There will be no slowing of momentum at the International Integrated Reporting Council. Richard Howitt, its new chief executive, has hit the ground running. In a film interview I did with him it was clear that global adoption of integrated reporting and its use as a catalyst for much reform of global corporate governance systems is going to feel the full force of his powers of persuasion and implementation. As an MEP Howitt was involved with integrated reporting almost from the outset and now he has taken over from Paul Druckman as chief executive. After Druckman’s five years of travelling the world and building momentum behind integrated reporting ideas, Howitt says he feels ‘a huge responsibility on me to drive it forward’, with hopes of moving ‘towards global adoption’. He intends there to be a seamless but equally energetic transition. ‘I bring huge energy and ideas to the task’, he said, ‘but I am absolutely signed up to the concept and there will be big continuity’.
The Druckman years were of building experience, understanding, acceptance and momentum. Now Howitt can build on that. ‘I want to send a very clear signal to all our international partners that IIRC continues and will be enhanced as a global coalition and a global movement’. The spreading of the word and the spreading of its application in practice is, as Howitt put it, ‘deeply exciting’. He is encouraged, as he put it, ‘that no one single company anywhere in the world having decided to go down the road of integrated reporting has gone back on that. They see the advantages’. And he is working off the back of successes. In Japan over 300 companies are producing integrated reports. In Malaysia over 20 major companies are committed to producing integrated reports. And South Africa has just introduced a new corporate governance code that explicitly embeds integrated reporting within it. ‘This is something with deep international momentum behind it’, said Howitt. ‘There are going to be very exciting times in the months and years ahead’. But it is not about simply implementing a system. ‘This is not a numbers game’, he said. ‘It’s not about quantity. It’s about quality’. And it is about a much wider influence. ‘We want integrated reporting to be a key part of corporate governance’, he said. He talked of the debates going on around the world about reform of the capital markets, the shift to long-termism by investors. ‘All those are our debates’, he said, and across the coming five years ‘integrated reporting will be seen as a means, a tool, by which these aims can be realized and we will be at the heart of shaping that debate’. And within companies it will be just as powerful a tool. ‘Integrated reporting is not an add-on’, he said, ‘not disclosure for disclosure’s sake, but genuinely about companies building long-term value, being better managed, understanding and managing risk, and therefore reducing costs but creating value. This is a very, very strong message’.
And it all has a wider significance around the world. Howitt sees it as being at the heart of the debate around the idea of inclusive capitalism, articulated by the UK’s Prime Minister but also, as Howitt pointed out, a global movement. He hopes the UK Government will take to heart his views that within company law politicians, in his words, ‘stick to a backward looking definition of shareholder primacy’, whereas in the Corporate Governance Code ‘they are working exactly along the lines that the IIRC does to say that there should be a concentration for boards and for executives on long-term value creation’. Talking about the conversations the IIRC has had with Government Howitt pointed out that ‘we have said to them that aligning corporate governance codes and stewardship codes to the principles of integrated reporting and long-term value creation is an important contribution’.
He also wants, through the Corporate Reporting Dialogue, to bring the major standard-setting frameworks involved in both financial reporting and sustainability reporting around the world together. ‘I am very proud that we have convened and led that work’, he said. And he also raised the importance of the accounting profession as a key element in the change that integrated reporting is bringing about. ‘The accounting profession have been key drivers in this’, he said. ‘They share the same aim of wanting better corporate reporting. They don’t want to be part of the old compliance world. They want to ensure that their work is improving the management for good business strategy. It is all part of that long-term value creation story’. And he urged the profession to bring its skills to bear on traditional areas like assurance, hitherto rarely discussed in the integrated reporting arena. ‘It shows how important it is for the accounting community internationally that we drive ahead on this goal of assuring integrated reporting’.
He is also very keen to ensure that business is not seen in the public arena as something untrustworthy. He is keen to speak up for business. He sees more moral strength in business than elsewhere. His view after the recent Rio Summit for sustainable development is that ‘there was no doubt there that the business leaders were ahead of the governmental representatives on what they wanted to see’. And his experience around the international business world generally leads him to say: ‘I am not meeting people who are morally neutral and ambiguous people’, he says. ‘I’m meeting people with vision, people with passion, people who are committed, who can see they have the opportunity in their business, in their work, to be able to realise aims that many people outside of business would share’. He intends using his energy to put this across and build it into the international debates taking place. ‘It is part of how we are going to deliver integrated reporting ‘, he says.