Integrated Thinking & Reporting Conference—five key takeaways
The IFRS Integrated Thinking & Reporting Conference: Connecting strategy to impact through integrated thinking and reporting took place in Frankfurt on Monday 12 June. This event provided insights, thought leadership and best practices on integrated thinking and reporting from pioneers and practitioners, market participants and academics, and shared how the ISSB is embedding the principles and concepts of the Integrated Reporting Framework within its Standards. Read on for five key takeaways from the day’s sessions.
1. Integrated thinking and reporting improve engagement and discourse between investors and investees.
Integrated thinking and reporting provide focus for conversations with investors because they explain implications and improve visibility over the drivers of long-term value creation. Having clearer information enables investors to make better investment decisions. Takashi Nagaoka, Deputy Commissioner of the Financial Services Agency of Japan and Chair of the IFRS Foundation Monitoring Board, affirmed:
“The most important element in increasing medium- to long-term corporate value, is to have a continuous and constructive dialogue between investors and investee companies. […] The Integrated Reporting Framework […] is a model that clearly shows the process by which an organisation creates value.”
2. Integrated thinking and reporting are integral to the IFRS Foundation’s development of a comprehensive global corporate reporting system.
Integrated thinking and reporting enhance the way organisations think about, plan and report on business performance and provide insights into their future prospects through a multi-capital and value-creation lens.¹ More than 2,500 businesses in 70+ countries have adopted integrated reporting. The IASB and ISSB Chairs encourage the continued use of the Integrated Reporting Framework and remain committed to using its principles and concepts to help achieve a globally accepted, comprehensive corporate reporting system.
Erkki Liikanen, Chair of the IFRS Foundation Trustees, reiterated the Foundation’s commitment to developing the global corporate reporting system:
“I want to confirm that the principles of integrated reporting, underpinned by integrated thinking, can help the IFRS Foundation to deliver a comprehensive corporate reporting system, securing integration and connectivity between sustainability and financial disclosure. […] The stewardship of the Integrated Reporting Framework and the related strategy for corporate reporting is of real importance to the IFRS Foundation Trustees. We are focused on the simplified, standardised and integrated approach to reporting”.
3. Integrated thinking and reporting improve performance.
Integrated thinking and reporting help organisations worldwide look at their businesses through a more connected, multi-capital lens, which enables them to tell their value creation stories in a more transparent and insightful way. Moreover, the multi-capital approach—and extending disclosure horizons beyond the short-term—can bring substantial benefits such as a lower cost of capital.
CEOs and CFOs from world-leading organisations discussed their experiences with embedding integrated thinking into their organisations, highlighting resulting benefits of long-lasting positive cycles of value creation and improved reporting:
“We started by organising the process of corporate value creation, which is the basis for integrated thinking, and this became a turning point for the company, in building a new corporate value enhancement story.”
– Kaoru Sakita, CFO, Asahi Group Holdings
“The how and the what is about having an overall ambition, a holistic plan – that’s the thinking – and what we believe at Solvay is we need three pillars: climate, resources, […] people.”
– Ilham Kadri, CEO, Solvay
4. Integrated thinking and reporting can be a natural link between investor- and impact-focused sustainability reporting
The landscape of corporate reporting is changing, bringing new opportunities and challenges. ISSB Chair Emmanuel Faber said, “The integrated reporting approach is a natural bridge to a number of initiatives.” Underpinned by the holistic principles of integrated thinking, the Integrated Reporting Framework is ideally placed to help ensure that the IFRS Foundation and Global Reporting Initiative (GRI) realise their joint goal of developing a comprehensive corporate reporting system that addresses the information needs of the capital markets as well as multi-stakeholders.
Bastian Buck, Chief of Standards at GRI, highlighted:
“We believe that [integrated reporting] is an integral part of connecting more traditional audiences, from the accounting profession, the CFOs, the boards, into an impact perspective.”
“As Emmanuel said earlier, lots of the metrics that we’ve developed in the last 25 years [for example, human capital] can be used to tell a story about value creation as well.”
5. Integrated thinking and reporting are complementary to the ISSB Standards.
Charles Tilley, Chair of the Integrated Reporting and Connectivity Council (IRCC), offered a few final considerations to sum up the day’s discussions. He stressed the importance of integrated thinking and reporting to investors, referencing Clara Barby, Senior Partner of Just Climate, who contributed to a panel of investors at the IRCC’s April 2023 meeting and noted that when companies are not following the integrated reporting process, investors have to make their own assumptions, which can be dangerous.
Additionally, Mr. Tilley reminded the audience that integrated reporting and the ISSB Standards are interconnected:
“You need the Framework to tell your story, but so that people actually believe it, you need the Metrics and Standards.”
The Integrated Reporting Framework and Integrated Thinking Principles, when used together with ISSB Standards, can support a holistic view of the value creation process through governance, strategy, risk and opportunity management and business model disclosure to drive connections between financial statements and sustainability‑related financial disclosures.
Thank you to all who attended the Integrated Thinking & Reporting Conference in person and online. If you missed it, you can watch the recorded sessions on demand. The next Integrated Thinking & Reporting Conference is tentatively planned for May 2024.
The ISSB is currently seeking feedback on its agenda priorities for its next two-year work plan, including four potential projects.
One of these potential projects is a research project on integration in reporting to explore how to integrate information in financial reporting beyond the requirements related to connected information in IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures.
Your feedback on this Request for Information is important and will inform both the ISSB’s work plan and its approach to future projects. Responses to the Request for Information must be submitted by Friday 1 September 2023.
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 A multi-capital lens recognises that an organisation’s success depends on multiple stocks of value, resources and relationships. The resources and relationships are the stored value of an organisation and the inputs to its business model and are increased, decreased or transformed through the organisation’s business activities and outputs. The capitals are categorised in the Integrated Reporting Framework (January 2021) as financial, manufactured, intellectual, human, social and relationship, and natural.