The Bruce Column — Reporting on corporate strategy, not just the financial data

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21 Mar, 2014

Robert Bruce, our regular, resident, columnist talked to Paul Druckman, Chief Executive of the International Integrated Reporting Council, about how integrated reporting is about embracing the wider corporate realities instead of concentrating only on the narrow data.

The evolution continues. In his latest interview Paul Druckman explains how he thinks this should work. The CEO of the International Integrated Reporting Council, (IIRC), is determined that the implementation of integrated reporting should be a gradual acceptance, rather than a mandated imposition. And when I caught up with him recently to record our interview* he was in a relaxed frame of mind.

He is happy. After much work through pilot programmes and consultation around the world a full framework for the implementation of integrated reporting was unveiled late last year. Now he is in the business of maintaining the momentum and spreading the word into the upper echelons of business life. ‘We need to make sure people are aware that we are talking about an evolution in corporate reporting’, he told me.

This is where the approach is different. There have been many attempts to improve corporate and financial reporting in the past. But all of them have, to a greater or lesser extent, involved ripping up the past and implementing the new. And that approach has always failed.

This is not what integrated reporting is about. ‘There is still the stigma about this being about “another report”’, he says in the interview. ‘The challenge’, as he puts it, ‘is not to be “yet more”, but to be “part of” the evolution’. In other words he wants it to be seen not as overload but as part of what people are trying to do anyway.

And for that to work there has to be an understanding that he is talking about corporate reporting in the wider sense rather than financial reporting in the narrowest. Often ‘their mindset is in compliance’, he says of the financial reporting community. ‘Their mindset is not: “What information is useful?”’ This is where the change has to come.

And the same applies to investors. Integrated reporting will, he says, ‘enable them to look at the company through the door of strategy rather than only through data’. Companies, he argues, already think this way. It is just that reporting systems have not always encouraged or required them to explain it clearly. ‘Any good company is going to be thinking strategically’, he says. ‘Integrated reporting is about demonstrating that integrated thinking’. Indeed there is a drive in many jurisdictions for narrative and financial reporting to work together more effectively to provide a coherent and consistent story of the company’s performance and position.

So this is the direction in which corporate reporting is already travelling. Integrated reporting simply provides recognition of this and enables companies to work within the changes rather than struggling to keep up with them. It is ‘an articulation of your company’s strategy’, he says. And this is what allows the value of a company to become clear.

Looking ahead he sees the gradual implementation of integrated reporting as producing more thoughtful and useful information.  ‘In ten years’ time integrated reporting will be the corporate reporting norm’, he says. 

*The full interview with Paul Druckman is available at UK Accounting Plus, here.

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