Video: panel discussion with Paul Druckman: Normalising integrated reporting

This video records a panel discussion with Paul Druckman the CEO of the International Integrated Reporting Council (IIRC), Carol Adams and Richard Slack both Professors of Accounting at Durham University Business School and Anne Adrain, Deputy Director, Sustainability and Assurance at ICAS. The key highlights of each presentation are summarised below. More information about the speakers and the event is here.

Paul Druckman

Paul is critical of current corporate reporting and reporting framework setting practices, but argues that corporate reporting could be a catalyst and a means of enabling two critically important shifts in capital markets: i.e.

  • Moving to an inclusive capital market system
  • Lengthening the time frame that capital markets are looking at in their investment strategies

He quotes shocking statistics with respect to the decline in length of the average stockholding and the increase over the last few decades in the proportion of corporate profits going to shareholders as dividends rather than being reinvested.

Drivers for change identified are:

  • Stewardship Codes and Corporate Governance codes which can work together to change the current dynamic
  • Long term forward thinking which is encouraged by integrated reporting

Richard Slack

Richard questions the usefulness of corporate reports  to users and particularly investors, the primary audience of integrated reporting.

Richard’s research (with David Campbell) examined the familiarity of fund managers with the term integrated reporting.  Evidence is mixed.  Many are unfamiliar with it and they don’t like new terms, for example the capitals. Whilst there is high level institutional support for integrated reporting this hasn’t filtered down into training programmes in investment houses.

Anne Adrain

Anne argues that the traditional annual report does not give investors an understanding of a company’s risks, strategy and business model.  This is changing with companies now showing a more connected picture between the financial elements of performance and non-financial impacts.

Anne refers to the 2010 ICAS report Making Corporate Reports Readable which proposes reporting on only material and relevant facts and making reports concise and readable.  She emphasises that assurance can enhance the credibility and reliability of non-financial, narrative information.

Carol Adams

I discuss Board Director understanding of the link between Environment, Social and Governance (ESG) issues, strategy and value creation for the organisation and the role of reporting, and particularly integrated reporting, in facilitating that link.

There is a sharp contrast in views about the awareness of the impact of ESG issues on business between Board Directors in South Africa, where integrated reporting has been mandatory for six years, and Directors in Australia where where Directors are concerned about Directors’ Liability legislation.

Question and answer session

The discussion is facilitated by Fiona Robertson who is a member of the ICAS Corporate Reporting Committee.  The panel responded to a range of questions:

  • David Campbell, Professor of Accounting at Newcastle Uni and co-author with Richard Slack, asked why a bank would disclose its top risks given that it is proprietary information.
  • Geoff Moore, Professor of Business Ethics, asked what is considered long term.
  • Danny Chow, Durham University Business School, asked Paul Druckman how he saw the economic and political forces making integrated reporting work.
  • Gavin D’Northwood, Durham University Business School, observed that we are some way off from longer term thinking and asked how we could make that happen.
  • Gillian Duffy, an ICAS member in practice noted that whilst directors want their risks to be discounted by the market they don’t want to commit it in writing.
  • A student asked whether integrated reporting should be mandatory.
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