There was big progress this week in the journey toward integrated, connected reporting of financial and sustainability performance.
A new council met for the first time this week that will address the connections between financial and sustainability performance. It’s called the Integrated Reporting and Connectivity Council (IRCC). The IRCC is an advisory body to the IFRS Foundation Trustees, the International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB), providing guidance on how reporting required by the IASB and the ISSB could be integrated, and how the IASB and the ISSB could consider applying principles and concepts from the Integrated Reporting Framework to their projects.
This council is the final piece of the puzzle in the mergers that have brought financial and sustainability standards under the same umbrella. This new IRCC is building on the decade-plus work of the International Integrated Reporting Council that was also part of this merger and the important Integrated Reporting Framework and the Integrated Thinking Principles. If you want to learn more about this movement, you may want to consider joining the Integrated Reporting U.S. Community, a group our Insights7 founders helped create and continue to support.
What it Means
This new council is focused on the crucial missing piece in the new IFRS structure. Based on this news about the IRCC, we added the asterisk and footnote in the gray box at the bottom of this graphic highlighting its role:
As this graphic illustrates, the idea of integration and connectivity is crucial to our collective ability to deliver on the promise of sustainability reporting. It’s about clearer communication externally. And, crucially, it’s about delivering improved results to those shareholders, stakeholders and the environment.
The core message here is that here is a reciprocal relationship between a company and its shareholders, stakeholders and the environment. A company earns the right to access the resources they provide and it, in turn, creates value for them. You can see that connectivity answers the crucial questions of why and how a company should focus on both financial and sustainability performance, and why that dual focus leads to the creation of sustainable corporate value, ensuring a company thrives along with its partners.
Seeing and tracking the complex interdependencies implied in the concept of connectivity can be challenging without the right tools. We examined three approaches to operationalizing connectivity in previous posts (each is hard-wired into our Insights7 platform):
Value Chain – A company’s value creation system can and should be mapped. This kind of map identifies the interconnected working components (and associated resources) that provide work-to-value context. It’s about connecting work anywhere in the organization and overall corporate value.
Multi-capital Model – The value can be tracked and categorized with the multi-capital model. It’s a way of breaking down and understanding the constituents and interests of the shareholder-stakeholder-environment foundation supporting a company. It’s about connecting metrics and controls and the work of the value chain.
Sustainable Value Creation – Sustainable Value Creation is the use of stakeholder, shareholder and environmental capitals today to create value for customers in a way that preserves and protects access to the capitals tomorrow. It’s about connecting today and tomorrow.
We are all on a journey to meet the challenges and opportunities of our time. We celebrate the continued progress toward connectivity in reporting. The concept and practices of connectivity help us rise to the occasion.