The first IIRC Council meeting took place in July 2010 on the top floor of the HSBC offices in London’s Canary Wharf, with panoramic views over the city. It was the first time in thirty years that I had missed Cowes Week – one of the oldest sailing regattas in the world and something I look forward to every year – but my instincts told me that this meeting was going to set a course, not only for the future of the accountancy profession, but for the way our capital markets system operates globally. It was not a meeting to miss.
I was not alone in this assessment. The global CEOs of the major accounting firms were all present, alongside leaders from across the regulatory, investor, business, standard setting and civil society community. It was the start of a coalition that is, to this day, at the heart of the integrated reporting movement and the reason behind the many achievements we have witnessed over the last ten years.
My initial role at the IIRC was Chair of the Technical Task Force, responsible for the development of the International <IR> Framework. I am not a technical expert (luckily the likes of Lisa French, Michael Nugent, Lois Guthrie and others, who led the process from within the IIRC team are), but I saw my role as ensuring there was a balance of voices in the room to ensure the needs of business, investors and civil society were reflected in the final product. There were compromises along the way, but there was also a wonderful energy – and a lot of fun – alongside a genuine belief that we were creating something that could change the way companies think, plan and communicate.
I believe we did indeed achieve this through the International <IR>Framework, published in December 2013, because I’ve seen its effects and benefits in action. When I introduced the concept to a home-loans organization I was on the board of, the CFO realized there were a number of risks to the organization that were not yet being effectively managed and put in place a revised strategy and processes to manage them as a result.
And when I introduced the concepts to Great Ormond Street Hospital, where I was Chair of the Audit Committee, they went on to be recognized at PwC’s Building Public Trust Awards for excellence in public sector reporting.
In another organization I am on the board of, implementing integrated reporting resulted in a change of focus as we identified gaps in our business model, that we could then address through enhanced stakeholder relationships.
I also used it rigorously in my then day job, as CEO of the Chartered Institute of Management Accountants (CIMA). We used the value creation model to focus on setting the right key performance indicators and incentives. Every year there was always something we had missed, or something that went slightly wrong, but it was a process that we learnt from and built on annually.
A key challenge was ensuring we had access to robust information across the organization’s value drivers. It is a challenge that global CEOs identified in PwC’s annual CEO survey, demonstrating the need to develop skills within organizations around data gathering.
Not only did we implement integrated reporting to run CIMA as a business, we also set about developing the future of management accounting around integrated thinking and reporting principles. Nick Topazio and Noel Tagoe demonstrated real innovation and insight in this respect. We promoted the shift from accounting for the balance sheet to accounting for the business, ensuring accountants were taking into account the impact of the external environment on the business.
At CIMA, we worked closely with the IIRC and I was grateful for the leadership of Prof. Mervyn King and Paul Druckman, as the IIRC emerged from the development phase into the implementation phase – introducing the concepts around the world and driving real behavioural change.
When I took over as CEO at the IIRC in 2019, integrated reporting had become the cornerstone of much corporate governance reform in business – and indeed entire markets such as South Africa and Japan – internationally. A focus on developing integrated thinking was in place, with important insights emerging from the Integrated Thinking & Strategy Group around how to engrain multi-capitalism within business strategy and activities.
This year, our focus has been on cementing the principles of integrated thinking and reporting within a comprehensive, holistic corporate reporting system. In many ways it feels like as much has happened in 2020 as in the ten years proceeding it. We have seen movement within the IFRS Foundation, the European Commission and IOSCO. We have come together with CDP, CDSB, GRI and SASB to lay out our joint vision for a robust reporting system. We are on a journey and further standards will be required to address all the capitals to support the preparation of an integrated report.
They say that necessity is the mother of invention. Perhaps the COVID-19 pandemic and the universal effect it has had on businesses and investors, will provide the necessity for the IIRC to realize its vision – a world in which capital allocation and corporate behaviour are aligned to the wider goals of financial stability and sustainable development.
What I know for certain, is that the coalition that first came together in those HSBC offices ten years ago, as well as the great number of organizations that have joined us along the way, will be vital to making it happen.
I look forward to working with you all.