Transcript Presentation

Agenda
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Opening & welcome
Discussion Paper walkthrough
<IR> Framework
Pilot Programme
Q&A
Closing
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Discussion Paper –
context for Integrated Reporting
Discussion Paper Overview
• Available from 12th September 2011
• Public comment until 14th December 2011
– Ten specific questions
– Other comments respondents would like to make
• Rationale behind Integrated Reporting
• Outline of an International Integrated Reporting Framework
– Central themes: business model and value creation
– Guiding Principles
– Content Elements
• Benefits and challenges along the reporting supply chain
• Future directions
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The percentage of market value represented by physical and financial assets versus intangible
factors, some of which are explained within financial statements, but many of which are not.
The world has changed – reporting must too
Global economic power is shifting
Top 10 economies by GDP in 2050
The global middle class is rapidly expanding
Population in low- and middle-income countries
earning $4,000-$17,000 per capita (purchasing
power parity)
Source: UN Population Division, World Population
Prospects: The 2008 Revision, 2008
Source: Goldman Sachs, BRICs and Beyond, 2007
Source: World Bank, Global Economic Prospects, 2007
Greenhouse gas emissions keep rising
GHG emissions by regions
Environmental degradation jeopardises
people’s quality of life
People living in areas of water stress by level
of stress
The world could be running out of some
resources
Source: Goldman Sachs, BRICs and Beyond, 2007
Source: World Bank, Global Economic Prospects, 2007
Growth
The world population is increasingly urban
Global population by type of area and by region:
1950-2050
Degradation
Global supply forecasts according to the implied ultimate recoverable
resources of conventional oil, date of peak production and the postpeak aggregate decline rate
Source: UN Population Division, World Population
Prospects: The 2008 Revision, 2008
Source – WBCSD Vision 2050
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Reports: Increasing length and complexity
Prudential annual report pages 1850-2008
Source: Investis research - PwC
The evolution of Reporting…
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…Integrated Reporting – the Future
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Coordinated, International Action Needed
Now
• Reporting has a fundamental impact on decision-making
• Critical interdependencies need to be made clear
• A clear, concise picture of performance, impacts and
interdependencies, to:
– drive innovation
– be focused on communication and not just on compliance
– support resource allocation decisions consistent with sustained
value creation and with long term economic stability
• Build on the many positive developments to date
• Bring together divergent strands of reporting
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Aims of the Framework
• Support the development of reporting over the coming
decades
– Reporting organizations – consistency of content and approach
– Policy makers and regulators – consistent reporting regimes
within and across jurisdictions
– Standard-setters – focal point for harmonization
• Initial proposals in Discussion Paper – interim guidance to
be on the IIRC website
• Initial focus – larger companies and the needs of their
investors
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What Will it Mean for Me?
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Benefits and challenges
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Future Direction
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Continue developing the International Integrated Reporting
Framework
– draw on Pilot Programme experiences
– Exposure Draft in 2012
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Work with others on measurement and reporting relevant to
Integrated Reporting
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Explore with regulators etc opportunities to harmonize
reporting requirements within and across jurisdictions
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Conduct regional roundtables and other engagement and
communications activities
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Public consultation regarding ongoing governance of
Integrated Reporting
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International Integrated Reporting Framework overview
How is Integrated Reporting Different?
Thinking:
Disconnected
Stewardship:
Financial capital
Focus:
Past, financial
Timeframe:
Short term
Trust:
Narrow disclosures
Adaptive:
Rule bound
Concise:
Long and complex
Technology
enabled:
Paper based
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Integrated
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Short, medium and long term
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Concise and material
All forms of capital
Past and future, connected,
strategic
Greater transparency
Responsive to individual
circumstances
Technology enabled
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Central themes
Business model & value creation
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Resources and relationships or “capitals”
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Financial capital: The pool of funds available to the
organization.
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Manufactured capital: Manufactured physical objects, as
distinct from natural physical objects.
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Human capital: People’s skills and experience, and their
motivations to innovate.
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Intellectual capital: Intangibles that provide competitive
advantage.
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Natural capital: Includes water, land, minerals, and forests; and
biodiversity and eco-system health.
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Social capital: The institutions and relationships established
within and between each community, group of stakeholders and
other networks to enhance individual and collective well-being.
Includes an organization’s social license to operate.
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Guiding Principles
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Strategic focus: An Integrated Report provides insight into the organization’s
strategic objectives, and how those objectives relate to its ability to create and
sustain value over time and the resources and relationships on which the
organization depends.
Connectivity of information: An Integrated Report shows the connections between
the different components of the organization’s business model, external factors that
affect the organization, and the various resources and relationships on which the
organization and its overall performance depend.
Future orientation: An Integrated Report includes management’s expectations
about the future, as well as other information to help report users understand and
assess the organization’s prospects and the uncertainties it faces.
Responsiveness and stakeholder inclusiveness: An Integrated Report provides
insight into the organization’s relationships with its key stakeholders and how and to
what extent the organization understands, takes into account and responds to their
needs.
Conciseness, reliability and materiality: An Integrated Report provides concise,
reliable information that is material to assessing the organization’s ability to create
and sustain value in the short, medium and long term.
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Content Elements
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Organizational overview and business model: What does the organization do
and how does it create and sustain value in the short, medium and long term?
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Operating context, including risks and opportunities: What are the
circumstances under which the organization operates, including the key resources
and relationships on which it depends and the key risks and opportunities that it
faces?
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Strategic objectives and strategies to achieve those objectives: Where does
the organization want to go and how is it going to get there?
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Governance and remuneration: What is the organization’s governance structure,
and how does governance support the strategic objectives of the organization and
relate to the organization’s approach to remuneration?
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Performance: How has the organization performed against its strategic objectives
and related strategies?
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Future outlook: What opportunities, challenges and uncertainties is the
organization likely to encounter in achieving its strategic objectives and what are the
resulting implications for its strategies and future performance?
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Pilot Programme
What is the Pilot Programme?
A two year programme:
• Trying and testing IIRC’s proposed principles for Integrated
Reporting
• In support of the development of an International
Integrated Reporting Framework
• Asking leading companies and investors to develop and
exchange good practice
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Programme Milestones
Expression of
Interest
Dry Run
(Phase 1)
Pilot Cycle 1
(Phase 2)
Pilot Cycle 2
(Phase 3)
September 2011 – Dry Run Conducted
17-18 October 2011- Pilot Programme Kick-off
Meeting (Rotterdam, the Netherlands)
September 2012 - Mid-Programme Conference
November 2013 – Closing Conference
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Questions?