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The Bruce Column — Integrated Reporting achieves lift-off

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Dec 09, 2013

The international integrated reporting framework has finally been published. Here our regular resident columnist, Robert Bruce, looks at why it has the potential to be revolutionary and what is likely to happen next.

The essence of integrated reporting appears on page 17 of the new framework, released today. "The more that integrated thinking is embedded into an organization’s activities, the more naturally will the connectivity of information flow into management reporting, analysis and decision-making, and subsequently into the integrated report."

It has been a long and intense journey to reach this point. The concept of connected reporting came to the fore in the work of the Prince’s Accounting for Sustainability Project back in 2009. This week the International Integrated Reporting Council (IIRC), which sprang out of that project, has issued its full framework explaining and showing how integrated reporting can become, and is already becoming, the accepted "process founded on integrated thinking that results in a periodic integrated report by an organization about value creation over time and related communications regarding aspects of value creation." In other words, it brings together all the aspects of a company, its business model, and its relationships, both internal and external to show the outside world how it all works while also transforming the potential of the organization internally through the same process of understanding.

What was originally being discussed in a small meeting room, once upon a time Prince William’s bedroom, in St James’ Palace in London, is now mainstream and global, with over a hundred companies around the world taking part in its pilot program. And it is a persuasive and evolutionary process. This is not something being implemented from the top down. The IIRC has been patient and painstaking in trying to create something which is market-led and answers corporate desires for a better way forward. Sensibly it could see that the chances of acceptance and goodwill towards the process depended on that.

The benefits, experience, and lessons learned from the pilot program will enable many others to take part with reasonable confidence. The momentum will bring more organizations around the world into the fold. The fact that the IIRC is a global coalition of regulators, investors, companies, standard-setters, the accounting profession and NGOs gives it enormous strength.

There are still issues. Some prefer greater precision and regulation in their lives than the integrated reporting framework insists upon. Some feel it may lead them into greater initial complexity. But the underlying philosophy, that of benign guidance towards an environment where "integrated thinking" will enable organizations to see their world and its connections anew, will help. As the introduction to the framework puts it, "The cycle of integrated thinking and reporting, resulting in efficient and productive capital allocation, will act as a force for financial stability and sustainability."

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