Integrated Reporting practices of 100 JSE-listed companies

Deloitte has released its second quarterly report on the state of Integrated Reporting in South Africa. The report is called Integrated Reporting – Navigating your way to a truly Integrated Report. It reveals that Integrated Reporting standards have been adopted by more than half of South Africa’s listed companies. Although it is now necessary for these JSE-listed companies to include a statement of compliance with the principles set out in the King Code on Governance Principles (King III) in their annual reports, many companies are still scoring surprisingly low on corporate governance matters.

The publication (which applies to all members of the C-Suite) was prepared by the Deloitte Integrated Reporting and Sustainability team. It contains the key findings of the empirical research conducted on 100 companies listed on the Johannesburg Stock Exchange. The analysis covered 7 subjects, 58 principles and 160 questions seeking to assess actual performance against good practice. The publication includes practical observations on certain topical subjects which appear to be a challenge for companies.

GRI / Deloitte XBRL Taxonomy for Sustainability Reporting

XBRL stands for eXtensible Business Reporting Language. It is one of a family of 'XML' languages and is machine readable. Use of XML language allows sharing not only the data, but also the format that is used for presenting the data. Machine readable means that computers can recognize various elements of the report and process it without manual labor. Computers can recognize the information in an XBRL document, and select, analyze, store, and exchange it with other computers. XBRL data is set out in taxonomies – data classifications that are defined by industries and organizations for their reports and communications. XBRL information can be presented automatically in a variety of ways.

The Global Reporting Initiative (GRI) Taxonomy, developed in collaboration with Deloitte, is one of the first XBRL taxonomies for sustainability reporting. It will help investors, auditors and analysts to access information in sustainability reports faster, and more simply. An XBRL taxonomy is an industry-specific categorization scheme that defines and 'tags' data in relation to its purpose, framework or outline. It enables users to uniquely tag and identify individual detailed reporting elements which can be easily shared electronically. In the case of the GRI Taxonomy, data can be tagged following the GRI Guidelines.

The new GRI Taxonomy enables organizations to tag their sustainability data in reports. This will help report users – including regulators, investors and analysts – to find and analyze sustainability information. Organizations can benefit from a well-defined structured format for collecting and disseminating sustainability information. It enables reporters, analysts, regulators and others to exchange sustainability data electronically and inform stakeholders with consistent and high quality information.

For more information, see the GRI frequently asked questions webpage. Reporters who use the GRI Taxonomy are asked to participate in the Voluntary Filing Program.

Sustainability 2.0: Using sustainability to drive business innovation and growth

Sustainability can be a game changer. It can drive innovation by introducing new design constraints that shape how key resources— energy, carbon, water, materials and waste—are used in products and processes. It can also suggest areas where innovation can pay off especially well. These five resources are ubiquitous throughout an organization’s supply chain, and the potential to boost efficiency and cut costs across these resources is significant.

Sustainability-driven innovation goes beyond designing green products and packaging solely on their inherent virtue. It entails improving business operations and processes to become more efficient, with a goal of dramatically reducing costs and waste. It’s also about insulating a business from the risk of resource price shocks and shortages. Taken together these enhancements can deliver business benefits that go far beyond the bottom line—whether it’s improving the overall carbon footprint, enhancing the brand image or engaging employees in a more profound way.

Often, there are significant opportunities for organizations to use sustainability to drive innovation and improve how they do business. A methodical analysis can highlight areas ripe for attention. Taking it a step further, that analysis may yield even greater benefits if it is extended beyond the company’s own walls through collaboration with suppliers, customers and alliance partners. Changes to each link in the supply chain can affect everything upstream and downstream and create financial benefits for everyone involved.

To reach this new frontier, leading organizations are taking a hard look inside their operations and across their supply chains, assessing where they are, prioritizing initiatives, and then formulating a broad sustainability strategy to foster product and process innovation to achieve their goals. They are also adopting metrics that more accurately measure their progress and improve their image in the marketplace. Companies that achieve this vision have the opportunity to enhance revenue and brand value, engage effectively with key stakeholders, manage risks and reduce costs.

To learn more, read the complimentary article reprint “Sustainability 2.0: Using sustainability to drive business innovation and growth” in Deloitte Review, Issue 10, January 2012. The article is also available for reading online.

FEE Factsheet on Integrated Reporting – January 2012

The FEE (Fédération des Experts-comptables Européens - Federation of European Accountants) initially published a Factsheet on Integrated Reporting in January 2011, introducing the concept as an emerging approach to reporting by organizations. Since then, debates and developments around integrated reporting have grown and will continue.

According to a recent FEE news release, “Integrated Reporting is seen as a major development in corporate reporting. FEE releases a factsheet explaining how integrated reporting differs from traditional reporting and highlighting some of the steps taken by the International Integrated Reporting Council (IIRC). Planned actions from the IIRC include publishing an analysis of the responses received on the Discussion Paper in March 2012.”

For more information, read the FEE paper “Integrated Reporting Update, January 2012.” Also, read the December 14, 2011, FEE Comment Letter to the IIRC.

AICPA Encourages IIRC to Leverage Enhanced Business Reporting Framework

In a December 14, 2011 comment letter to the International Integrated Reporting Council on its discussion paper, Towards Integrated Reporting: Communicating Value in the 21st Century, the American Institute of Certified Public Accountants (AICPA) supported an international framework for integrated reporting and encouraged the IIRC to leverage the preliminary, high level Enhanced Business Reporting Framework.

The letter states that: “We agree that there is a need for a new reporting model that brings together the currently disparate pieces and perspectives of business reporting to produce a more holistic external presentation of decision-useful information for investors and other stakeholders.” It suggests that the framework should allow organizations to find and report common framework elements most relevant to their stakeholders and that the elements should be presented so that they are comparable across companies and time periods. In order to improve transparency and provide easy access to, and analysis of, integrated reporting disclosures, the framework should allow the creation of standardized integrated reports using data standards such as eXtensible Business Reporting Language (XBRL).

According to the AICPA, the initial focus of integrated reporting should be on larger companies and the needs of their investors, which would serve as an important core foundation that can be leveraged over time to meet the needs of all companies and audiences. For more information, read the AICPA Insight blog and visit the Enhanced Business Reporting section on AICPA.org.

Canada’s Corporate Reporting Awards program celebrates 60 years of excellence

For 60 years, the CRA has been Canada’s only national program shining a spotlight on Canada’s best corporate reporting models. The program offers publicly-listed companies, and now federal and provincial Crown corporations, a unique opportunity to showcase their commitment to quality corporate reporting. Entrants demonstrate confidence in their reports by submitting them to an independent panel of judges, who are experts in their respective areas.

Fifteen Canadian publicly-listed companies and Crown corporations were recently honoured in Toronto at a gala event that marked the diamond anniversary of the Chartered Accountants of Canada’s Corporate Reporting Awards (CRA).

When the program started in 1941, the focus was the annual financial report. Over the years, it has evolved to keep pace with the capital markets and the expectations of Canadian investors for greater transparency and better information on which to base their investment decisions. Today’s CRA includes separate categories for corporate governance reporting, sustainable development reporting and electronic disclosure. The criteria have helped drive the development of best practices in all these areas, which are now regarded as essential components of the integrated corporate reporting model.

Global Companies to Lead Unique Integrated Reporting Pilot Program

The International Integrated Reporting Committee (IIRC) has announced that over 40 leading companies from around the world have been chosen as participants in the IIRC Pilot Programme initiative and the number is growing. These global companies, representing various sectors and industries, met for a two day kick-off event in Rotterdam on October 17-18, 2011. This marked the beginning of a two year journey with the IIRC where they will be given the opportunity to demonstrate global leadership in this emerging approach to corporate reporting. The full list of participating companies is available on the IIRC website.

KPMG International Survey of Corporate Responsibility Reporting 2011

According to a recent KPMG survey, leading companies have combined their Corporate Social Responsibility (CSR) reporting and financial reporting, often by merging the two into the annual report. While this has been a valuable stepping stone in building an understanding of how CSR impacts the business, greater value will be gained once both sets of information are treated as part of the company’s comprehensive business performance reporting, both to internal management and external stakeholders.

Companies are also quickly evolving the method by which they communicate their CSR information to their various audiences. As more and more companies start to employ multiple vehicles for communication, the focus will be on developing and implementing a comprehensive communication strategy that enhances trust and value for the company within its different stakeholder groups.

(For more information, read the full report, KPMG International Survey of Corporate Responsibility Reporting 2011, available online.)

Corporate reporting - From compliance to competitive edge

Today’s business information and reporting is under fire from companies, investors, government and regulators alike. In response, PricewaterhouseCoopers (PwC) has published a paper called "Corporate reporting - From Compliance to Competitive Edge" which explains why today's business information and reporting is falling short, what's driving change, where insight is missing and how companies can take action. This report incorporates some of the findings from the PwC annual survey of the quality of FTSE 350 reporting.

(For more information on recent developments, visit the PwC corporate reporting website and also see the PwC Corporate Reporting Blog by David Phillips, Senior Corporate Reporting Partner in the Assurance practice of PricewaterhouseCoopers LLP.)

What makes a good annual report?

What’s the secret for a good annual report? It usually boils down to keeping things simple, but keeping them simple these days is a challenge. Rising demands for more disclosure and the integration of sustainability reporting are factors making annual reports ever longer and more complex. Unfortunately, too many annual reports are choked with low-quality information, disconnected content and boilerplate, all of which obscures key messages.

Clear, crisp communication, on the other hand, is a sign of strong leadership. It’s also an opportunity to improve engagement and dialogue with stakeholders. Four techniques for creating a good annual report are: (1) focus on strategy; (2) cut the clutter; (3) sum it up; and (4) speak plainly.

(To learn more, read “What makes a good annual report?” by Richard Ketchen at IR Web Report online.)

Corporate Sustainability: A progress report

Corporate Sustainability: A progress report is a KPMG research report, conducted in cooperation with the Economist Intelligence Unit. It reviews the importance of sustainability within business today and executive attitudes toward this issue. According to the report, sustainability is rapidly becoming a strategic priority for businesses.

Around the world, there are encouraging examples of pioneering companies that have recognized the imperative of sustainability and created strategies and solutions. For a growing number, the concept of sustainability goes far beyond corporate social responsibility (CSR). It has become the strategic lens through which they view their businesses. For these organizations, sustainability offers an undeniable opportunity to gain competitive advantage, drive innovation and generate real bottomline results. Despite a complex array of challenges, these companies are already taking great strides towards shaping the global approach to sustainability. What propels these organizations past their competitors is the recognition that sustainability goals must be tied to operational strategy and measured in the same way as other investments. By treating sustainability as an investment rather than a cost, they have adjusted their business models to drive long-term change and make them more competitive in the market. 

This research report is based on an October 2010 global survey of 378 senior executives encompassing a range of industries and evenly split among North America (US and Canada), Asia Pacific and Europe, with a smaller representation from the Middle East, Africa and Latin America. Organizations of all sizes were represented: 40% of respondents worked for firms with revenues of at least US$ l billion, whereas 47% were from firms with revenues of US$ 500 million or less. The respondent base was very senior: 26% were CEOs, presidents or managing directors of their firms; half represented the C-suite or board; and all respondents were in a management position. To complement this and to provide specific context, the Economist Intelligence Unit conducted extensive desk research and in-depth interviews with numerous corporate sustainability executives and experts.

ACCA launches online Virtual Research & Insights Conference

More than 6,000 finance professionals have signed-up for the Association of Chartered Certified Accountants (ACCA) online Research & Insights Conference which launched last week. The conference sessions can be viewed on-demand via the ACCA website until October 27, 2011.

HRH Prince of Wales delivered a live address at the conference on his involvement with the Accounting for Sustainability Project, as part of the session on integrated reporting. The online audience also heard from Professor Mervyn King, deputy chair of the International Integrated Reporting Committee (IIRC), who talked about the future scope of integrated reporting, as well as the benefits and challenges of creating a framework that brings together financial, environmental, social and governance information in a clear, concise and comparable format.

The conference covered a wide range of topics from a wealth of expert speakers, including: the new business environment: opportunities for growth; why talent management in finance matters; integrated reporting: a framework for the future; financial issues from Brussels; extended audit reporting; the eProfessional: creating the next generation of accountants; making businesses accountable; cloud computing; social media; and XBRL.

(View the ACCA conference program and ACCA Attendee Guide, then register to access the conference presentations.)

Transocean: No Apologies Over Gulf Oil Spill

"Fourteen months after the Deepwater Horizon drilling rig exploded 50 miles southeast of Venice, La., killing 11 men and setting off the largest offshore oil spill in U.S. history, Transocean (RIG), the company that owned and ran the ill-fated 32,600-ton vessel, finally issued its official account of what happened and why. It produced a report on June 22 of no fewer than 854 pages, divided into two volumes, and spared no detail. The bottom line, though, isn’t complicated:It was BP’s (BP) fault." (Read the full story "Transocean: No Apologies Over Gulf Oil Spill" at Bloomberg Businessweek online.)

Sustainability Framework 2.0: Professional Accountants as Integrators

“The role of leadership and business strategy is to promote the integration of sustainability issues at a strategic level, so that they are embedded in organizational development covering strategy, planning, enterprise risk management, and operations. The importance of tone at the top is best captured by the King Code of Corporate Governance for South Africa, which specifically encourages the integration of governance and sustainability into strategy, operations, and reporting of an organization. The philosophy of the King code revolves around leadership, sustainability and corporate citizenship. Responsible leaders direct company strategies and operations with a view to achieving sustainable economic, social and environmental performance.” (Read the publication Sustainability Framework 2.0: Professional Accountants as Integrators, issued by the International Federation of Accountants (IFAC) in March 2011.)

Integrating the Business Reporting Supply Chain

High-quality business reporting lies at the heart of strong capital markets and sustainable economic growth. All those involved in the business reporting supply chain play a critical role in making business reports more relevant, understandable and reliable. This will enable the various stakeholders who use those reports to make informed decisions with respect to an organization’s social, environmental, and economic performance.

Recent interviews with key business leaders from around the globe capture recommendations on governance, financial reporting, financial auditing, and broader business reporting from prominent preparers, directors, auditors, standard setters, regulators and investors. This report analyzes what, according to interviewees, the various participants in the business reporting supply chain should do to further improve governance and the usefulness of business reports, as well as the preparation and audit of those reports. Unless otherwise stated, the recommendations in this report apply to all organizations and businesses. (For more information, read the March 2011 IFAC report Integrating the Business Reporting Supply Chain.)

Green Gauge

The idea that business organizations have a responsibility to account for their impact on the environment once seemed radical, even eccentric. Now, it is accepted as a mainstream concept – but to put it into practice, corporate reporting will have to evolve dramatically. It’s a challenge to which the accountancy profession must step up, if it is to retain its relevance in the 21st century. As a start, the Sustainability Advisory Group of the Institute of Chartered Accountants of Scotland (ICAS) has launched a dedicated section on the institute’s website providing links to a number of useful resources and a template Corporate Social Responsibility Report. (Read the article “Green Gauge” in the May 2011 issue of CA Magazine (Scotland) online.)

CICA Corporate Reporting Awards celebrate 60 years of excellence

This year marks the diamond anniversary of the Chartered Accountants of Canada’s Corporate Reporting Awards. Since 1941 the program has been centre stage in Canada’s evolution to best practice reporting models.  By providing important recognition for those committed to advancing business reporting, the program has helped drive the development of best practices in financial reporting, corporate governance disclosure, electronic disclosure and sustainable development reporting, all of which are now regarded as essential components of the corporate reporting model. Judging organizations include the Canadian Institute of Chartered Accountants (CICA), PricewaterhouseCoopers, Ernst & Young, Deloitte, International Institute for Sustainable Development, Canadian Investor Relations Institute, and Toronto CFA Society. (Read the article “Corporate Reporting Awards celebrate 60 years of excellence” in the June-July 2011 issue of CAmagazine online.)

ICAEW Library and Information Service - Gateway on Environmental, social and sustainability reporting

Environmental, social and sustainability reporting have grown substantially over the last decade.  The Institute of Chartered Accountants inEngland and Wales (ICAEW) provides access to a range of articles, publications and online resources including information on reporting trends and developments. (Visit the ICAEW Library and Information Service - Gateway on Environmental, social and sustainability reporting.)

Integrated Reporting Workshop Videos - Harvard Business School

A series of about 30 YouTube videos has recently been posted by the Harvard Business School. The videos cover the various speaker presentations at the Workshop on Integrated Reporting which was held at the Harvard Business School on October 14-15, 2010. The Workhop was discussed in a previous blog posting on December 1, 2010.

FEE Factsheet on Integrated Reporting

Debates and developments around the concept of “integrated reporting” are growing in importance. According to the FEE (Fédération des Experts-comptables Européens - Federation of European Accountants), “integrated reporting is a holistic approach to enable investors and other stakeholders to understand how an organisation is really performing. Addressing the wider as well as longer-term consequences of decisions and actions, an integrated report makes clear the link between financial and non-financial value. The relationship between an organisation's strategy, governance and business model should be transparent through such reporting. It also gives an analysis of the impacts and interconnections of material opportunities, risks and performance across the value chain.” The FEE represents 45 professional institutes of accountants and auditors from 33 European countries, including all 27 EU Member States. (Read the FEE Factsheet on Integrated Reporting.