Global perspectives

Thomas Kusterer

IIRC Council Member and <IR> Business Network participant

Chief Financial Officer, EnBW Energie Baden-Württemberg AG

Ten years ago, I had the very great privilege of being one of the founding members of the IIRC, an initiative conceived with the aim of further developing corporate reporting.

In the aftermath of the financial crisis it became obvious to me that the existing practice of financial reporting no longer adequately reflected the information needs of capital markets. This applied not only to my company EnBW, but also to the vast majority of capital market-oriented companies. Therefore, EnBW actively supported the IIRC in developing an integrated reporting framework right from the beginning. Then in 2012, we embarked on our own journey towards integrated reporting and in 2014 published our first annual report that deserved to be called an integrated report in accordance with the guiding principles and content elements of the International <IR> Framework.

Right from the beginning it was our goal to present a more comprehensive and at the same time concise picture of all material financial and non-financial aspects of our company. In recognizing the increasing significance of forward-looking information for sustained long-term value creation, we also focused on disclosing more strategic information to the capital market. The <IR> Framework provided EnBW with the basis to further develop and enhance our corporate reporting. We were able to integrate our sustainability reporting as well as the recommendations of the Task Force on Climate-related Financial Disclosures on climate related risks and opportunities into our financial reporting. This now allows us to present a more holistic and transparent view of EnBW’s current state and future development.

The IIRC has achieved a lot over the past ten years and can be proud of how it has shaped corporate financial reporting globally. At the same time, we also need to recognize that there is still a way to go towards establishing a global standard for non-financial information and integrated reporting with meaningful outreach. Without a doubt, implementing integrated reporting for the first time in a company requires additional effort in the beginning. Integrated thinking often requires long and far reaching transformation processes within the company which, in my experience, is one of the main factors why CEOs and CFOs often shy away from introducing integrated reporting and tend to hold on to traditional financial reporting. In addition, regulators and legislators are often not as helpful as they could be.

On the other hand, it seems as if the time is right to push even more towards integrated thinking and reporting. Investors are increasingly asking for more transparency regarding financial and non-financial information and future legislation, at least in Europe, is pointing in the same direction. From my perspective, the next ten years could be a decade in which more integrated and holistic corporate reporting, the IIRC and the <IR> Framework, will play a decisive role. The latest development with the statement of intent to work together towards comprehensive corporate reporting between financial and non-financial standard setters and the IIRC is evidence that we are going in this direction.

I am very much looking forward to further supporting the IIRC in its drive to foster integrated thinking and long-term value creation.