Corporate reporting reform is necessary to support the wider goals of financial stability and sustainable development. Given today’s complex business models and operating environment, markets need high-quality information in order to allocate capital efficiently and productively.

By Neil Stevenson Managing Director, Global Implementation, International Integrated Reporting Council

Take the US$500 billion annual gap in infrastructure investment worldwide identified by Standard & Poor’s: investors will need information that goes beyond the financials to commit to making the long-term investment decisions required for a solution. Integrated reporting can help businesses meet these investor needs. It gives them vital insight into business strategy, performance, governance and prospects. Research indicates that investors use an increasing range of information when making investment decisions – information that has not typically appeared in traditional annual reports.

Investors come in various shapes and forms, and there will be some who are more natural users of integrated reports, and the wider sets of information they offer. However, investors are playing an increasingly substantial role in driving corporate governance reform, accountability and transparency. The advent of investor stewardship codes is providing a helpful pull in this direction.

Integrated reporting is the friend of movements seeking to align corporate reporting with long-term economic performance and sustainable development. This can happen through dialogue between investors and companies, based on a wider view of strategy and a plan to create value over time. The IIRC, in collaboration with the PRI, produced Creating Value: Value to investors, which examines this in further detail, drawing on evidence and commentary in the market to explain why integrated reporting is relevant to key capital markets participants, and what benefits they could gain from its widespread adoption.

The work of the PRI in building the bridge from reporting to investment decisions, and mobilising investors towards long-term value creation, is a vital component in creating the conditions for successful corporate reporting reform.

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    RI Quarterly vol. 7: Unleashing performance through reporting and disclosure

    May 2015