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Responsible investors at heart of new integrated reporting project

High level group to examine ESG and financial reporting integration

Some of responsible investing’s best known names, such as APG, the UN Principles for Responsible Investment, Railpen and the International Corporate Governance Network, are involved in a new group looking at how to integrate ESG (environmental, social and governance) factors into corporate reporting.
The International Integrated Reporting Committee (IIRC) was launched today by the Global Reporting Initiative and Prince Charles’ Accounting for Sustainability Project. It has the backing of top level figures in the accounting sector, corporates such as Microsoft and Nestlé, NGOs and academics. A full list of Steering Group and Working Group members is available here as an appendix.
The new body argues that information currently required under accounting standards and listing rules does not fully reflect material environmental and social factors, such as climate change, resource use or human rights. In addition, when this information is disclosed “it is seldom presented in a manner which is connected with strategic direction and financial performance, assists comparison between businesses and years or makes clear risks and opportunities”. It argues there is no single body that has the oversight or authority over integrated reporting.

The IIRC will be chaired by Prince Charles’ aide Sir Michael Peat, with GRI Chairman Professor MervynKing taking on the role of steering committee chairman. King chaired South Africa’s prominent King Committee on Corporate Governance.The 33-member Steering Committee features ICGN Chair Christy Wood, Angelien Kemna, Chief Investment Officer of APG, the asset manager owned by Dutch civil service pension fund ABP and Paul Clements-Hunt, Head of Unit at the UN Environment Programme Finance Initiative.
The 20-strong Working Group includes Aviva’s Head of Sustainability Research and Engagement, Steve Waygood, UN Principles for Responsible Investment Executive Director James Gifford and Frank Curtiss, Head of Corporate Governance at Railpen.
The working group will present initial proposals for an integrated reporting framework by the end of this year for review by the steering committee in 2011.
The new committee is the latest initiative to grapple with the topic of how to integrate sustainability and financial reporting.
In May, for example, European financial analysts’ group EFFAS and its German counterpart DVFA called on companies to “formally orient” their ESG reporting towards International Financial Reporting Standards. And Tomorrow’s Company has partnered with PricewaterhouseCoopers and the Chartered Institute of Management Accountants – who are both involved in IIRC – to also look at intergrated corporate reporting.