International Federation of Accountants Integrated Reporting: a global shift Göran Tidström, IFAC President Accounting Day Copenhagen, Denmark October 6, 2011

TOWARDS INTEGRATED REPORTING Communicating Value in the 21 st Century Integrated Reporting: a global shift

Global Reporting to express Financial Environmental Social and Governance information all in one place. Integrated Reporting: a global shift

A journey toward a sustainable future… Integrated Reporting: a global shift

The International Committee Integrated Reporting: a global shift

The Global Reporting Initiative (GRI) drives sustainability reporting by all organizations. GRI produces the world’s most comprehensive Sustainability Reporting Framework to enable greater organizational transparency. The Framework, including the Reporting Guidelines, sets out the Principles and Indicators organizations can use to measure and report their economic, environmental, and social performance. GRI is committed to continuously improving and increasing the use of the Guidelines, which are freely available to the public.” Integrated Reporting: a global shift

Integrated Reporting: merging the strands Integrated Reporting: a global shift

CDP S&P 500 Report 2011 Strategic Advantage Through Climate Change on behalf of 551 investors with assets of US$71 trillion Action Integrated Reporting: a global shift

10 The IIRC – organisations involved Companies - Corporate networks - WBCSD - UN Global Compact - BSR - CERES - Global Alliance - WEF Investors Investor networks - UN PRI - UNEP-FI - ICGN - INCR Regulators, Standards Setters and Stock Exchanges IGOs and Accounting - Microsoft - GE, Natura - EDF, 100 Group - Novo Nordisk - China Light & Power - Nestlé, WPP - HSBC - Tata - Aviva Investors - APG - EFFAS - Hermes EOS - Mercer - French government fund - IASB - FASB - GRI - CDSB - UNCTAD - World Bank - IFAC, ACCA - JICPA, SAICA - IOSCO - Tokyo Stock Exchange - London Stock Exchange - Financial Stability Board Civil Society, Academia - WWF - WRI - A4S - Volans - Transparency International - Harvard University - Uni. Sao Paolo - Uni. New South Wales - CIMA, ICAEW - PwC, E&Y, GT, Deloitte, KPMG, BDO Integrated Reporting: a global shift

The report identifies six different types of capital: Financial capital: The pool of funds that is available to the organization for use in the production of goods or the provision of services. Manufactured capital: Manufactured physical objects (as distinct from natural physical objects) that are available to the organization for use in the production of goods or the provision of services. Human capital: People’s skills and experience, and their motivations to innovate. Integrated Reporting: a global shift

Intellectual capital: Intangibles that provide competitive advantage; Natural capital: Natural capital and the natural processes that generate them, including air, water, land, biodiversity, eco-system health, and natural sources of energy; and Social capital: The institutions and relationships established within and between each community, group of stakeholders, and other networks to enhance individual and collective well-being, which together support the business model. Integrated Reporting: a global shift

Seven categories of an integrated report Report profile Organizational overview and business model Operating context, including risks and opportunities Strategic objectives and strategies to achieve those objectives Governance and remuneration Performance Future outlook Integrated Reporting: a global shift

Aims of Integrated Reporting Integrated Reporting: a global shift Transform current reporting processes from a disconnected to an integrated approach that portrays a concise picture of the business. Address all forms of capital and reflect the interconnected nature of environmental, social, governance and financial factors, highlighting those aspects most material to business performance. Express the connections between economic, environmental, social, governance and financial factors and their impact on the long term performance of the company.

Aims of Integrated Reporting Integrated Reporting: a global shift Clearly communicate to the market about the drivers of value in the short, medium and long term, rebalance away from undue reliance on short-term financial measures of performance. Highlight the extent to which sustainability is embedded into and aligned with the way the business is run on a day-to-day basis (its corporate plan). Reduce complexity in reporting, regulation and guidance.

Risks to consider Integrated Reporting: a global shift Directors’ duties Directors’ liability Commercial confidentiality Capacity building Information systems

Pilot Program A two year program: Leading companies and investors exchanging good practice. Trying and testing IIRC’s proposed principles and content elements. Support the further development of the Framework. Integrated Reporting: a global shift

Pilot Program Why join the program? Help shape the future of integrated reporting. Achieve visibility as a leader. Receive support when piloting. Integrated Reporting: a global shift

AEGON NV Pilot Program Aegon Danone HSBC Holdings Marks and Spencer Prudential Financial Microsoft National Australia Bank Takeda Pharmaceutical Volvo Integrated Reporting: a global shift

International Federation of Accountants