Global perspectives

Saker Nusseibeh CBE

IIRC Council Member

Chief Executive Officer, Federated Hermes International

Many congratulations to the IIRC on its tenth anniversary. What a long way industry has come in integrated reporting, thinking and management due in large part to the IIRC’s pioneering efforts.

It has been an honour and a privilege to participate as a member of the IIRC’s Council since 2015 and see integrated reporting gain global traction with companies, investors and other stakeholders. Each year, more and more companies have embraced the integrated reporting approach.

I believe by focusing on business purpose and articulating the delivery of returns to different stakeholders, and the capitals they represent, companies have come to integrate different disciplines in their strategic and operational management. As a result, they are much more likely to perform sustainably over the long term. Fundamentally, integrated management makes good business sense. There is no rational investment argument to ignore the obligations we have to the environment and society and forego the business opportunities these represent.

Our own experience as a responsible investment firm demonstrates that a holistic stakeholder approach has a positive effect on delivering sustainable wealth creation for the investors we serve. What we do in practice to achieve this, is employ high active share strategies and consider material environmental, social and governance factors alongside traditional performance factors. Perhaps most crucially, we engage with companies to mitigate risk, and encourage the companies we invest in to create sustainable wealth by seeking to meet the needs of their relevant stakeholders. In this way, I believe we can justifiably call what we do investment - and not simply market trading.

We have been delighted to publish our own integrated annual report for the last three years. Each year we seek to enhance the way we describe how we serve and deliver for investors and society.

As the dawn of the new decade unfolds, we expect the acceleration towards integrated reporting to continue in every geographic region. The unprecedented events of 2020 have rendered companies more likely than ever to disclose their approaches to health and safety, employee well-being, diversity and inclusion, and long-term sustainability challenges such as climate change, biodiversity and the need for a circular economy. These are all issues whose importance will only intensify in the decades to come.

There are evolving approaches to quantify the impact to the environment and society in a more comparable way than the financially internalized costs currently captured in the report and accounts. If successful, these will make the case for sustainability and the considerations of all capitals all the more transparent. As a result, both company and policymaker behaviours will change for the better.

Over the next ten years, we expect further adoption of integrated reporting that will bring us closer to the IIRC’s vision of aligning capital allocation and corporate behaviour with the wider goals of financial stability and sustainable development. Going forward, the IIRC is well-positioned to respond to new trends and challenges facing the integrated reporting landscape. Specifically, the IIRC can continue to promote integrated reporting as an approach to implementing the next era of capitalism that is purposeful and stakeholder-focused. It can push for transparency on how different capitals are serviced and showcase best practice in integrated reporting. It can also serve as a convener for the integrated reporting global landscape.

The increasing popularity of integrated reporting creates new challenges as multiple approaches and frameworks emerge. The IIRC is ideally placed to bring together stakeholders to advance cohesion and consistency, promote policies conducive to high quality integrated reporting, and bring maximum clarity to companies and investors.

I have been proud to work with the IIRC and look forward to continuing our journey together.