IIRC Consultation Draft. Executive Summary

Transcription

1 IIRC Consultation Draft Executive Summary T 1

2 IIRC Consultation Draft Executive Summary IIRC Consultation Draft Executive Summary The International Integrated Reporting Council (IIRC) released the International Integrated Reporting (<IR>) Framework Consultation Draft (Consultation Draft) on 16 April The Consultation Draft is open for comment until 15 July 2013 with v1.0 of the IIRC Framework expected to be released in December Definition of IR: <IR> is a process that results in communication by an organization, most visibly a periodic integrated report, about value creation over time. An integrated report is a concise communication about how an organization s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value over the short, medium and long term. Audience for IR: The primary audience for an integrated report is providers of financial capital, particularly those with a long term view. However, other stakeholders may benefit from information included in the integrated report. Frequency of reporting A stand alone integrated report should be prepared annually in line with the statutory financial reporting cycle. Reporting boundary The integrated reporting boundary should be based on: The boundary used for financial reporting purposes Opportunities, risks and outcomes attributable or associated with other entities/ stakeholders beyond the financial reporting entity that have a material effect on the financial reporting entity s ability to create value over time. <IR> Reporting Boundary (opportunities, risks and outcomes) Financial Reporting Entity (control and significant influence) Parent Joint arrangements Subsidiaries Investments (other forms) Subsidiaries Employees Customers Suppliers Business Partners Local Communities Others 2

3 Reporting suite: An integrated report should be a stand alone, concise communication, with any other reports or communications released by organisations for compliance purposes or to provide particular information for a specific stakeholder, referenced or linked thereto (where relevant). Application of the Framework: The Framework is intended primarily for application by private sector, for profit companies, but it can also be applied (with adaptions as necessary) by public sector and nonprofit. An integrated report should be prepared in accordance with the Framework. In order for an integrated report to state that it has been prepared in accordance with the Framework, the Guiding Principles and Content Elements disclosed in the table on the next page should be complied with (unless, and to the extent, the unavailability of reliable data, specific legal prohibitions or competitive harm results in an inability to disclose information that is material). In addition, there are some minimum disclosures required: The governance body with oversight responsibilities for integrated reporting. The reporting boundary and how it has been determined The organisation s materiality determination process The nature and magnitude of the material trade offs that influence value creation over time The reason why the organisation considers any of the capitals identified in the Framework to be immaterial given its particular circumstances, if that is the case. 3

4 IIRC Consultation Draft Executive Summary Guiding Principles and Content Elements Guiding Principles Strategic focus and future orientation: An integrated report should provide insight into the organisation s strategy, and how that relates to its ability to create value in the short, medium and long term and its use of and effects on the capitals. Connectivity of information: An integrated report should show, as a comprehensive value creation story, the combination, inter-relatedness and dependencies between the components that are material to the organisation s ability to create value over time. Stakeholder responsiveness: An integrated report should provide insight into the quality of the organisation s relationships with its key stakeholders and how and to what extent the organisation understands, takes into account and responds to their legitimate needs, interests and expectations. Materiality and conciseness: An integrated report should provide concise information that is material to assessing the organisation s ability to create value in the short, medium and long term Reliability and completeness: An integrated report should provide include all material matters, both positive and negative, in a balanced way and without material error. Consistency and comparability: The information in an integrated report should be presented on a basis that is consistent over time and in a way that enables comparison with other organisations to the extent it is material to the organisation s own value creation story. Content Elements Organisational overview and external environment: What does the organisation do and what are the circumstances under which it operates? Governance: How does the organisation s governance structure support its ability to create value in the short, medium and long term? Opportunities and risks: What are the specific opportunities and risks that affect the organisation s ability to create value over the short, medium and long term and how is the organisation dealing with them? Strategy and resource allocation: Where does the organisation want to go and how does it intend to get there? Business model: What is the organisation s business model and to what extent is it resilient? Performance: To what extent has the organisation achieved its strategic objectives and what are its outcomes in terms of effects on the capitals? Future outlook: What challenges and uncertainties is the organisation likely to encounter in pursuing its strategy, and what are the potential implications for its business model and its future performance? 4

5 5

6 IIRC Consultation Draft Executive Summary Fundamental concepts Integrated reporting recognises that value is not created by an organisation alone, but is influenced by the external environment and operating context, is created through relationships with others and is dependent on various inputs/resources (capitals). An organisation s business model is the vehicle through which it creates value. An integrated report should disclose an organisation s unique value creation story that allows users thereof to understand the its ability to create value as depicted in the diagram below. Financial Manufactured Intellectual Opportunities and risks External environment Mission and vision Governance Business Model Strategy and resource allocation Financial Manufactured Intellectual Society Organisation Business Inputs Outputs Outcomes Activities Organisation Society Performance Human Future outlook Human Social and relationship Social and relationship Natural Natural 6

7 Links to additional resources Integrated Reporting Committee of South Africa, Integrated Reporting Discussion Paper, Framework for Integrated Reporting and the Integrated Report, January International Integrated Reporting Council Discussion Paper, Towards Integrated Reporting: Communicating Value in the 21st Century, September International Integrated Reporting Council Prototype Framework International Integrated Reporting Council Consultation Draft of the International Integrated Reporting Framework International Integrated Reporting Council examples of best practice in integrated reporting Ernst and Young, Climate Change & Sustainability Services Website 7

8 Ernst & Young Assurance Tax Transactions Advisory About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. The Ernst & Young Africa Sub-Area consists of practices in 28 countries across the African continent. We pride ourselves in our integrated operating model which enables us to serve our clients on a seamless basis across the continent, as well as across the world. Ernst & Young South Africa has a Level two, AAA B-BBEE rating. As a recognised value adding enterprise, our clients are able to claim B-BBEE recognition of %. Ernst & Young refers to the global organisation of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. All Ernst & Young practices in the Africa Sub Area are members of Ernst & Young Africa Limited (NPC). Ernst & Young Africa Limited (NPC) in turn is a member firm of Ernst & Young Global Limited, a UK company limited by guarantee. Neither Ernst & Young Global Limited nor Ernst & Young Limited (NPC) provides services to clients. For more information about our organisation, please visit EYGM Limited. All Rights Reserved This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither EYGM Limited nor any other member of the global Ernst & Young organisation can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor. Studio ref Artwork by Kweyama. Contacts We can assist you on your Integrated Reporting journey Jeremy Grist Director Climate Change & Sustainability Services Tel: +27 (11) jeremy.grist@za.ey.com Kelly Gilman Senior Manager Climate Change & Sustainability Services Tel: +27 (21) kelly.gilman@za.ey.com