NEW YORK, September 26, 2011 /PRNewswire/ --
- Development of a standard framework will take time, but the progression toward a single, global framework appears irreversible
The movement toward integrated reporting on environmental, social, and corporate governance (ESG) issues continues to gain momentum despite the relatively slow spread of regulatory mandates in this area, according to a recent paper, "Integrated Reporting: A better view?" by Deloitte Touche Tohmatsu Limited (DTTL).
"Today, there are growing expectations that businesses will do more than simply turn a profit," said Nick Main, Leader, Global Sustainability, DTTL. "Today's businesses must operate in a manner that is responsible, ethical, and sustainable. Of course they must operate profitably, and the great opportunity of our time lies in discovering ways of doing so that minimize negative effects on the environment, take into consideration the varied needs of a spectrum of stakeholders, and create sustained benefits-to the communities in which they operate and to the planet generally.
"This trend extends to investors as well. Businesses' success will increasingly be gauged by an expanded set of criteria. Integrated reporting, which encompasses elements of traditional financial reporting, sustainability reporting, and governance reporting within a single presentation, represents a growing trend that reflects these expectations," said Main.
Forward-looking companies are putting integrated reporting on their agendas now, as the benefits of being ahead of the curve may be significant. One such benefit may be marketplace advantage, where organizations that report on the full spectrum of issue may be seen as more advanced than those that restrict their reporting to traditional financial statements, according to the DTTL paper. Other benefits may include better risk management and the identification of new opportunities.
Several decades after the first environmental reports, and despite the clear benefits of integrated reporting, standardization remains elusive. But a number of initiatives are underway by governmental and nongovernmental groups to develop sustainability-related frameworks, principles, codes, and management systems.
"In the absence of a generally accepted framework, companies that wish to move toward integrated reporting may encounter uncertainties around relevance, scope, assurance, and other issues," said Eric Hespenheide, partner, Deloitte & Touche LLP in the United States. "This is why Deloitte member firms are collaborating with organizations that are leading the effort to develop an accepted framework for integrated reporting that will increase transparency and accountability in corporate reporting."
One such effort is being led by the International Integrated Reporting Committee (IIRC), which holds the promise of increasing collaboration, convergence, and conformance among the emerging frameworks and standards. Deloitte member firms actively support and contribute to the work of the IIRC, whose recently released discussion paper offers initial proposals for the development of an International Integrated Reporting Framework and outlines next steps toward its creation and adoption. Deloitte member firms are engaged in this discussion and will provide a response to the IIRC paper by the deadline of 14 December 2011.
"We strongly encourage business leaders to follow developments in this area closely, as integrated reporting has the potential to become the preferred reporting format for larger companies in the majority of advanced countries around the world," added Main. "The knowledge and insights acquired through an integrated reporting process can be critical, and can lead to significant competitive advantage for forward-thinking organizations."
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