinking with guidance and examples.
Therefore the IIRC said it would develop guidance to help with the practical implementation and that research would be commissioned into the extent that connectivity of information improves decision making. The IIRC said that issues would be addressed with developed Frequently Asked Questions and the <IR> Examples Database as forms of guidance, or that research would be considered.
IIRC CEO Richard Howitt and IIRC board chair Barry Melancon said: “We have carefully considered the small number of suggestions made in this exercise for Framework revisions, and concluded that none are of immediate concern to justify making those changes now. However, we undertake to consider those suggestions further, along with other feedback, as the IIRC implements the actions.”
The consultation received 400 submissions, including from regional focus groups across 19 countries. The majority of the consultation feedback (29%) came from consultants or assurance providers and 24% came from report preparers. Seventeen percent of the feedback came from professional bodies or industry groups, 10% from regulators and standard setters and only 8% from report users. By region, the majority of responses (38%) came from Europe, followed by 21% from Asia, and 12% from “International”, an undefined collection of results.
The framework aims to implement integrated reporting internationally and since its release in December 2013, 1,500 businesses in 62 countries are using the integrated reporting framework to support their reporting, according to the IIRC. The IIRC intend to consider upgrading their strategy over the next 12 months but they do not expect changes to be implemented until 2019.