IR Discussion Paper Presentation Sep2011

7/29/2019 IR Discussion Paper Presentation Sep2011

1/24


2/24

Agenda

Opening & welcome

Discussion Paper walkthrough

Framework

Pilot Programme

Q&A

Closing

2


3/24

Discussion Paper context for Integrated Reporting


4/24

Discussion Paper Overview

Available from 12th September 2011

Public comment until 14th December 2011

Ten specific questions

Other comments respondents would like to make

Rationale behind Integrated Reporting Outline of an International Integrated Reporting Framework

Central themes: business model and value creation

Guiding Principles

Content Elements

Benefits and challenges along the reporting supply chain

Future directions

4


5/24

The percentage of market value represented by physical and financial assets versus intangible

factors, some of which are explained within financial statements, but many of which are not.


6/24

The world has changed reporting must too

Source

WBCSD Vision 20506

The world population is increasingly urbanGlobal population by type of area and by region:1950-2050

Global economic power is shiftingTop 10 economies by GDP in 2050

The global middle class is rapidly expandingPopulation in low- and middle-income countriesearning $4,000-$17,000 per capita (purchasingpower parity)

Greenhouse gas emissions keep risingGHG emissions by regions

Environmental degradation jeopardisespeoples quality of lifePeople living in areas of water stress by levelof stress

The world could be running out of someresourcesGlobal supply forecasts according to the impli ed ultimate recoverableresources of conventional oil, date of peak production and the post-peak aggregate decline rate

Growth

Degradatio

n

Source: UN Population Division, World PopulationProspects: The 2008 Revision, 2008

Source: Goldman Sachs, BRICs and Beyond, 2007 Source: World Bank, Global Economic Prospects, 2007

Source: UN Population Division, World PopulationProspects: The 2008 Revision, 2008 Source: Goldman Sachs, BRICs and Beyond, 2007 Source: World Bank, Global Economic Prospects, 2007


7/24

Reports: Increasing length and complexity

Source: Investis research - PwC

Prudential annual report pages 1850-2008


8/24

The evolution of Reporting

8


9/24

Integrated Reporting the Future

9


10/24

Coordinated, International Action NeededNow

Reporting has a fundamental impact on decision-making

Critical interdependencies need to be made clear

A clear, concise picture of performance, impacts andinterdependencies, to:

drive innovation

be focused on communication and not just on compliance

support resource allocation decisions consistent with sustainedvalue creation and with long term economic stability

Build on the many positive developments to date

Bring together divergent strands of reporting

10


11/24

Aims of the Framework

Support the development of reporting over the comingdecades

Reporting organizations consistency of content and approach

Policy makers and regulators consistent reporting regimeswithin and across jurisdictions

Standard-setters focal point for harmonization

Initial proposals in Discussion Paper interim guidance tobe on the IIRC website

Initial focus larger companies and the needs of theirinvestors

11


12/24

What Will it Mean for Me?

12

Benefits and challenges


13/24

Future Direction

Continue developing the International Integrated ReportingFramework

draw on Pilot Programme experiences

Exposure Draft in 2012

Work with others on measurement and reporting relevant toIntegrated Reporting

Explore with regulators etc opportunities to harmonizereporting requirements within and across jurisdictions

Conduct regional roundtables and other engagement andcommunications activities

Public consultation regarding ongoing governance ofIntegrated Reporting

13


14/24

International Integrated Reporting Framework -overview


15/24

How is Integrated Reporting Different?

Thinking: Disconnected IntegratedStewardship: Financial capital All forms of capitalFocus: Past, financial Past and future, connected,strategicTimeframe: Short term Short, medium and long termTrust: Narrow disclosures Greater transparencyAdaptive: Rule bound Responsive to individualcircumstancesConcise: Long and complex Concise and materialTechnologyenabled:

Paper based Technology enabled15


16/24

Central themesBusiness model & value creation

16


17/24

Resources and relationships or capitals

Financial capital: The pool of funds available to the

organization.

Manufactured capital: Manufactured physical objects, as

distinct from natural physical objects.

Human capital: Peoples skills and experience, and their

motivations to innovate.

Intellectual capital: Intangibles that provide competitive

advantage.

Natural capital: Includes water, land, minerals, and forests; and

biodiversity and eco-system health. 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.

Includes an organizations social license to operate.

17


18/24

18


19/24

Guiding Principles

Strategic focus:An Integrated Report provides insight into the organizationsstrategic objectives, and how those objectives relate to its ability to create andsustain value over time and the resources and relationships on which theorganization depends.

Connectivity of information: An Integrated Report shows the connections betweenthe different components of the organizations business model, external factors thataffect the organization, and the various resources and relationships on which the

organization and its overall performance depend.

Future orientation:An Integrated Report includes managements expectationsabout the future, as well as other information to help report users understand andassess the organizations prospects and the uncertainties it faces.

Responsiveness and stakeholder inclusiveness: An Integrated Report providesinsight into the organizations relationships with its key stakeholders and how and towhat extent the organization understands, takes into account and responds to their

needs. Conciseness, reliability and materiality: An Integrated Report provides concise,

reliable information that is material to assessing the organizations ability to createand sustain value in the short, medium and long term.

19


20/24

Content Elements

Organizational overview and business model: What does the organization do

and how does it create and sustain value in the short, medium and long term?

Operating context, including risks and opportunities: What are the

circumstances under which the organization operates, including the key resources

and relationships on which it depends and the key risks and opportunities that it

faces?

Strategic objectives and strategies to achieve those objectives: Where doesthe organization want to go and how is it going to get there?

Governance and remuneration: What is the organizations governance structure,

and how does governance support the strategic objectives of the organization and

relate to the organizations approach to remuneration?

Performance: How has the organization performed against its strategic objectives

and related strategies?

Future outlook: What opportunities, challenges and uncertainties is the

organization likely to encounter in achieving its strategic objectives and what are the

resulting implications for its strategies and future performance?

20


21/24

Pilot Programme


22/24

What is the Pilot Programme?

A two year programme:

Trying and testing IIRCs proposed principles for Integrated

Reporting

In support of the development of an International

Integrated Reporting Framework

Asking leading companies and investors to develop and

exchange good practice

22


23/24

Programme Milestones

23

Dry Run(Phase 1)

Pilot Cycle 1(Phase 2)

Pilot Cycle 2(Phase 3)

17-18 October 2011- Pilot Programme Kick-offMeeting (Rotterdam, the Netherlands)

September 2012 - Mid-Programme Conference

November 2013 Closing Conference

September 2011 Dry Run Conducted

Expression of

Interest


24/24

Questions?

Documents

IR Discussion Paper Presentation Sep2011