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Four Recommendations

IN THIS BOOK, WE have taken stock of the integrated reporting movement's state of affairs. Given its current level of adoption, the accelerators in place, and its present visibility, it is unlikely that the movement will disintegrate any time soon. But persistence is a necessary, not sufficient, condition for progress. Members of the integrated reporting movement want tangible, substantive changes in corporate reporting practices to influence resource allocation decisions in companies and markets. By fostering a broader, longer-term view in these decisions, they hope to help create a more sustainable society.

As discussed in Chapter 4, exactly what the movement's strategies and priorities should be in order to achieve these goals is the subject of an ongoing debate among its participants. Many necessarily pursue individual goals that do not map directly onto those of the International Integrated Reporting Council (IIRC). Participants must balance their activities—and in particular, the extent to which they should expend resources—in collaboration with each other.1 Adding to the social movement's collective but sometimes conflicting conversation, interested observers will express their opinions about who should be doing what. As both actors in and observers of the movement, we have our own views of what should be considered the critical issues facing integrated reporting today and how to address them. To be clear, these are our personal views; the people and organizations alongside which we work are free to agree or disagree.

In this final chapter, we identify four main strategic issues, each leading to a specific suggestion, that must be addressed: (1) striking the right balance between experimentation and codification, (2) striking the right balance between market and regulatory forces to speed adoption, (3) gaining greater advocacy from the accounting community, and (4) achieving greater role clarity among the key framework and standard-setting organizations in the movement. We will conclude by sketching a possible future scenario, not with the intention of divining the future, but to suggest that imagining such scenarios is a useful exercise in addressing these strategic issues.


If history serves as an example, supporters of integrated reporting should prepare for a long march. The current institutional infrastructure supporting financial reporting and auditing took decades to build. In the United States, for example, increasing regulations regarding financial reporting and auditing evolved over the past 125 years, beginning with the formation of the American Association of Public Accountants in 1887.2 By 1926, in an indication of market forces' potency—and potential good news for integrated reporting— over 90% of companies listed on the New York Stock Exchange issued audited financial statements despite the absence of a law requiring them to do so. Due to a prevailing belief that certain types of information would be useful to competitors, only 62% disclosed sales and 54% cost of goods sold.3

Following the Stock Market Crash of 1929 and the ensuing Great Depression, voluntary disclosure was replaced by mandated disclosure. The 1933 Securities Act4 and the 1934 Securities and Exchange Act5 ('34 Act) put a strong regulatory stamp on corporate disclosure which continues to this day, with the most recent major regulatory intervention being the Sarbanes-Oxley Act of 2002.6 The '34 Act mandated that all public companies file annual reports certified by independent public accountants and gave the Securities and Exchange Commission (SEC) the authority to prescribe the form in which the required information should be disclosed, the items to be shown in the balance sheet and the income statement, and the methods to be followed in the preparation of reports.7 The fact that such a step was necessary in order to ensure the comprehensive and consistent reporting of financial information raises the question of whether integrated reporting must also ultimately receive a formal "stamp of approval" from the State in order to guarantee the format and content of an integrated report.

Neither sustainability nor integrated reporting is supported by anything resembling the well-established infrastructure of standards, frameworks, and reporting requirements that exist in the United States for financial reporting. Small nongovernmental organizations (NGOs), some of which are only a few years old, are responsible for nearly all of the development in this arena thus far. With the exception of South Africa, State support for their efforts is modest, particularly in the largest capital markets. Especially for ideas largely untested in the marketplace, regulators wisely move with caution toward new disclosure requirements. As a result, integrated reporting will remain a social movement for the foreseeable future.

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