Good news for proponents of sustainability reporting: On Tuesday, the Global Reporting Initiative and the Accounting for Sustainability project (A4S) sponsored by the Prince of Wales announced the formation of the International Integrated Reporting Committee (IIRC) The group intends to create a globally accepted accounting framework linking financial, environmental, social, and governance information into one clear, concise, consistent, and comparable format. It consists of a “cross-section of representatives from civil society and the corporate, accounting, securities, regulatory, NGO [governmental organization], IGO [inter-governmental organization] and standard-setting sectors,” according to the press release. Thus far, its membership and working group comprise leaders of these organizations.
Tuesday’s launch follows from an argument advanced late last year (and revised in May) by the Prince of Wales for a “connected and integrated reporting framework overseen by an ‘International Integrated Reporting Committee’“ that would “help transition toward a sustainable economy”. (See Governance & Collaboration). Last December, attendees of the Prince’s Accounting for Sustainability Forum meeting discussed the idea, and made a commitment to “integrate the work of different initiatives”.
In late May, at its biannual Conference in Amsterdam, the GRI threw its support behind the effort. GRI’s Chief Executive Ernst Ligteringen proposed that a standard for integrated reporting should be defined, tested, and adopted by 2020.
While this is a milestone, integrated reporting is not a new concept. The surge of interest comes from the convergence of several forces:
- three financial crises in the last decade that have led to a collapsed worldwide economy, spurring a growing sense that prevailing business models don’t work;
- increasing acceptance of the reality of climate change, which poses serious risk to our economic and community well-being;
- the “mainstreaming” of sustainability reporting and investing on the part of institutions and individuals, including the establishment of government policies in the UK, South Africa, and elsewhere that connect sustainability concerns to fiduciary obligation; and
- the publication last March of a book devoted to the subject, entitled One Report: Integrated Reporting for a Sustainable Strategy, co-authored by Robert Eccles of Harvard Business School and Michael Krzus of the accounting firm GrantThornton.
“[D]ue to efforts by forward-thinking people like John Elkington [the founder of SustainAbility who developed the concept of, and coined the term, “triple bottom line reporting” in 1994], Mervyn King (chairman of South Africa’s King Committee which has issued three reports on corporate governance since 1994, the latest in 2009), and Robert K. Massie (former director of Ceres and co-founder, along with Allen White, of the [Global Reporting Initiative]), organizations like Ceres, the Global Reporting Initiative (GRI), The Prince of Wales Accounting for Sustainability Project (A4S), Business for Social Responsibility and social investment funds and associations all over the world, substantial progress has been made over the past 10 to 15 years in voluntary non-financial reporting (called by such names as corporate social responsibility, sustainability, or environmental, social and governance reporting).”
This phase of the movement toward integrated reporting is off to a great start. Tomorrow we’ll provide more information on various reactions both to the concept and this initiative, as well as ways in which the broader public can get involved.