The International Integrated Reporting Council (IIRC) today welcomes the updated guidance on the Strategic Report issued for consultation by the UK Financial Reporting Council, which provides the potential for a step-change in the quality of corporate reporting.
The updated guidance strengthens the alignment between the Strategic Report and Integrated Reporting in several important ways, in particular by recommending that non-financial information should be integrated throughout the Strategic Report. This commitment to integration provides a clearer direction for companies wishing to adopt the International <IR> Framework while meeting necessary statutory requirements.
In addition, the IIRC welcomes the focus on improving the quality of Section 172 disclosures to ensure the long-term impact of company decisions is understood by shareholders and other stakeholders.
Since the release of the International <IR> Framework in December 2013 and the original FRC guidance issued in June 2014, a significant number of FTSE listed companies have started to adopt Integrated Reporting, including United Utilities, Unilever, Diageo, HSBC and Marks & Spencer.
Commenting on the release of today’s consultation, Richard Howitt, CEO, IIRC, said:
“This guidance provides the clearest signal yet that a company can use the International <IR> Framework to prepare its Strategic Report, as the updated guidance increases the complementarity of these reporting approaches. This increased alignment provides the opportunity for a step-change in the quality of corporate reporting. The major shift with today’s guidance is that, not only are the principles consistent, but now the language of long-term value creation is becoming embedded in UK corporate reporting practice.
“We know that investors increasingly assess the quality of corporate reporting as a proxy for the quality of management, and the evidence shows that businesses practicing Integrated Reporting benefit from lower borrowing costs as well as higher performance. Today UK businesses have the chance to reach for the gold standard – using the International <IR> Framework to achieve world-class Strategic Reports.
“The UK is providing a model for the adoption of Integrated Reporting and I would encourage all listed companies to use the International <IR> Framework alongside the FRC’s guidance to achieve improvements to the quality of their corporate reporting.”