Contents 02 Who we are
03 Strategy 03 Vision 03 Mission 03 Strategic phases and themes
04 Breaking through 04 From our leadership 06 Breakthrough moments 08
10 How we create value
12 Leadership 12 Governance 14 The IIRC Council 16 Board of Directors
18 External environment
20 Stakeholders 20 Our stakeholders 20 Delivering on stakeholder expectations
24 Materiality 24 Material matters 24 Our response to material matters
27 Performance 27 Increasing the pace and scale of integrated reporting adoption 29 Maintaining the
39 Acronyms
Scan to view the executive summary of the IIRC Integrated Report 2017 18 External environment 20 Stakeholders 24 Materiality 27 Performance 39 Acronyms 1
Reporting channels Responsibility for the Report Our annual report is in two parts. What you are As the Board of the International reading is the first part, 'IIRC Integrated Report 2017'. Integrated Reporting Council The other is 'IIRC Financial Statements 2017'. Both were released simultaneously. (a company limited by guarantee), we acknowledge our responsibility To balance the twin goals of conciseness and for ensuring the integrity of our completeness we have used multiple mediums and Integrated Report 2017. Together formats to effectively meet the diverse interests of our several stakeholder groups: with management, and reflecting on our operating context, strategy and The concise print version of the IIRC value creation model, we believe this Integrated Report 2017 is identical to integrated report addresses all matters its PDF counterpart. The latter, along that have, or could have, a material with the IIRC Financial Statements effect on our ability to create value. 2017 in PDF comprise our statutory annual report. We have applied our collective mind to the preparation and presentation The interactive online HTML version of of information in this integrated the annual report provides additional report, which has been prepared in supplementary information and features accordance with the International including those for ease of finding, Integrated Reporting Framework recording, extracting and sharing information. (
In addition, we have released an We have examined the content executive summary of the IIRC and presentation of our Integrated Integrated Report 2017 for mobile Report 2017 to ensure application devices for those who want a quick read of the requirements summarized on while on the go. pages 34-35 of the
report via email: [email protected] Report 2017 IIRC Integrated 2 02 Who we are 03 Strategy 04 Breaking through 10 How we create value 12 Leadership
Members of the Council include BlackRock, Tata Sons, Businesses and investors The World Bank, World Economic Forum, Ministry of Finance China, global CEOs of major accounting firms, professional globally now recognize a accountancy bodies from around the world and all major standard setters and framework developers in the corporate broader approach to reporting field. creating value. When incentives only reward short-term behaviour, our capital markets are weaker, society is poorer and our environment Our commitment to the Who we are suffers. Sustainable Development Integrated reporting is a broad-based framework for business and investment decisions that are long-term, inclusive and Goals. with purpose. We are committed to supporting the United Nations and its partners in building a better world in which no one is left The International Integrated Reporting Council (IIRC) is a behind. worldwide coalition with the mission to mainstream integrated thinking and reporting and to change the corporate reporting We indirectly reinforce all Sustainable Development Goals system so that integrated reporting becomes the global norm. (SDGs) by encouraging organizations to consider, connect We are the global authority on integrated reporting and and communicate their adherence to the SDGs, to the extent steward of the International Integrated Reporting Framework. that their adherence to particular SDGs is significant to how they create value.
Our emphasis on the efficient and Organizations are using productive use of all forms of capital aligns with Sustainable Development integrated reporting to Goal 12, which seeks to ensure sustainable consumption and production communicate a clear, patterns. Integrated reporting is also an effective mechanism for monitoring the allocation of capitals, concise, integrated story managing performance and strengthening accountability in that explains how all of their the public and private sectors. As a broad coalition of businesses, resources are creating value. investors, standard setters, regulators and Integrated reporting is helping businesses to think holistically other key stakeholders, we support about their strategy and plans, make informed decisions Goal 17 revitalizing the global partnership and manage key risks to build investor and stakeholder for sustainable development. Through our confidence, value creation and improve future performance. multi-stakeholder partnerships and extended networks, we are well positioned to influence It is shaped by a diverse coalition including business regional and global policy and the decisions underpinning the leaders and investors to drive a global evolution in corporate flow of financial capital. reporting. See page 28 for specific work we have done around the Regulators, investors, companies, standard setters, the SDGs in 2017. accounting profession and NGOs are all part of the IIRC Council, working to align capital allocation and corporate behaviour to the wider goals of financial stability and sustainable development through the cycle of integrated thinking and reporting. IIRC Integrated Report 2017 IIRC Integrated 18 External environment 20 Stakeholders 24 Materiality 27 Performance 39 Acronyms 3
Vision Mission
Align capital allocation and corporate behaviour with Establish integrated reporting and thinking within the wider goals of financial stability and sustainable mainstream business practice as the norm in the development through the cycle of integrated reporting public and private sectors. and thinking.
Strategy Strategy
We pursue our vision and mission through a multi-phased strategy. We are currently in the third phase, our Breakthrough Phase, which focuses on six strategic themes or objectives. The next global strategic phase will be announced in 2018 –19.
FEASIBILITY CREATION BREAKTHROUGH
Jul 2010 – Dec 2011 Jan 2012 – Sep 2014 Oct 2014
Determine the conceptual Develop the
1 2 3 Increase the pace Maintain the Build a bridge from and scale of integrated
4 5 6 Progress through Engage with global Develop a long-term, dialogue: develop the policymakers and viable organization Corporate Reporting regulators (pages 35-37) Dialogue (pages 33-34) (page 32) IIRC Integrated Report 2017 IIRC Integrated 4 02 Who we are 03 Strategy 04 Breaking through 10 How we create value 12 Leadership
From our leadership Breaking through
Richard Howitt Mervyn King Barry Melancon Jane Diplock Chief Executive Officer Council Chair Board Chair GAN Committee Chair
In a polarized world, the IIRC is a convener, a coalition builder and a driver of integration rather than separation. Integrated reporting helps us piece together the elements of a fractured world in a way that business, investors and governments understand – unifying the financial system so that it contributes to resolving the systemic challenges of our age.
Integrated reporting has been endorsed This endorsement is one of a number of breakthroughs we have achieved since the release of the
We have had some signature successes on market strategic phase, and summarized under ‘Breakthrough penetration, but also some areas where we are still at the moments’ (pages 6-7), which together serve as a springboard early stages of creating awareness and building support for our long-term ambition of global adoption. Breaking through for adoption. In markets such as South Africa and Japan integrated reporting is already mainstream, while in other
Richard Howitt Mervyn King Barry Melancon Jane Diplock Chief Executive Officer Council Chair Board Chair GAN Committee Chair IIRC Integrated Report 2017 IIRC Integrated 16 August 2018 6 02 Who we are 03 Strategy 04 Breaking through 10 How we create value 12 Leadership
Breakthrough moments
Breaking through Here we illustrate a sample of the breakthroughs we have achieved towards early adoption of the
Iceland Sweden Denmark Canada Finland Belgium Germany Norway Poland Czech Republic Ireland Hungary Netherlands UK Slovenia Serbia Luxembourg Austria Ukraine USA Switzerland France Lebanon Spain Italy Malta Turkey Portugal Israel Greece Qatar Bulgaria Saudi Arabia Mexico Thailand Costa Rica
Colombia Nigeria Uganda
Kenya Peru Policy Brazil
Zimbabwe Botswana Chile Namibia
Argentina South Africa Regulatory signposting or alignment in 16 countries in addition to voluntary adoption
Endorsements
Accountancy bodies: Supranational organizations: B20: International Accounting Including the European Commission, World Bank, IIRC part of Standards Board (IASB) and United Nations Conference on Trade and Development B20 agenda International Federation of (UNCTAD), Principles for Responsible Investment (PRI) of the G20 Accountants (IFAC) and the Organisation for Economic Co-operation and since 2014 IIRC Integrated Report 2017 IIRC Integrated Development (OECD) 18 External environment 20 Stakeholders 24 Materiality 27 Performance 39 Acronyms 7 Breaking through
Adoption
1,600 organizations across 64 countries
Finland Russia including every G20 economy
Slovenia Global networks Serbia with 2,000 participants including Ukraine 500 in Brazil Lebanon Korea China Japan Malta Mainstream in South Africa and Japan
Taiwan Pakistan
Thailand Academic evidence India shows that integrated reporting improves conditions Malaysia Philippines Singapore for long-term investment, reduces cost of capital, Sri Lanka Indonesia improves performance and improves liquidity Kenya
Zimbabwe Mauritius Botswana Australia
New Zealand Guidance
First implementation review shows Included in curricula of
Investors Corporate Reporting Dialogue
12 mainstream investor Partnership with CFA Landscape Map creates Joint submission to organizations sign Institute and ICGN a more cohesive the FSB Task Force public letter of support picture of the corporate on Climate-related
for integrated reporting reporting environment Financial Disclosures Report 2017 IIRC Integrated 8 02 Who we are 03 Strategy 04 Breaking through 10 How we create value 12 Leadership
Process
The formal consultation attracted: Over 400 Feedback from events in A wide cross section of contributions 19 countries stakeholders
Feedback by region
10% 38% Americas Europe
21% Asia
9% Africa
12% International 10% Oceania
Feedback by stakeholder group
29% 24% 17% 10% 8% 6% 4% 2% Consultant or Report Professional body Regulator, stock Report user Academia NGO Others
IIRC Integrated Report 2017 IIRC Integrated assurance provider preparers or industry group exchange or standard setter 18 External environment 20 Stakeholders 24 Materiality 27 Performance 39 Acronyms 9
Following the release of the
Findings Next steps
The concepts of integrated reporting 48 action points identified across widely accepted and embraced 26 topics for implementation
Focus to now include improving Implement a two-year programme implementation of integrated of guidance and other technical reporting assistance to further clarify, simplify and amplify the adoption of integrated reporting Key areas identified for practical guidance: yy Multiple capitals approach The programme to include: yy Connectivity of information yy Supporting project proposals for guidance and yy Integrated thinking research yy Providing guidance in the form of practice notes, practice aids and frequently asked questions Senior management buy-in seen as yy Engaging with the Corporate Reporting Dialogue vital for successful adoption and others
Consider revising the
Our business model is a system for transforming inputs through business activities into outputs and outcomes that aim to fulfil our strategic purpose of creating value.
GOVERNANCE BREAKTHROUGH PHASE STRATEGY pages 12-13 page 3
Theme 1 Theme 2 Theme 3 Theme 4 Theme 5 Theme 6 How we create value
INPUTS ACTIVITIES
Funding Cash reserves, contributions, Guide Connect income and in-kind support Explain integrated Link to needs of reporting and show capital markets leading practice and society People IIRC team, Board, Council, Ambassadors and Advocates Convene Relationships Gather those critical to corporate reporting Networks, strategic partnerships and investing and collaborations
Intellectual capital
OUTPUTS ² Business case for integrated reporting ² Tools, case studies, guidance and training ² Policy initiatives to support systemic change ² Partnerships to drive success
RISKS AND OPPORTUNITIES PERFORMANCE OUTLOOK pages 24-26 pages 27-38 page 5 IIRC Integrated Report 2017 IIRC Integrated 18 External environment 20 Stakeholders 24 Materiality 27 Performance 39 Acronyms 11 How we create value How we
OUTCOMES VALUE CREATED FOR US FOR OTHERS
Funding Continued Promotion of Funds converted to operations, delivery of our aligned missions reserves and intellectual capital vision and mandates
People Committed and Enhanced Capacity building across the knowledgeable capabilities among IIRC and our networks team our supporters
Relationships Amplification Mobilization Supportive networks and of efforts through of common advocacy to drive our vision partnerships interests
Intellectual capital Anchor for Understanding Expanded body of future work of integrated reporting research and guidance and funding and its benefits
Nature Promotion of a Enhanced Planetary limits elevated in core element of stewardship of capital market decisions our vision natural resources
Align capital allocation and corporate behaviour OUTLOOK with the wider goals of financial stability and sustainable development page 5 through the cycle of integrated reporting and thinking IIRC Integrated Report 2017 IIRC Integrated 12 02 Who we are 03 Strategy 04 Breaking through 10 How we create value 12 Leadership
Governance Our governance, as codified in our Constitution, is founded on our market-led strategy, as well as our reliance on effective partnerships to fulfil our mission. It strikes an important balance between the legal authority and responsibilities of our Board and the significant weight and influence of our Council. Structure Integrated Reporting Foundation The IIRC
Leadership Operating Company
Governance and Council Board of Directors Nominations Committee
Remuneration Committee Coalition parties
CEO and IIRC Team Advisory bodies and forces Activities
All activities of the IIRC are coordinated and conducted through The Council (pages 14-15) comprises Board or senior the Operating Company of the same name, a non-profit executive level designates from coalition parties, expressing company limited by guarantee, incorporated and based in the the coalition’s broad market view and collective voice – their UK, subject to oversight by the Board of Directors. breadth of views, depth of experience and commitment to integrated reporting continue to be instrumental to our strategy All Directors of the Board (pages 16-17), aside from the CEO, implementation. Council members, appointed by the Board, are participate on an individual, non-remunerated and the primary (though not exclusive) source of advice, guidance, non-executive basis. There were five Board meetings in 2017 expertise, experience, resources and support required for (two of which were physical), in which they engaged with and achievement of the IIRC’s purpose. gave direction to the CEO and the IIRC team on strategic matters. The Board comprises leaders whose individual We convened two Council meetings in 2017, in New York in backgrounds and combined experience reflect our broad April and in Amsterdam in October, where we provided updates constituency base. The skills and diversity of Board members, on our progress and key developments, and discussed issues lend healthy debate, guidance and discipline to such activities including how to advocate for integrated reporting, drivers of as strategic development and risk management. long-term value creation, assurance, review of the Breakthrough Phase and the Sustainable Development Goals. It was at our Specifically in 2017, the Board oversaw an evaluation of New York Council meeting that Hans Hoogervorst, Chair of the the Breakthrough Phase and the development of our future IASB, said that through integrated reporting, organizations strategic direction, guided development of our ‘elevator pitch’, can “address more clearly resources that are not included in approved the International
the IIRC’s own integrated reporting and in particular its financial continuing to develop the business case for integrated and risk management. reporting, and the identification of the principal outcome Leadership measures to enable the Board to monitor whether the The
The IIRC Council Council members as at 31 December 2017 Leadership Changes to the Council in 2017: The two Deputy Chairs of the Council were appointed – French Interest Academia Jean-Charles de Lasteyrie Peter Bakker and John Stanhope. Vice President, Federation of European Accountants The Institute of Chartered Accountants of India joined and FIPECAFI Welington Rocha Caixa de Previdência dos Funcionários do Banco do Brasil President and CEO Global Accounting Alliance (GAA) (PREVI) left the Council. Stephen Harrison Chief Executive Officer Saïd Business School at the University of Oxford The profiles of Council members may be accessed here. Prof Robert Eccles Grant Thornton International Visiting Professor of Edward Nusbaum Global Chief Executive Officer Changes to the Council in 2018 (to date): Management Practice The Africa Integrated Reporting Committee and the Institute Institute of Chartered Accountants Accountancy of Chartered Secretaries and Administrators have joined profession in England and Wales (ICAEW) Michael Izza the Council. Chief Executive American Institute of CPAs Timothy Christen Chairman Institute of Internal Auditors (IIA) Richard Chambers President and CEO Association of Chartered Communities represented by Certified Accountants (ACCA) Alan Hatfield Institute of Management Council members Executive Director, Strategy and Accountants (IMA) Development Jeffrey Thomson President and CEO
BDO International 17% Keith Farlinger International Federation of Chief Executive Officer Accountants (IFAC) Providers of Rachel Grimes President financial capital Chartered Accountants Australia and New Zealand 3% Simon Grant Japanese Institute of Certified 8% Group Executive Advocacy and Public Accountants (JICPA) Academia Professional Standing and Aiko Sekine, CPA Policymakers, International Chairman and President regulators, exchanges Chartered Institute of Management KPMG Accountants (CIMA) Bill O’Mara Charles Tilley Global Head of Audit 30% Executive Chairman, Accountancy CGMA Research Foundation PwC International profession Robert E. Moritz 7% CPA Australia Global Chairman Framework [Representative TBC] developers, South African Institute of Chartered CPA Canada Accountants (SAICA) standard Terence Nombembe setters Joy Thomas President and CEO Chief Executive Officer
Deloitte The Institute of Chartered David Cruickshank Accountants of India Global Chairman Naveen Gupta President
Ernst & Young Mark Weinberger 26% Chairman and CEO 9% Business and other Civil society reporter entities IIRC Integrated Report 2017 IIRC Integrated 18 External environment 20 Stakeholders 24 Materiality 27 Performance 39 Acronyms 15 Leadership
Business and other Nestlé SA Framework developers, Providers of reporter entities David Frick standard setters financial capital Senior Vice President, Corporate Governance, Compliance and Asian Centre for Corporate CDP APG Asset Management Corporate Services Governance & Sustainability Paul Simpson Claudia Kruse Prof. Mahendra K. Chouhan Chief Executive Officer Managing Director, Head of Vice Chairman of Novo Nordisk Governance & Sustainability Susanne Stormer Global Advisory Board Climate Disclosure Standards Vice President of Board (CDSB) Brazilian National Bank for Corporate Sustainability Brazilian Institute of Corporate Richard Samans Economic and Social Governance Chairman Development (BNDES) Eliane Lustosa Prudential Financial Vania Borgerth Margaret M. Foran Board member Global Reporting Initiative (GRI) Advisor to CEO Chief Governance Officer, Timothy J. Mohin Vice President and CII-ITC Centre of Excellence for Chief Executive BlackRock Corporate Secretary Sustainable Development Michelle Edkins Yogesh Deveshwar International Accounting Standards Managing Director & Global Tata Sons Chairman of the Advisory Council Board (IASB) Head of Corporate Governance Koushik Chatterjee Hans Hoogervorst Group CFO (Tata Steel) CLP Chairman CFA Institute Geert Peeters Sandra Peters World Business Council for Group Director & Sustainability Accounting Head, Financial Reporting Sustainable Development (WBCSD) Chief Financial Officer Standards Board Policy Group Rodney Irwin Steven Gunders Managing Director of Redefining DBS Group Member of the Board of Directors European Federation of Financial Value and Education Sok Hui Chng Analysts Societies Chief Financial Officer World Intellectual Capital Initiative Frank Klein World Economic Forum (WEF) (WICI) Member of the Richard Samans Energie Baden-Württemberg AG Stefano Zambon Executive Management Committee Managing Director (EnBW) Chair Thomas Kusterer Eumedion Chief Financial Officer Angeli van Buren Civil society Policymakers, Chair of the Audit & Reporting regulators, exchanges Foundation for the Global Compact Committee Sir Mark Moody-Stuart Business for International Integrated Chairman Social Responsibility Hermes Investment Management Reporting Council Dunstan Allison-Hope Saker Nusseibeh Mervyn King Managing Director Chief Executive Officer Global Alliance for Public Relations Chairman and Communication Management Dan Tisch CERES International Corporate Governance International Organization of Director and Immediate Past Chair Mindy Lubber Network (ICGN) Securities Commissions (IOSCO) President Anne Molyneux Paul Andrews Member of the Governing Board Global Network of Director Secretary General Institutes Globalethics.net Angela Cherrington Prof. Dr. Obiora Ike Japan Exchange Group Chair Executive Director Principles for Responsible Dr Takafumi Sato Investment (PRI) President Fiona Reynolds The Prince’s Accounting for International Integrated Managing Director Reporting Council Sustainability Project (A4S) Ministry of Finance, Peter Bakker Jessica Fries People’s Republic of China Deputy Chair of the Council Executive Chairman Rockefeller & Co. Dr. Lin Zhu Joyce Haboucha Director, Accounting Regulatory Managing Director, Transparency International International Integrated Department Senior Portfolio Manager Reporting Council [Representative TBC] John Stanhope The World Bank RPMI Railpen Deputy Chair of the Council WWF, South Africa Bernard Lauwers Phil Willcock Morné du Plessis World Bank Group Controller Chief Executive Korea Productivity Center Chief Executive Officer Prof Dongsoo Kim United Nations Conference on Trade Director – Sustainability UN Environment Programme and Development (UNCTAD) Management Centre Finance Initiative (UNEP FI) James Zhan David Pitt-Watson Director of Investment and Enterprise Immediate Past Co-Chair Steering Committee IIRC Integrated Report 2017 IIRC Integrated 16 02 Who we are 03 Strategy 04 Breaking through 10 How we create value 12 Leadership
Board of Directors Leadership as at 31 December 2017
Helen Brand OBE Michael Bray Alexsandro Broedel Lopes Deputy Chair of the Board Chief Executive, ACCA KPMG Fellow of Integrated Finance Executive Director at Reporting at Deakin University; Itaú Unibanco; member of the Director of Better Business Accounting Standards Advisory Reporting, KPMG Australia. Forum of the IASB; Professor at the University of São Paulo’s Accounting & Law School.
Aron Cramer Louise Davidson Richard Howitt Chief Executive Officer President and CEO, BSR CEO, Australian Council of Superannuation Investors
Other positions held by Board members Appointed in 2017: are indicated above while their profiles Michael Bray, Aron Cramer, Jeanne Ng and are available online. Christian Thimann
Mervyn King (Chairman of the Council) Stood down in 2017: attends Board meetings as an observer; Peter Bakker (now Deputy Chair of the Charles Tilley (Senior Adviser to the Council), Jane Diplock Chairman and CEO) attends Board (now Chair of the GAN Committee), meetings as a guest. Timothy Flynn and Reuel Khoza
Stood down in 2018 (to date): Christian Thimann IIRC Integrated Report 2017 IIRC Integrated 18 External environment 20 Stakeholders 24 Materiality 27 Performance 39 Acronyms 17 Leadership Leadership
Izumi Kobayashi Barry Melancon Jeanne Ng Chair of the Board Vice Chair, Japan Association of CEO, Association of International Director – Group Sustainability, Corporate Executives; director of Certified Professional Accountants CLP Group Ana Holdings, Mitsui & Co. and Mizuho Financial Group.
David Nussbaum Upendra Sinha Christian Thimann Deputy Chair of the Board Chief Executive, The Elders Former Chairman of Securities and Senior Adviser to the AXA Chairman Exchange Board of India and Director of the Research Fund; Chairman, EU High-Level Expert Group on Sustainable Finance; Vice Chair, FSB Task Force on Climate-related Financial Disclosures. Experience No. of Directors* of Board members 7 6
5
4
3
2
1
0
* Some Directors represent more than one community; the Board comprised Business and Providers Framework Accountancy Policymakers, Civil society Academia 12 Directors as at 31 December 2017. other reporter of financial developers, profession regulators,
entities capital standard setters exchanges Report 2017 IIRC Integrated 18 02 Who we are 03 Strategy 04 Breaking through 10 How we create value 12 Leadership
Our strategy remains focused on anticipating future global trends and being able to respond to them, to ensure that integrated reporting continues to remain relevant to the issues and market needs of today and tomorrow. External environment
External operating environment IIRC Integrated Report 2017 IIRC Integrated 18 External environment 20 Stakeholders 24 Materiality 27 Performance 39 Acronyms 19
Global trends How integrated reporting aligns Globalization and interconnectedness Integrated reporting encourages systems thinking, the
The International Monetary Fund, World Economic Forum External environment basis for effective risk management in a globalized and other bodies highlight that risks can no longer be environment. isolated and managed according to geography or type.
Inclusive capitalism Integrated reporting underscores the importance of Growing inequality risks harming development and growth a holistic approach to understanding, measuring, potential and demands greater focus on social and managing and expressing value creation, including the environmental value. This has driven a movement towards broader dimensions of human, economic and social ‘inclusive capitalism’. progress seen through a multi-capital lens.
Stewardship and governance Integrated reporting is strongly aligned with enhanced Increased shareholder interest in corporate governance corporate governance and improved decision-making drives improved communication between businesses and among capital market participants. It is already their investors. Stewardship codes reflect investors’ role as mainstream in South Africa and Japan with growing custodians of long-term and other assets. country level alignment globally.
Sustainable development Integrated reporting encourages stewardship of a The United Nations Sustainable Development Goals, broader resource base, which includes human and natural European Union Non-financial Reporting Directive, resources. While translating global commitments into a shift Paris Agreement on climate change and the 2016 FSB Task towards productive and sustainable investments remains Force work reinforce the status of sustainable development a challenge, integrated reporting serves a role by bringing as a public and private sector imperative. investors and businesses to the table.
Technological change New technologies can affect, for better or worse, an Integrated reporting helps organizations discuss the organization’s operations, innovation and valuation. Artificial material impacts of technology on value creation and intelligence and robotics are already impacting the future of stakeholders, either in stimulating progress or in mitigating work and threatening jobs. The contributions of intellectual risks. Whether in the hands of business or the stakeholder, property and an innovative culture are increasingly driving technology is a powerful tool to drive better quality organizational success, while the proliferation of data drives corporate reporting. the desire for consistent and comparable metrics.
The corporate reporting system There is a renewed urgency to bring coherence to the The different elements of the corporate reporting system are reporting landscape brought about by market demand, not in harmony – such as conflicting objectives, disjointed while advances in technology are also making an definitions and unclear objectives. PRI, UNEP FI and the impact. This is an opportunity to embed integrated EU High Level Expert Group on Sustainable Finance are reporting within these developments, particularly examples of bodies working to align the financial system to through the Corporate Reporting Dialogue. sustainable development.
Long-termism Investors have voiced the need for reform in corporate Institutional investors are increasingly vocal about the reporting. Integrated reporting aligns with FCLTGlobal’s dangers of a short-term focus. To support the large ‘10 elements of a long-term strategy’ by supporting and investments in infrastructure, particularly in emerging managing this transformation by providing investors with economies, a longer-term view of value is needed to long-term information on risks and opportunities and shift business practices, resource allocation and capital creating the foundations for sustainable investment. market behaviour. IIRC Integrated Report 2017 IIRC Integrated 20 02 Who we are 03 Strategy 04 Breaking through 10 How we create value 12 Leadership
Our stakeholders Stakeholder engagement is ingrained in our governance and strategy. All our stakeholder groups are represented on the IIRC Council and the IIRC Board who we convene regularly. Stakeholders
BUSINESS AND OTHER PROVIDERS FRAMEWORK DEVELOPERS, ACCOUNTANCY REPORTER ENTITIES OF FINANCIAL CAPITAL STANDARD SETTERS PROFESSION
Delivering on stakeholder expectations
Stakeholder Stakeholder interest/IIRC response Examples of how we engage Evaluation
BUSINESS AND OTHER Navigate the range of available reporting standards and frameworks yy
PROVIDERS OF FINANCIAL Reduce portfolio risk yy Partnerships with International Corporate Governance We align with investor initiatives that promote stewardship, corporate CAPITAL The
POLICYMAKERS, CIVIL SOCIETY ACADEMIA OUR TEAM REGULATORS, EXCHANGES
Delivering on stakeholder expectations
Stakeholder Stakeholder interest/IIRC response Examples of how we engage Evaluation
BUSINESS AND OTHER Navigate the range of available reporting standards and frameworks yy
PROVIDERS OF FINANCIAL Reduce portfolio risk yy Partnerships with International Corporate Governance We align with investor initiatives that promote stewardship, corporate CAPITAL The
Stakeholder Stakeholder interest/IIRC response Examples of how we engage Evaluation Stakeholders FRAMEWORK DEVELOPERS Fill gaps in corporate reporting standards yy Corporate Reporting Dialogue IASB's new thinking on the concept of materiality is partly based AND STANDARD SETTERS We work with the Corporate Reporting Dialogue to identify subject matter gaps. yy IASB’s Management Commentary Review Committee. on our joint work in the Corporate Reporting Dialogue, and they are ...shape the nature and direction updating their Management Commentary Practice Statement in Minimize the perception of a reporting patchwork of the corporate reporting light of developments in integrated reporting. See page 32 for our We highlight complementarity and pursue clarity and consistency through the Corporate landscape progress on the Corporate Reporting Dialogue. Reporting Dialogue. Ensure respective standards and frameworks are well understood and applied The
ACCOUNTANCY PROFESSION Advance member interests and the profession through leadership and advocacy yy Bilateral projects and partnerships. Our relationship with the accountancy profession continues to ...promotes integrated reporting We work with the profession on areas of mutual interest and support its leadership role in thrive and provide mutual benefits, including capacity building, and builds related professional integrated reporting. elevated profile in the business community and momentum for competencies enhanced reporting. See network partners on pages 27-28 and Build capacity within accounting bodies, accounting firms and accountants in business funding on pages 35 and 37. We extend capacity building via Council arrangements, secondment agreements and joint initiatives. Provide client and member services that drive organizational, client and public interest We equip secondees with skills and knowledge in integrated reporting to enhance and expand firms’ services.
POLICYMAKERS, Work in various areas in the public interest yy B20 We learn and benefit much from these stakeholders. Their REGULATORS AND We show how integrated reporting supports capital market efficiency, inclusive capitalism, yy UN’s Intergovernmental Working Group of Experts on referencing of integrated reporting in national codes, EXCHANGES infrastructure investment, sustainable development and effective corporate governance International Standards of Accounting and Reporting recommendations and requirements supports our vision. ...support
CIVIL SOCIETY Raise the profile of important societal issues yy
ACADEMIA Probe and refine the theoretical basis for enhanced reporting yy
OUR TEAM Understand and align with organizational goals and provide valued contributions yy Monthly team, and sub-team meetings Team commitment will continue to drive our success. In 2017 we ...drives performance and shares We explain how our strategies support our mission and vision. We also highlight individual and yy Annual performance reviews. performed an exercise to follow up our 2016 team survey, which regional perspectives collective achievements and provide employee feedback annually. showed strong alignment to the goals of the IIRC, producing an action plan to address identified areas for improvement, including Access the tools to do a good job improved internal communications across our widely spread team. We maintain guiding procedures and offer training/development opportunities. Contribute to a collaborative, communicative team We interact via cross-functional meetings and online platforms. IIRC Integrated Report 2017 IIRC Integrated 18 External environment 20 Stakeholders 24 Materiality 27 Performance 39 Acronyms 23
Stakeholder Stakeholder interest/IIRC response Examples of how we engage Evaluation Stakeholders FRAMEWORK DEVELOPERS Fill gaps in corporate reporting standards yy Corporate Reporting Dialogue IASB's new thinking on the concept of materiality is partly based AND STANDARD SETTERS We work with the Corporate Reporting Dialogue to identify subject matter gaps. yy IASB’s Management Commentary Review Committee. on our joint work in the Corporate Reporting Dialogue, and they are ...shape the nature and direction updating their Management Commentary Practice Statement in Minimize the perception of a reporting patchwork of the corporate reporting light of developments in integrated reporting. See page 32 for our We highlight complementarity and pursue clarity and consistency through the Corporate landscape progress on the Corporate Reporting Dialogue. Reporting Dialogue. Ensure respective standards and frameworks are well understood and applied The
ACCOUNTANCY PROFESSION Advance member interests and the profession through leadership and advocacy yy Bilateral projects and partnerships. Our relationship with the accountancy profession continues to ...promotes integrated reporting We work with the profession on areas of mutual interest and support its leadership role in thrive and provide mutual benefits, including capacity building, and builds related professional integrated reporting. elevated profile in the business community and momentum for competencies enhanced reporting. See network partners on pages 27-28 and Build capacity within accounting bodies, accounting firms and accountants in business funding on pages 35 and 37. We extend capacity building via Council arrangements, secondment agreements and joint initiatives. Provide client and member services that drive organizational, client and public interest We equip secondees with skills and knowledge in integrated reporting to enhance and expand firms’ services.
POLICYMAKERS, Work in various areas in the public interest yy B20 We learn and benefit much from these stakeholders. Their REGULATORS AND We show how integrated reporting supports capital market efficiency, inclusive capitalism, yy UN’s Intergovernmental Working Group of Experts on referencing of integrated reporting in national codes, EXCHANGES infrastructure investment, sustainable development and effective corporate governance International Standards of Accounting and Reporting recommendations and requirements supports our vision. ...support
CIVIL SOCIETY Raise the profile of important societal issues yy
ACADEMIA Probe and refine the theoretical basis for enhanced reporting yy
OUR TEAM Understand and align with organizational goals and provide valued contributions yy Monthly team, and sub-team meetings Team commitment will continue to drive our success. In 2017 we ...drives performance and shares We explain how our strategies support our mission and vision. We also highlight individual and yy Annual performance reviews. performed an exercise to follow up our 2016 team survey, which regional perspectives collective achievements and provide employee feedback annually. showed strong alignment to the goals of the IIRC, producing an action plan to address identified areas for improvement, including Access the tools to do a good job improved internal communications across our widely spread team. We maintain guiding procedures and offer training/development opportunities. Contribute to a collaborative, communicative team We interact via cross-functional meetings and online platforms. IIRC Integrated Report 2017 IIRC Integrated 24 02 Who we are 03 Strategy 04 Breaking through 10 How we create value 12 Leadership
Material matters Material matters are those that substantively affect our ability The management team evaluates this initial assessment – to create value. Those that may destroy value are termed drawing on their experience, judgement and own engagement risks; those that may create value are termed opportunities. with stakeholders – and agree which matters may be material and what response measures may be or should be in place. We start with identifying a wide variety of risks and opportunities, by: considering our strategy, work plans and Our Board reviews our conclusions and methodologies and the
Identified risks and opportunities are assessed quantitatively in terms of: (a) the potential severity of their impact, R Risk (b) likelihood of their occurrence and (c) the effectiveness of our controls and response. O Opportunity
Our response to material matters
Material matter and description of risk/ IIRC response Strategic theme opportunity (pages 27-37)
1. Value proposition of integrated reporting
O Relevance of integrated yy Make public statements, issue policy papers and continue to deliver 5 reporting to macro themes. communications to demonstrate alignment of integrated reporting to Making the links between global developments macro trends and integrated yy Ensure attendance at important economic summits, e.g. the World Economic reporting can provide a Forum and B20. powerful tool for building support for integrated reporting and ensuring it continues to be seen as a relevant response to current issues.
R Credibility of integrated yy Deliver action points identified in the
Material matter and description of risk/ IIRC response Strategic theme Materiality opportunity (pages 27-37)
R Making the case for yy Build the business case for integrated reporting, including case studies on how 1 integrated reporting. boards are adapting to global trends and encourage research Insufficient understanding yy Expand our global communications programme, leveraging key global partners, or evidence of the benefits to increase profile, accessibility and understanding of the business case of integrated reporting to yy Develop thought leadership on the role of integrated thinking as a foundation businesses, investors and of integrated reporting and inclusive decision-making. broader capital markets would hinder growth in adoption.
O Business focus on sustainable yy Continue our programme of alignment with the SDGs through partnerships and 1 development. supranational platforms (pages 28 and 34), and include in the
2. Pace and scale of
R Corporate reporting system. yy Support the Corporate Reporting Dialogue as a unifying force and seek a clear 1, 2, 4, 5 The range of standards, move from dialogue to alignment, with integrated reporting as the “umbrella” frameworks and regulations yy Work bilaterally with leaders in the world of financial reporting to position risks adding to the perception integrated reporting as central to the future of mainstream corporate reporting that integrated reporting and distinct from sustainability reporting, and develop an understanding of could cause further burden a new ‘end-game’ for the corporate reporting system – in particular through and fragmentation. Perceived collaboration with IASB’s management commentary practice statement project competition and divergent yy Engage with global initiatives relevant to the future of corporate reporting, definitions of integrated capital market reform, digitalization, inclusive capitalism and sustainable reporting would create market development, building an understanding of the role and impact of integrated confusion and uncertainty. reporting in achieving their aims.
R Investor demand for yy Build investor support through engagement with key influencers in the capital 1, 3 integrated reporting. markets, including through events Visible demand from investors yy Increased emphasis internally on investor engagement through individual is a vital incentive for business targeting, working with investor networks and bodies, in particular CFA Institute, adoption of integrated PRI and ICGN. Use trend towards ESG investment as catalyst for integrated reporting – low demand would investment stall widespread business yy Build further the evidence base on benefits of integrated reporting to investors adoption. through partnering on research.
O Supportive regulatory yy Engage with policymakers to ensure revised corporate governance and 1, 5 environment. stewardship codes endorse and/or align to integrated reporting Endorsement from regulators yy Work to build increasing recognition of integrated reporting by major and policymakers could supranational institutions. accelerate adoption of integrated reporting. IIRC Integrated Report 2017 IIRC Integrated 26 02 Who we are 03 Strategy 04 Breaking through 10 How we create value 12 Leadership
Material matter and description of risk/ IIRC response Strategic theme
Materiality opportunity (pages 27-37)
R Key markets: USA and China. yy Dedicated USA lead in place who has established a USA Network. 1 Slower progress of integrated Development of working groups, e.g. with technology companies and wider reporting penetration in the engagement with lead investor representative bodies key markets of USA and China yy Two country visits to China planned for 2018 with the Ministry of Finance (i.e. the two largest economies) (now a Council member) would hinder global adoption. yy Develop with the Board clear strategies for USA and China markets.
O Demonstrable momentum of yy Target businesses to adopt integrated reporting, developing new target markets 1 adoption. and sectors and encourage them to join integrated reporting networks A pronounced and measurable yy Engage with, and increase support from, international business organizations shift to integrated reporting and their national members could stimulate further uptake yy Increase collaboration with existing and new convening partners to of the
R Ease of adoption. yy Deliver action points identified in the International
3. IIRC capacity
R IIRC resource constraints. yy Establish a fundraising campaign to increase grant income while maintaining 6 Our funding model, global existing core support spread and capacity gaps yy Close resource gaps through new secondments and partnerships on challenge our ability to deliver specific projects our strategy and take full yy Identify funding opportunities through existing relationships. advantage of the momentum for integrated reporting.
O IIRC relationships. yy Review current priority partners list and forge deeper partnerships with 4, 6 Our institutional reach is those that will deliver most extended by our coalition and yy Lever support from international business organizations and their partners who build awareness national members and advance our vision. yy Identify and work with partners to pursue projects that support our strategy and lever communication channels. IIRC Integrated Report 2017 IIRC Integrated 18 External environment 20 Stakeholders 24 Materiality 27 Performance 39 Acronyms 27
The review of our activities and performance in 2017 is structured around the six strategic themes or objectives of the Breakthrough Phase, while cutting across all key elements of our value creation model and governance.
Strategic theme 1: Performance Increasing the pace and scale of integrated reporting adoption
Connection to governance Material matters (pages 24-26) Advocacy by governance body members extends our reach into priority markets Making the case for integrated reporting Complex corporate reporting system R Investor demand for integrated reporting Uptake of integrated reporting in USA and China
Business focus on sustainable development O Demonstrable momentum of adoption Supportive regulatory environment
We collaborated with ACCA on a thought leadership paper Activities/outputs on the high-level trends and learnings from the 2016
Number of organizations Dec. 2017 Dec. 2016 Dec. 2015 We held the 2017 Integrated Reporting Convention in Amsterdam, bringing together around 250 delegates from
members in Professional Accountancy Organizations (PAOs) We collaborated with Scottish accountancy body ICAS and to understand how they are advocating for integrated the Green Economy Coalition on a report, authored by Performance reporting so that it can further develop the PAO network. Prof. Carol Adams, to help organizations enhance their IFAC published ‘Creating Value for SMEs through Integrated contribution to the SDGs through integrated reporting, with Thinking: The Benefits of Integrated Reporting’. Also working a foreword from the Chair of the Business Commission for with IFAC, we published another in our Creating Value series, Sustainable Development. We presented the report in the ‘CFO Leadership in
Global and regional engagement We are the only reporting organization to be appointed to the new multi-stakeholder platform on SDGs established by the Our new USA market lead set up a working group and an IIRC European Commission. We are collaborating on the work of US Community in collaboration with Smarter-Companies, UNCTAD on target SDG 12.6 and are also on the advisory starting a series of webinars aimed principally at business. group of a project led by UN Global Compact and GRI on A seconded China market lead has not yet materialized, but measuring the SDGs. we presented at a round-table for senior Chinese business leaders and hosted a delegation from the Ministry of Finance, Evidence base with whom we have developed our strategy for the Chinese market in 2018. The Academic Research Support Group pulled together over three hundred published articles and research papers that We continued to visit numerous other markets, involving will be shared publicly via a database in 2018. speaking engagements, participation at round-tables and bilateral engagement with key members of our stakeholder Some examples of emerging academic evidence in this groups (pages 20-23) at the national level. area include a publication showing that integrated reporting improves conditions for long-term investment (Harvard Engagement at the global level included addressing the Business School), reduces cost of capital (National University Global Network of Director Institutes, where the concept of Singapore and separately, Stanford Business School) and of integrated reporting was welcomed warmly by member improves shareholder value (Chuo Graduate School of bodies; a global conference of national development banks Accounting, Japan). at the invitation of the World Bank; and IFAC’s CEO Forum, which was followed by a further discussion at the Global While the evidence base is getting strong, we need to Accounting Alliance. package the findings in a way that business audiences will find compelling.
Our methodology is not perfect due to limited resources, yy 55% increase in integrated reports by Dutch listed so we also look to other studies to a wider perspective on companies Performance adoption of integrated reporting. yy Twenty of the top forty listed French companies, with our partners Paris Europlace, the French markets authority, Of the 4,900 companies surveyed in KPMG’s global report setting a target of all forty within three years. on corporate reporting 14% produced a (self-labelled) “integrated” report in 2017, compared to 11% in the previous Endorsements KPMG survey of 2015 - indicating an increase in the number of integrated reports of 27%. Around two thirds of these A major ‘breakthrough’ moment came with the International also reference the
Strategic theme 2: Maintaining the
Connection to governance Material matters (pages 24-26) The Council is our initial barometer for guidance on public opinion and market demand; Credibility of integrated reports R the
O Ease of adoption IIRC Integrated Report 2017 IIRC Integrated 30 02 Who we are 03 Strategy 04 Breaking through 10 How we create value 12 Leadership
Activities/outputs Performance indicators Performance
The
Strategic theme 3: Building a bridge from corporate reporting to financial capital allocation
Connection to governance Material matters (pages 24-26) Investors on governance bodies inform our engagement with the investor community R Investor demand for integrated reporting
Activities/outputs Investor statement We launched the investor statement of support for We are using this statement to demonstrate to businesses integrated reporting at the PRI in Person Conference with the growing demand for integrated reporting from the 12 signatories from mainstream investor organizations from investor community and to build further investor support, the UK, the Netherlands and Australia: Aberdeen Standard signing up a further seven investors in 2018 to date: Allianz Investments, Achmea Investment Management, Aegon Asset Global Investors, Comgent, Edmond de Rothschild Asset Management, Cbus Super, Eumedion, Evenlode Investment, Management France, EFFAS, Resona Bank, Sparinvest Hermes Investment Management, Martin Currie Investment International and WHEB Asset Management. Management, NN Investment Partners, PGGM Investment Management, Triodos Investment Management, VicSuper. IIRC Integrated Report 2017 IIRC Integrated 18 External environment 20 Stakeholders 24 Materiality 27 Performance 39 Acronyms 31
Investor engagement Performance indicators Performance As well as bilateral engagement with investors, we connected Global investor survey to relevant investor-led initiatives, including speaking at a seminar hosted by the Australian Council of Superannuation EY’s 2017 global investor survey found that integrated reports Investors and G100, ‘Dialogue for longer-term value remained the second most useful source of non-financial creation – Bridging the information gap between capital information when making an investment decision behind market participants’, and attending the annual event of the the annual report. The majority, 57%, of the respondents ‘CEO Force for Good Strategic Investor Initiative’. considered integrated reports to be essential or very useful in conveying non-financial performance when making We published ‘Creating Value: Benefits to Investors’, investment decisions, though this represents a fall from 71% highlighting what the
These results are consistent with other research published during 2017 including, ‘The Investing Enlightenment’ by Bob Eccles and Mirtha Kastrapeli in collaboration with State Street, and PwC’s ‘2017 Global Investor Survey’.
While we are making progress in the investor space, more active and effective engagement is constrained by our limited resources. IIRC Integrated Report 2017 IIRC Integrated 32 02 Who we are 03 Strategy 04 Breaking through 10 How we create value 12 Leadership
Strategic theme 4: Performance Progress through dialogue: developing the Corporate Reporting Dialogue
Connection to governance Material matters (pages 24-26) The IIRC convenes eight influential standard setters and framework developers via the Corporate R Complex corporate reporting system Reporting Dialogue. The initiative’s Corporate Reporting Landscape Map shows how organizations can report on the six capitals identified in the
Other engagement Going forward The IIRC presented to the IFRS Trustees and renewed Going forward our KPIs will include the score from IIRC MoUs with IFRS Foundation (IASB) and CDP. We were also stakeholder survey questions below: appointed to the advisory group of the (now launched) Social and Human Capital Protocol. yy To what extent do you agree that integrated reporting promotes a more connected and efficient approach to corporate reporting? yy To what extent do you agree that integrated reporting is an “umbrella” for corporate reporting, providing the context and linkages for other forms of reporting? yy How connected do you think the current elements of
IIRC Integrated Report 2017 IIRC Integrated corporate reporting are today? 18 External environment 20 Stakeholders 24 Materiality 27 Performance 39 Acronyms 33
Strategic theme 5: Engaging with global policymakers and regulators Performance
Material matters (pages 24-26) Connection to governance The Board and Council members help us cultivate our relationships with regulators and policymakers R Complex corporate reporting system
Response to macro themes O Supportive regulatory environment
Sri Lanka – The Institute of Chartered Accountants of Activities/outputs Sri Lanka’s ‘Code of Best Practice on Corporate Governance Bilateral engagement 2017’ calls on businesses to “consider the need for adopting integrated reporting”, and specifically references Our engagement with regulators around the world led to the
IASB Other global engagement
Performance Refer page 32 for details. Other key engagements throughout 2017 in the policy arena include: active participation in B20 Taskforce on Energy, FSB TCFD Climate & Resource Efficiency; our close partner IFAC calling The FSB TCFD reinforced the key principles of integrated on G20 leaders to “embrace integrated reporting” in their reporting in its recommendations released in June 2017 ‘Call for Action by G20 countries’; participation in the – that companies should adopt an integrated approach to OECD Expert Group on Measuring Impacts of Business on their risk management and that climate change is itself not Well-being; and meetings and events with various simply an environmental issue, but a financial challenge for international bodies such as the International Trade Union companies and for stability of the global economy. The Task Council and the International Chamber of Commerce. Force specifically recommended alignment with existing reporting frameworks including integrated reporting.
IOSCO Performance indicators IOSCO have taken a more proactive role in accelerating Regulatory alignment their consideration of sustainable finance and we have had positive discussions with them regarding the role integrated Regulatory signposting/ 31 Dec. 31 Dec. Change reporting can play. We have been invited to speak at their alignment to integrated reporting 2017 2016 Committee on Issuer Accounting, Audit and Disclosure IIRC's priority markets 12 8 4 50% (Committee 1) in 2018. Percentage of IIRC’s priority markets 39% 26% UN Other markets 4 1 3 300% We spoke at the annual Intergovernmental Working Group of Experts on International Standards of Accounting and Total 16 9 7 78% Reporting meeting, and are on the consultative group on matters relating to reporting and SDGs. We also took part in the Eminent Persons Group for the UN Guiding Principles Reporting Framework.
ICGN Integrated reporting remains a part of ICGN’s ‘Global Governance Principles’, providing a platform for our close partnership – leading to a second joint conference in 2018. IIRC Integrated Report 2017 IIRC Integrated 18 External environment 20 Stakeholders 24 Materiality 27 Performance 39 Acronyms 35
Strategic theme 6: Developing a long-term, viable organization Performance
Connection to governance Material matters (pages 24-26) Robust governance supports the integrity of our work, attracts funding and improves access to R IIRC resource constraints policymakers.
O Effective IIRC relationships
Activities/outputs yy Funders are increasingly moving away from ‘unrestricted funding’ – the IIRC needs to ‘package’ its work into Fundraising discrete fundable pieces of work We employed a consultancy to review our fundraising strategy yy The IIRC’s fundraising space is very crowded with a limited and to identify the potential to diversify our funding base, pool of funders identify which types of funders to prioritize and identify what yy Funders do not want to see duplication of effort, but much we need to do to capitalize on these opportunities. The key greater collaboration between organizations. findings, limited to grant funding, are given below: Fundraising remains high priority. We will explore new funding Strengths sources such as charitable foundations while maintaining There is great stakeholder respect for the IIRC team, existing core support from ‘Breakthrough partners’, with a the Board and Council and the choice of leadership, and full-time dedicated team member to start in January 2018. strong commitment to support us. yy The IIRC’s ‘egolessness’ in pulling together the Corporate We will differentiate ourselves from comparators while Reporting Dialogue building on the ‘elevator pitch’ work. The elevator pitch complements our existing communications, and translates yy The ‘straddling’, global and inclusive approach of the IIRC the strategy and brand story into a vibrant, conversational was noted as IIRC’s unique selling proposition and point text, in particular with audiences who have not engaged with of difference from its comparators us or the concept of integrated reporting before. yy Willingness from the core team and some stakeholders to play an active role in fundraising Staffing yy Foundations are promising sources, based on the success Our total average headcount during 2017 remained at of comparators 29 staff members, amounting to 19.3 FTE (2016: 21.2 FTE). yy Contributions policy is in place with commitment to taking fundraising best practice seriously. Staff team structure Challenges As depicted in the diagram that follows, we operate under five strategic business units, each having regular staff and yy The IIRC has a relatively complex ‘sell’ compared to more those seconded pro bono from other organizations as well as traditional causes which address singular issues consultancy support. Each business unit focuses mainly on one or more of our strategic themes, while supporting others. yy Need for greater urgency in our vision, and defined timelines, to get funders’ attention IIRC Integrated Report 2017 IIRC Integrated 36 02 Who we are 03 Strategy 04 Breaking through 10 How we create value 12 Leadership
CEO Performance
Strategic Global Guidance, Policy, business CEO Office Networks & Research Communications Operations units Relationships & Training & Marketing
Staffing (full-time 4.4 + equivalent during 3 consultancy 4.3 3 3.6 2017) support
Strategic theme 1, 3 2, 4 1, 5 focus and 1, 2, 3, 4, 5, 6 6 [support] [2,6] [1, 3, 6] [3, 4]
CEO Office Policy, Communications and Marketing yy Support to CEO yy Engage with policymakers and regulators yy USA market lead yy Coordinate IIRC communications and marketing yy Administrative support yy Develop IIRC strategy
Global Networks and Relationship Operations yy Manage
Income statement Movement on 2016 Performance For the year ended 31 December 2017 2016 The increase in income is largely explained by a GBP 200k GBP ’000 GBP ’000 grant from the Integrated Reporting Foundation, which is expected to be renewed in 2018. The fall in Council INCOME contributions is entirely due to timing differences – where Council contributions 663 724 contributions pertaining to 2017 Council membership were Network contributions 559 599 received and therefore recognized in income in 2016. Taking this into account Council contributions actually increased by Grants and other contributions 305 26 GBP 99k. We are working to counter the fall in our networks Training and events 198 160 contributions with the launch of special interest groups as 1,725 1,509 referred to on page 27.
OPERATING EXPENSES The increased costs is largely explained by increased travel Staff costs (1,331) (1,365) expenditure, specifically related to our Board of Directors due Travel and subsistence (248) (143) to the changes in personnel made in late 2016. Other costs increased mainly due to forex losses related to our USD bank Communications and engagement (47) (33) account and the consultancy costs of our fundraising strategy Other costs (116) (59) review. (1,742) (1,600) Our net assets fell marginally according to the loss in the OPERATING DEFICIT (17) (91) year to GBP 581k (2016: GBP 603k), while our cash level increased by GBP 118k to GBP 863k due to improvement Other non-operating income 1 2 in our cash collection. Tax expense (6) (9) For a detailed financial account please refer to the IIRC DEFICIT FOR THE YEAR (22) (98) Financial Statements 2017. Income Going forward We continue to be heavily dependent on contributions, which Going forward our KPIs will include the view of the IIRC from accounted for 89% of our total income (also 89% in 2016). our Council members, ascertained via IIRC stakeholder survey Training and events accounted for the balance. question scores: Income by stakeholder group yy What degree of progress do you believe the IIRC is making towards global adoption of integrated reporting? 3% 3% yy As a partner or advocate, to what extent is the IIRC Policymakers, regulators Other effective at building good relationships with you? and exchanges 47% 4% Business and other Providers of reporter entities financial capital
12% Civil society
31% Accounting profession IIRC Integrated Report 2017 IIRC Integrated 38 02 Who we are 03 Strategy 04 Breaking through 10 How we create value 12 Leadership
Financial performance
Performance Details of our financial performance are given in the IIRC Financial Statements 2017. We give below a snapshot of its contents.
Statutory information Independent auditor’s report to the members of International Integrated Reporting Council Comprehensive income statement Statement of changes in equity Statement of financial position Statement of cash flows Notes to the financial statements
The IIRC Financial Statements 2017 may be accessed here. IIRC Integrated Report 2017 IIRC Integrated 18 External environment 20 Stakeholders 24 Materiality 27 Performance 39 Acronyms 39
ACCA Association of Chartered Certified Accountants APEC Asia-Pacific Economic Cooperation BIAC Business and Industry Advisory Committee to the OECD CIPFA Chartered Institute of Public Finance and Accountancy ESG Environmental, Social and Governance FASB Financial Accounting Standards Board FSB Financial Stability Board Acronyms GRI Global Reporting Initiative IAASB International Auditing and Assurance Standards Board IASB International Accounting Standards Board ICAS Institute of Chartered Accountants of Scotland ICC International Chamber of Commerce ICGN International Corporate Governance Network IFAC International Federation of Accountants IIRC International Integrated Reporting Council IOSCO International Organization of Securities Commissions