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08.08.2012: ACCA advocates adoption of integrated reporting

Companies who adopt an integrated reporting (IR) approach disclose more social, environmental and ethical information in their corporate reports and take greater account of stakeholders’ needs, according to a study from ACCA.

The institute has published a discussion paper Reporting pre-and post-King III: what’s the difference? summarizing the findings of an academic report on the impact of IR in South Africa, where it has been mandatory since 2010/11.

The researchers analyzed 10 annual reports from South African companies both before and after the introduction of IR and found that there was significantly more social, environmental and ethical information reported in the 2010/11 reports than those before IR became mandatory.

In the pre-IR reports this information tends to be restricted to specific sections (usually the sustainability report itself) rather than being part and parcel of the whole report, which IR advocates.

Rachel Jackson, head of sustainability at ACCA said:

  • “Our findings show there is a difference between then and now, and it appears that the organizations examined have had a growing realization that non-financial issues have financial implications for their firms. There has been a change in how sustainability issues are now linked to materiality and risk”.
  • ACCA says the research shows IR encourages a shift towards more stakeholder orientated reporting, particularly in the chairman’s statement and chief executive’s review, as well as a greater level of stakeholder engagement.
  • However it warns that this means adopting IR could prove a challenge for the International Integrated Reporting Council (IIRC) based on its recent announcements.
  • Jackson said: “The IIRC’s focus has been on the production of integrated reporting for decision-making purposes, and for shareholders – the IIRC itself has made clear its emphasis on shareholder, not stakeholder, accountability”.
  • ACCA has drawn up a list of recommendations for developing IR further. These include making information more concise to avoid repetition and incorporating more feedback from consultation with stakeholders, as well as involving academics more closely in discussions over the future of IR.

 

Source: AccountancyLive

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