The call for integrated reporting[edit]
Capitalism relies on the efficient allocation of capital to deliver returns to
investors over the short, medium and long term. It is the job of companies to
manage the financial capital that investors provide and also to create and
preserve the value generated from other forms of non-financial data such as
people, trademarks/copyrights and natural resources or nature, the basis of all
life. The western model of capitalism has been questioned following the onset of
the banking crisis in 2007 because of its apparent dependence on short-term
financial factors over other forms of capital and longer time scales. Corporate
reporting no longer reflects the needs of the 21st century, resilient capitalism
needs financial stability and sustainability in its exchange with nature in order to
succeed – and Integrated Reporting is intended to underpin both of these
problems through communicating to providers of financial capital the
information that they need. Therefore, a report of financial data is no longer
sufficient, but has to be extended with information about our exchanges with
nature,[4] as money is not natural, but a 7,000 year old cultural invention.
Nature has never invented a means for its exchanges.
At the heart of IR is the growing realization that a wide range of factors
determine the value of an organization – some of these are financial or tangible
in nature and are easy to account for in financial statements (e.g. property,
cash), while many such as intellectual capital, competition and energy
security are not. IR reflects the broad and longer-term consequences of the
decisions organizations make, based on a wide range of factors, in order to
create and sustain value. IR enables an organization to communicate in a clear,
articulate way how it is drawing on all the resources and relationships it utilises
to create and preserve value in the short, medium and long term, helping
investors to manage risks and allocate resources most efficiently.
It is therefore necessary, to extend the reporting of only financial data with
ecological data, for example about carbon dioxide emissions a company
generates. When according to the 2015 Paris climate agreement carbon dioxide
emissions should be reduced, than at first a report about this is necessary to aim
at saving them. Integrated Reporting therefore needs two sides, the financial
balancing data as well the non-financial ecological data, it must aim at two
achievements: annual financial profit per as well as profit for nature, e.g.
reductions in CO2 emissions.
History of integrated reporting[edit]
In 2009, the Prince of Wales convened a high-level meeting of investors,
standard setters, companies, accounting bodies and UN representatives
including The Prince's Accounting for Sustainability Project,[5] International
Federation of Accountants (IFAC), and the Global Reporting Initiative (GRI), to
establish the International Integrated Reporting Committee (IIRC), a body to
oversee the creation of a globally accepted Integrated Reporting framework. In
November 2011, the Committee was renamed the International Integrated
Reporting Council.[6]
