IIRC and SASB to merge
a blog by Jessica Fries, Executive Chairman, A4S
Over 10 years ago, discussions to establish the International Integrated Reporting Council began. It was at about this time in November 2009 that I was putting the finishing touches to a discussion paper to be launched at the A4S Summit that year, a copy of which is linked below, and finalizing the guest list for a roundtable which His Royal Highness The Prince of Wales hosted to agree the proposals. Those proposals were for the establishment of the IIRC. The following July, we held the first meeting of the IIRC, at the time housed within A4S, and run in partnership with GRI and IFAC, with the following aims, extracted from the papers of that meeting:
Background The over-consumption of finite natural resources coupled with the very real risk of catastrophic climate change are possibly the greatest challenges facing the world. An effective response to these challenges will require deep-seated changes to our current economic model. Information currently required under accounting standards and listing rules does not fully reflect material environmental and social factors, such as climate change, resource use or human rights, despite the fundamental impact that these factors have on an assessment of both the current and future performance of an organisation and its contribution to the creation of a sustainable economy. Where organisations disclose this information, it is seldom presented in a manner which is connected with strategic direction and financial performance, assists comparison between businesses and years or makes clear risks and opportunities. Aims and objectives of integrated reporting The IIRC is being created to respond to this need for a concise, clear, consistent and comparable integrated reporting framework structured around the organization’s strategic objectives, its governance and business model and integrating both material financial and non-financial information. The objectives for an integrated reporting framework are to: a) support the information needs of long-term investors, by showing the broader and longer-term consequences of decision-making; b) reflect the interconnections between environmental, social, governance and financial factors in decisions that affect long-term performance and condition, making clear the link between sustainability and economic value; c) provide the necessary framework for environmental and social factors to be taken into account systematically in reporting and decision-making; d) rebalance performance metrics away from an undue emphasis on short-term financial performance; and e) bring reporting closer to the information used by management to run the business on a day-to-day basis. |
Ten years on and enormous progress has been made. We are at an exciting point where the vision that we developed for reporting so long ago is at last becoming a reality. The merger of the IIRC and SASB is an important milestone in its realization. The work of the two organizations is very complementary. The IIRC has developed a framework which helps organizations to reflect the impact that material social and environmental issues have on their strategy and decision making; SASB provides sector-specific metrics that can help to illuminate how these issues impact financial performance.
Over the coming months, we are likely to see further, rapid developments towards a corporate reporting system which provides the information we need to guide our decisions towards a sustainable future.
We look forward to working with our colleagues in the newly formed Value Reporting Foundation, and wish them every success in the merger.
To find out more click here to visit the IIRC website.
