Reporting chief’s formula for better decision making

Anne Adrain IMG_8602 (2)

Anne Adrain, ICAS

By Anne Adrain

Paul Druckman, CEO of the IIRC, says “three shifts” in capital markets will lead to better informed and more sustainable investment.

Integrated Reporting will provide greater benefits to business through “three shifts” in capital markets, according to one of the world’s leading experts.

Speaking at Durham University Business School, Paul Druckman, CEO of the International Integrated Reporting Council (IIRC), summarised recent developments and said there have been great improvements in reporting in recent years.

He began his presentation to alumni, accountants and academics at a special event by quoting Mark Carney, Governor of Bank of England, who recently said that ‘by improving reporting requirements for organisations, Integrated Reporting will lead to better informed and more sustainable long term investment for the benefit of society’.

Paul, who is due to stand down as IIRC CEO later this year, then referred to what he called the “three shifts” in the capital markets which are necessary to make this possible:

  • A shift from a financial capital market system to a more inclusive capital market system. The influence of good company stewardship, such as the Stewardship Code and the Corporate Governance Code in the UK, can change the dynamics within organisations and the way that investment decisions are taken.
  • A shift in the timeframe that capital markets consider. Paul referred back to his accounting training when the average stock holding period for an investment on the New York Stock Exchange was six years. This holding period is now 0.6 years demonstrating the current short term attitude of investors.
  • A shift in the corporate reporting environment to address the two issues above.
Carol Adams and Paul Druckman

Carol Adams and Paul Druckman

He also participated in a panel session on the subject of Integrated Reporting where he was joined by ICAS members Professor Carol Adams CA and Fiona Robertson CA, and Professor Richard Slack from Durham University Business School.

Paul cited some of the other progress made by the IIRC to date, but acknowledged that there was still work to be done.

Paul said that, as a profession, accountants should be reclaiming the responsibility for designing and implementing a more transparent corporate reporting regime that encourages a longer term approach to investment decisions for the benefit of all.

Anne Adrain is ICAS Assistant Director, Sustainability and Assurance. This article was first posted by ICAS here.

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