Integrated Reports Voluntary Filing, by authors Eccles and King, is a very useful update on the global integrated reporting situation and outlines four challenges to the 2020 Goal for Integrated Reporting. I’d like to comment on these challenges below.
1. Standards for nonfinancial information need to be established

The GRI (and others e.g. Sigma) have done a great job defining content standards like ESG indicator sets but data standards are few and far between. The GRI’s XBRL taxonomy has not gained much traction and Spain’s RSC-CCI XBRL taxonomy is only being leveraged by a handful of early-adopter organizations. Without data standards to control agreement around what the data actually means, indicators merely present information that is unverifiable at the data storage level.

2. A framework for a truly integrated report needs to be established since currently none exists

This is a big one. A truly holistic framework for integrated reporting is a major task. What this represents is nothing less than defining the web of connections between financial and non-financial data so that drilldown, through and around can deliver true transparency from the numbers. That’s what ‘connected’ and ‘holistic’ reporting is really all about.

3. These frameworks need to more explicitly incorporate how the Internet can be leveraged.

And the terms ‘paper’ and ‘PDF’ are explicitly not incorporated in this framework.

4. Audit methodologies need to be developed for nonfinancial information that are as rigorous as they are for financial information and that cover both paper-based and Internet-based content.

There’s that damn ‘paper’ word again.

But aside from that, we need to replace the word ‘as’ with ‘more’ in front of rigorous. First because financial auditing hasn’t proved especially rigorous over the last decade or so and second because non-financial information is simply more important than financial information to everyone outside the IR ghetto. Auditing to financial information standards is simply not good enough.

Then of course there’s the biggest challenge of all which is getting Governments to understand that without mandates much of this won’t mean squat. Integrated reporting is not just about a few well-intentioned multi nationals cranking out an annual sustainability report – it’s about understanding that we live in an integrated global economy that is inextricably integrated with an environment that is beginning to show distinct signs of disintegrating.

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This entry was posted on Monday, July 19th, 2010 at 8:37 am and is filed under Sustainability, Transparency, XBRL. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.