The document discusses the evolution and significance of integrated reporting (IR) in enhancing corporate reporting, promoting sustainable organizations, and improving decision-making for better value creation. It highlights global momentum towards IR, with various countries endorsing its implementation and many organizations recognizing its benefits. Key insights include the importance of non-financial assets, the role of boards in strategic planning, and the need for companies to communicate a long-term value creation framework to investors.

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Success Through Integrated
Reporting
Stathis Gould
PAIB and Integrated Reporting Lead
IFAC
South Asian Federation of
Accountants / IFAC PAIB Forum
Mumbai, 23 April 2016

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Credit: The New Yorker
Sustainable Organizations, Markets, Economies
Sustainable Organizations, Markets, Economies

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• IFAC and IIRC strategic partners
• The global profession’s commitment to <IR> as a means
– Enhancing corporate reporting; and
– Enabling resilient and responsible organizations
• IFAC’s public interest mandate - Focus on profession’s
contribution to societal objectives
• Addressing the problems of the corporate reporting
system
IFAC and Integrated Reporting <IR>
IFAC and <IR> Integrated Reporting

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• Integrated Reporting an opportunity to
– Create value (internal benefit)
– Tell the story (external benefit)
• Research of IIRC’s Pilot Programme
Companies Realizing the Benefits,
The Impact of Integrated Reporting
• 71% - strategic benefits from <IR>,
the most important a change in conversations
between the board and management
• 79% reported improvements in management
information and decision making
Integrated Reporting – Communicating Value
Creation

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Pacioli created a lens through which a business and
its performance could be viewed and a way to hold
its owners to account.
While Pacioli’s focus was purely financial, Mervyn
King spearheaded a multi-capital approach to reflect
how value is created in a knowledge-based
resource constrained global economy.
—Paul Druckman, Financial Management, March 2016
From Pacioli to King

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Non-financial Assets (Intangibles)—The Most
Important Determinants of Value
Measuring & managing intangibles and connectivity
between financial and non-financials

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Positioning Integrated Reporting
INTEGRATED THINKING
Resulting in: Sustainable organizations, financial
markets, & economies
International
Standards
Financial
Performance
TransparencySustainability
Reporting
Overall
Performance
Story
Integrated
Reporting

8. International
Integrated
Reporting
Council
Global
momentum
towards <IR>

9. Over 1,000
organisations do <IR>
And over 35% say they will
750 participating in <IR> Networks
worldwide
Over 50% of CEOs, CFOs and COOs
are moving towards <IR>
182 Businesses
in Japan do <IR>

10. South Africa:
• Companies listed on the
Johannesburg Stock
Exchange have been
producing integrated
reports since 2010
• The Integrated
Reporting Committee of
South Africa endorsed
the International <IR>
Framework in 2014.

11. Japan:
• Around 200 companies
adopted Integrated
Reporting
• Japan's Ministry of
Economy, Trade and
Industry has endorsed
<IR> as a means of
communicating the long-
term value creation
proposition of
companies.

12. Singapore:
• The Singapore Stock
Exchange produces an
integrated report
• The Singapore
Accountancy
Commission is working
with the Ministry of
Finance to set out a
route towards
Singapore’s adoption of
<IR>

13. Malaysia:
• Malaysian Prime Minister,
Datuk Seri Najib Razak, has
said, “..the Securities
Commission, together with
professional bodies and
other stakeholders, is
exploring avenues to
enhance the quality of
information available to
the capital market. One of
the options being
considered is the eventual
introduction of integrated
reporting”

14. North America:
• Harvard Business School
research concluded that
“more <IR> is associated
with a more long-term
investor base”
• Businesses adopting <IR>
include PepsiCo,
Microsoft, GE and
Prudential Financial
• Larry Fink, CEO, Black Rock
called for CEO’s to
communicate their
strategic framework for
long-term value creation

15. The Netherlands:
• More than a third of
Dutch listed companies
are working towards
<IR>
• Eumedion, which
represents institutional
investors’ interests,
called on Dutch
companies to take
concrete steps towards
<IR>

16. Brazil:
• Brazilian Stock
Exchange
BM&FBOVESPA
encourages listed
companies to produce
integrated reports on a
‘report or explain’
principle.
• The <IR> network in
Brazil has over 300
participants

17. United Kingdom:
• The Strategic Report,
together with the
Financial Reporting
Council’s Guidance, is
consistent with
Integrated Reporting

18. India:
• The Indian <IR> Lab led
by the Confederation of
Indian Industry and
includes 9 leading
companies and support
from Institute of
Chartered Accountants
and Institute of Cost
Accountants, and the
Institute of Corporate
Secretaries
• SEBI has provided a
vision and momentum is
building

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We are asking that every CEO lay
out for shareholders each year a
strategic framework for long-term
value creation. Additionally,
because boards have a critical role
to play in strategic planning, we
believe CEOs should explicitly
affirm that their boards have
reviewed those plans. BlackRock’s
corporate governance team, in
their engagement with companies,
will be looking for this framework
and board review.
—Larry Fink, CEO, BlackRock
<IR> Momentum – Investor Demand

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<IR> Momentum – Investor Demand
Efforts by the International
Integrated Reporting Council to
develop a framework for reporting
value creation seem very much in-
line with what Mr Fink is suggesting.
—Sandra Peters, Head of
Global Financial Reporting
Policy, CFA Institute

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Public company reporting has
become so complicated that what
matters to investors can get lost.
Our priority is to provide
meaningful information that all
investors can readily access. For
investors to make investment and
voting decisions, we don’t believe
that more information is
necessarily better. Instead, we’ve
challenged ourselves to provide
better information…
—Jeff Immelt, GE 2015
Integrated Summary Report
<IR> Momentum – Telling the Story

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We use different words in the UK. Strategic
Report, not Integrated Report, but we are on
the same journey with the same purpose. The
principles in a UK strategic report are
consistent with an integrated report. And we
look forward to continuing to work closely with
the IIRC as it pursues its mission in the years
ahead.
—Stephen Haddrill, CEO,
Financial Reporting Council, UK
<IR> Momentum – Alignment to Management
Reporting
<IR> should not be seen as more reporting

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• Sustainable organizations and
societies ultimately depend on a
changing mindset, purpose, and
approach based on integrated thinking
• IFAC publication November ‘15:
– Vision and Framework for Integrated
Thinking
– Enhances the relevance of finance
professionals and links to business
partner agenda
– Focus on the information needed for
decisions that matter to value creation
Creating Value with Integrated Thinking
available on the IFAC website

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• <IR> is a journey; it will take more than one reporting cycle
– “Don’t try to do it all at once”
• Linked to strategy
– “Forward looking”
• <IR> should not be seen as just additional reporting
– “Embed integrated thinking in the organization”
• Don’t think of the Framework as a list of requirements
– “Tell your own, unique, value creation story”
• You are probably doing some/a lot of this already
– “Build on what you’ve got”
<IR> Implementation

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• A profession engaged and
connected
• Exchanging ideas, knowledge
and experiences
• Sharing resources
• Key staff and volunteers
involved
• How:
– LinkedIn
– Web based resources coming soon
<IR> Network for
Professional Accountancy Organizations

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IFAC: www.ifac.org/gateway

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IFAC Value Creation Model
Public
Interest
Input
Key
Resources
Key Value-
Adding
Activities
Key
Outputs
Key
Outcomes
Societal
Benefits
+ >>>
Our Values: Expertise, Integrity, Transparency

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• Alan Johnson - Board and finance leader perspective
• Sanjiv Kumar Chaudhary, ICAI Research Committee
• Heshana Kuruppu, CPD Committee, CA Sri Lanka
• Anwaruddin Chowdhury, PAIB Committee, ICA
Bangladesh
• Vrushali Gaud, India <IR> Lab update
• Q&A
Panel Agenda