Accounting groups meet to discuss integrated reporting and sustainability

Top officials from the International Integrated Reporting Council, the Institute of Management Accountants and the International Federation of Accountants met in New York to discuss what steps they can take to enhance integrated reporting to provide better information on sustainability and other non-financial matters.

“IMA is pleased to be a leader in transforming corporate reporting around the world to better develop, deliver and communicate value creation capacity and capability over time,” said IMA President and CEO Jeff Thomson at an event Thursday evening following the meeting. “We were early adopters of the balanced scorecard and strategy map nearly three decades ago. It is all about an integrated approach to strategy formulation, strategy execution and strategy communication, both internally and externally.”

He noted that the world’s two largest economies, the U.S. and China, are priority markets for the IIRC, pointing to a July report from the Conference Board that offers insights on the U.S. market for integrated reporting. “We have to do better,” said Thomson. “The Conference Board’s report is a call to action.”

“I would commend the Conference Board report to all of you,” agreed IIRC interim CEO Charles Tilley. “It’s a great way of describing what integrated reporting is.”

IFAC CEO Kevin Dancey sees great demand for integrated reporting. “I think the call to action for the IIRC is to take this on,” he said. “It’s important to get this right. There’s been a huge demand by the investors and all the other stakeholders.”

Sara DeSmith, a partner and U.S. sustainability services leader at PwC is seeing greater momentum for integrated reporting this year in corporate America and among standard-setters and rating agencies, as well as the Big Four. “Our focus has been to help our clients figure out this brave new world of non-financial reporting and communicating with clarity and confidence to the capital markets,” she said. “I’ve never been more optimistic about long-term value creation.” She pointed to the recent statement by the Conference Board about the purpose of corporate America being responsible not only to shareholders but also to employees and communities. “That’s all really positive momentum to creating value,” she added.

To address the future of corporate reporting, and the role accountants can play in it, the International Federation of Accountants published a Point of View article Thursday on enhancing corporate reporting. “IFAC believes that integrated reporting, bringing together the relevant information about a company, provides a holistic picture of performance and provides insights on an organization’s ability to create sustainable value over time,” said the group. “Integrated reporting enables companies of all sizes and sectors and their stakeholders to focus on the key factors (or ‘multiple capitals’) relevant to long-term value creation through the lens of governance, strategy, and the business model.”

IFAC also posted an article co-authored by Dancey and Tilley highlighting the evolving role of CFOs and finance teams in accounting for value creation. “In contrast to financial reporting, integrated reporting provides a broader foundation for accounting for value creation,” they wrote. “It enables greater corporate accountability, communication and transparency. It allows the organization to better understand and communicate value creation. Importantly, we know that adopting integrated reporting enables an organization to think in an integrated way, which leads to better business outcomes. Too often, information is siloed, and decisions are made without complete knowledge or context for their ramifications. The more that this integrated thinking is embedded into an organization’s activities, the better the connectivity of information flow into management reporting, analysis and decision-making.”