The future of corporate reporting is Integrated!

Хеннинг ДрагерRelationships Manager

International Integrated Reporting Council (IIRC)

МИРБИС - 18 апреля 2012

1

Agenda

What is Integrated Reporting (IR) and why do we need it?

Evolving reporting trends – where are we going?

About the IIRC and IR Pilot Project

Russian engagement needed!

2

The global context is changing!Greenhouse gas emissions keep rising

Environmental degradation jeopardises people’s quality of life

The world could be running out of some resources

Our footprint is growing!

Driving increased demand for disclosure!

3

Our choice…

4

• “Window dressing”• Business as usual reporting

• Strategic accounting for & integration of all impacts• Strategic resource allocation

The importance of reporting

5

• Influences decisions and actions of management

• An essential element of corporate governance

• Influences decisions and actions of shareholders and

other stakeholders

• Affects resource allocation (financial, natural and

human resources) in society

• Critical for investor confidence

• Influences perceptions of the company’s customers,

vendors, and employees

• Shapes how a company sees itself

Challenges

6

Financial

• Complexity• Meaningful narrative

information• Reporting on risk,

executive compensation and corporate governance

• Auditing for fraud

Non-financial

• Lack of standards• Lack of common

terminology• Definition of “materiality”• Underdeveloped audit

methodologies• Controversial role of the

Global Reporting Initiative

• Competing standard setters

Corporate Reports: Increasing length and complexity

Source: Investis research - PwC

Prudential annual report pages 1850-2008

7

“Corporate reporting…has got too big, too cumbersome

and incomprehensible …”Source: Tomorrow’s Corporate Reporting : A Critical System at Risk –

CIMA and PwC

8

INTEGRATED REPORTING IS...

9

The evolution of Reporting…

10

…Integrated Reporting – the Future

11

IR Elements

12

Central themesBusiness model & value creation

13

The IIRC - some of the participating organisations

Chairman - Professor Mervyn King, King report on corporate governance

Deputy Chairman - Christy Wood, Chairman ICGN

Chief Executive Officer - Paul Druckman

Chairman of the working group - Ian Ball, CEO IFAC

Corporate networks• UN Global Compact• BSR• CERES• Global Alliance• WEF

Companies• RosAtom• Rosneft• Microsoft• GE• Natura• 100 Group• Novo Nordisk• China Light & Power• Nestlé• HSBC• EnBw

14

The IIRC – more stakeholders

Regulators, Standards Setters• IASB• FASB• GRI• CDSB

Stock Exchanges• IOSCO• Tokyo Stock Exchange• London Stock Exchange/100 Group• Financial Stability Board (observer)

Investor networks• UN PRI• UNEP-FI• ICGN• INCR

Investors• Aviva Investors• APG• EFFAS• Hermes EOS• General Commissioner, France• Railpen

IGOs• UNCTAD• World Bank• IFAC• ACCA• JICPA• SAICA

Accounting• ICAEW• PwC, E&Y, GT• Deloitte, KPMG, BDO

Civil Society• Transparency International• WWF• WRI• A4S

Academia• Harvard University• University Sao Paolo• University New South Wales• Volans

15

About stakeholder expectations (1)

On reading a corporate report users should be able to tell that:

•The company has not profited at the expense of the environment, human rights, a lack of integrity or society;

•There are adequate controls in place to monitor and manage material risks and opportunities;

16

About stakeholder expectations (2)

• Remuneration is linked to overall performance which includes social, environmental and financial aspects;

• There is an interactive communication with the stakeholders who are strategic to the company’s business; and

• The company is conducting a sustainable business

17

18

• 82 international companies have joined the Integrated Reporting Pilot Programme which launched in October 2011

• Pilots will explore <IR> in the context of their organisations and be critical to the development of an Integrated Reporting Framework

• Leading companies and investors developing and exchange good practice in this two year programme

Current reporting - what is an IR?

19

Actual and expected benefits of <IR> so far

• Two primary benefits identified:

o reporting against KPIs which align to the corporate strategycooperation and collaboration across the business

• Numerous other benefits include:o telling the story about what the core business doeso risk assessment focused on material riskso wider knowledge of non-financial business driverso discussing the future considering finance and sustainabilityo knowledge across the business and sharing best practice

20

Our Future Direction

• Continue developing the IR Framework o draw on Pilot Programme experienceso Exposure Draft in 2012

• Work with others on measurement and reporting relevant to IR

• Explore with regulators etc opportunities to harmonise reporting requirements within and across jurisdictions

• Conduct regional roundtables and other engagement and communications activities + public consultation regarding ongoing governance of Integrated Reporting

• G20 Moscow 2013 – support for mandatory, global standard development 21

• IR Framework needs Russian input to be truly global!

• RosAtom and Rosneft are leading the way – will other corporates

follow?

• Corporate Governance and transparency issues can be covered

by adopting IR

• MIRBIS demonstrating the importance of academia and educational

involvement – development of future skill sets

• We welcome you to join the IR Pilot Programme, IIRC working

groups and get the word out about IR!22

Please contact us:

Henning Dräger

@: henning.drager@theiirc.org

Mobile: +38 050 452 20 37

Work: +38 044 393 26 87

www: theiirc.org

CПАСИБО

23