International Integrated Reporting framework set for 2013 launch

Project backed by major investors and blue-chip corporations

The International Integrated Reporting Council (IIRC), the body which aims to create a globally accepted integrated reporting framework for financial, environmental, social and governance information, has confirmed it plans to publish the world’s first Integrated Reporting Framework by the end of next year.

The initiative’s pilot programme is backed by more than 70 of the world’s largest companies, such as HSBC, Microsoft and Coca-Cola and 20 investor organisations. Investors signed up to the project include major institutions including Dutch pension asset management giant APG, the UK’s Railpen and Norwegian Government Pension Fund manager Norges Bank Investment Management. (Full list below).

The IIRC has also published the 214 responses to a discussion paper launched in September 2011, which will shape the project in its next phase of development. There will be work streams on topics including materiality, the concept of value and business model, conducted in “close dialogue” with its stakeholders.

The framework “will underpin and accelerate” the evolution of corporate reporting – enabling organizations to communicate all the factors behind value creation, the group said.

In a joint response to the IIRC, CalPERS (the California Public Employees’ Retirement System), NBIM and APG said: “Integrated Reporting should be guided by an objective to provide better, simpler, and more focused reporting that can be used by investors to value companies.

“If implemented with this aim, Integrated Reporting can potentially strengthen the quality and usefulness of both financial and non-financial reporting.”They identified the challenge of making the framework “more concrete and actionable”.

Dutch corporate governance forum Eumedion, in its submission, said a real global approach is the “highest priority for investors” – with conciseness, reliability and materiality as starting points. It acknowledged it might take many years to reach this goal.

Hermes Equity Ownership Services, the engagement arm of the fund management firm ultimately owned by the BT Pension Scheme, also responded to the document. It said: “While we support the development of a single IR framework, we believe that companies should be encouraged to define their own approach to its implementation in proactive and regular dialogue with their shareholders.”

The IIRC, chaired by leading South African corporate governance figure Professor Mervyn King, was formed in 2010 by Prince Charles’ Accounting for Sustainability Project (A4S) and the Global Reporting Initiative.

In April, Responsible Investor published the results of an experimental study into the integration of sustainability reports into financial statements.

Pilot Investors:

AMP Capital Investors (Australia); APG (Netherlands); ATP (Denmark); Australian Council of Superannuation Investors; Calvert (US); Colonial First State Global Asset Management (Australia); DWS (Germany); Ethos (Switzerland); Government Employees Pension Fund (South Africa); Hermes EOS (UK); Natixis Asset Management (France); Newton IM (UK); Norges Bank Investment Management (Norway); Pax World (US); PGGM (Netherlands); Railpen (UK, Lead); Rockefeller Financial (US); Skandinaviska Enskilda Banken (Sweden); Victorian Funds Management (Australia).