Few will argue with the newly hatched International Integrated Reporting Committee's (IIRC) assertion that the overconsumption of finite natural resources and the risk of catastrophic climate change are possibly the greatest challenges facing the world today. But what to do about it?
Deep-seated changes to our current economic model are required, says the IIRC, whose formation was announced this morning by the Global Reporting Initiative (GRI) and the Prince’s Accounting for Sustainability Project (A4S). The IIRC wants to get the ball rolling by creating a globally accepted framework for accounting for sustainability.
“To make our economy sustainable we have to relearn everything we have learnt from the past,” says Professor Mervyn King, who is chairman of GRI and deputy chairman of the IIRC. “That means making more from less and ensuring that governance, strategy and sustainability are inseparable.”
The IIRC aims to create a reporting framework for publicly listed companies that brings together financial information with environmental, social and governance information. It wants such information to be presented in a clear, concise, consistent and comparable format.
At the moment, publicly listed companies are required to file an annual report on their financial performance, and these usually comply with either International Financial Reporting Standards (IFRS) or US Generally Accepted Accounting Principles (GAAP). Increasingly, companies are also producing reports on social responsibility and sustainability, but there is no global standard for these reports, which are mostly voluntary.
David Tweedie, chairman of the International Accounting Standards Board, said the IIRC represented an important step on the journey towards a global standard for sustainability reporting. “The case for globally consistent financial reporting standards is well understood and accepted,” he said. “It is appropriate to apply the same global approach to other aspects of corporate reporting.
Meanwhile, Jane Diplock, chairwoman of the Executive Committee of the International Organization of Securities Commissions, said she believed we would look back on the creation of the IIRC as a turning point in the development of corporate reporting.
More information about the IIRC can be found at www.integratedreporting.org
Fiona Rintoul, Editorial Director
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