The Role ofIntegrated Reporting in Value Creation . Chair: Karin Ireton, Director,Group Sustainability M anagem ent, Standard Bank Group, South Africa Nelm araArbex , Deputy ChiefExecutive,Global Reporting Initiative M ichael Bray , Chair, BetterBusinessReporting Group, KPM G Nathan Fabian , ChiefExecutive,InvestorGroup on Clim ate Change Dr.Jeanne Ng , Group Environm entalAffairs, CLP Holdings Lim ited John Stanhope ,Chairm an,Financial Reporting Council’sIntegrated Reporting Taskforce;Form erChiefFinancial Officer, Telstra
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The Role of Integrated Reporting in Value Creation.
Chair: Karin Ireton, Director, Group Sustainability Management, Standard Bank Group, South Africa
Nelmara Arbex, Deputy Chief Executive, Global Reporting InitiativeMichael Bray, Chair, Better Business Reporting Group, KPMGNathan Fabian, Chief Executive, Investor Group on Climate Change Dr. Jeanne Ng, Group Environmental Affairs, CLP Holdings LimitedJohn Stanhope, Chairman, Financial Reporting Council’s Integrated Reporting Taskforce; Former Chief Financial Officer, Telstra
The role of IntegratedReporting in value creation
Is Integrated Reporting
going to change the world?
March 2012Michael Bray
3© 2012 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
The Australian Business Reporting Leaders Forum is moving from ‘facilitating’ to ‘influencing’
“We are very supportive of the great work done by the BRLF in Australia to generate interest and discussion around <IR>. They have done a superb job in harnessing input and presenting that back to the IIRC.”Banarra Submission on IIRC Discussion Paper
■ Project of Society for Knowledge Economics (SKE) - president is Steve Vamos
■ Participants include CFOs, directors, sustainability officers, investor relations officers, ‘big 4’ accounting firms, academia and regulators
■ Regular face to face meetings commenced in April 2011
Developed business case
Reviewed early draft of IIRC discussion paper
IIRC established
Move towards implementation
Integrated Reportbecomes flagship
Drive/influence implementation of IR
in Australia
GRI Conference
2011 2012 20132010 2014 and beyond
4© 2012 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
■ Submissions from a broad range of stakeholders
■ Strong support for the IIRC and developing a globally <IR> consistent framework
■ Calls for a fully worked conceptual framework – ‘what does it look like’?
■ Strong support for business model focus – operational guidance needed
■ Demonstrate that it is not just adding more reports – front end of annual reports?
■ How does it sit with financial reporting?
■ Does <IR> really lead to integrated thinking or can <IR> give the impression that integrated thinking exists when it does not?
■ Need to deal more authoritatively with the ‘commercially sensitive information’ and ‘director liability objections’
■ Strong support for investor focus
■ Facilitate the development of a global business reporting framework for measuring and reporting overall corporate performance to shareholders and other stakeholders
■ Working towards development of common idea on key performance indicators (KPIs)
Key themes – Australian Submissions on <IR> Framework
Key Themes Role of WICI
Industry KPI Libraries - Automotive, Pharmaceuticals, Mining, Electronic Devices, Telecommunications, Fashion & Luxury
3-Way KPI Concept
XBRL Taxonomy
5© 2012 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
IIRC Pilot Organisations – business is taking notice
Europe Europe Asia Pacific Americas
ACCA - Accounting
AEGON – Insurance / Funds
AkzoNobel - Chemicals
ARM Holdings - Hi-Tech
Atlantia – Industrial Markets
BBVA - Banking
Bwise – Industrial Markets
Chartered Institute of Building
CNDCEC - Accounting
Danone - Consumer Markets
Deloitte NL – Accounting
Diesel & Motor Engineering – Industrial Markets
Edelman – Media
EnBW Energie Baden-Wurttemberg – Energy
Enegas - Energy
ENEL – Energy
ENI – Oil & Gas
Flughafen Munchen – Industrial Markets
Leaseplan – Finance
HSBC - Banking
KPMG - Accounting
Marks & Spencer – Retail
N.V. Luchthaven Schiphol
Novo Nordisk
Randstad – Industrial Markets
State Nuclear Energy Co (Rosatom) – Energy
Vestas Wind Systems – Energy
Via Gutenberg – Industrial Markets
Volvo – Motor Vehicle
China Light & Power - Energy
Diesel & Motor Engineering
MECU – Banking
National Australia Bank – Banking
Showa Denkai – Consumer Markets
Stockland - Property
Takeda - Pharmaceuticals
Cliffs Natural Resources – Mining
Coca Cola – Consumer Markets
Microsoft – Hi-Tech
Natura Cosmeticos – Consumer Markets
pwc – Accounting
Prudential Financial – Funds
Vancity – Banking
Africa
Eskom - Energy
Gold Fields – Mining
Largest 400 companies in South Africa are now building Integrated Reports for year ending 31 March 2012
■ 60 globally significant
■ 20% in financial services
■ 20% in energy and natural resources
■ 20% in Asia Pacific
■ 3 in Australia
6© 2012 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
South Africa – leading the way?
■ Clearing up some confusion about the nature of the JSE ‘mandate’
Mandate
■ Global and South African frameworks are aligned and will be brought into line
■ May no longer produce an <IR> Exposure Draft in South Africa – fall in line behind IIRC
Framework
■ Many reports labelled ‘Integrated Reports’ pre-date IIRC
framework and in some instances pre-date South African
IR framework
■ Mining, energy and banking industries are making the
most progress
■ ‘Underlying profit’ debate changed in South Africa –
replaced by a more rewarding discussion about what is
relevant enough to the business model to be included in
the <IR> – financial and non-financial
■ There is no requirement for an annual report – most
incorporating <IR> at front end of annual report
■ Organisational buy-in, top leadership, balanced steering
group are critical success factors
■ Business model/value creation-centric and materiality
driven – ‘golden thread’
Integrated reports in practice
7© 2012 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Integrated Reporting will assist with the Australian energy financing challenge
Will Australia’s energy financing challenge be a gap or an opportunity?
KPMG recommendations include
■ An Integrated Report be prepared by the government on a timely basis in relation to each four yearly review.
■ Encourage legislation or regulation to accelerate the adoption of Integrated Reporting by energy businesses to provide financiers with a better basis for capital allocation.
8© 2012 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Will Integrated Reporting change the world?
Results
■ The integrated report <IR>becomes the flagship
■ Meaningful reports that clearly articulate business model/value creation
■ Capital markets able to make informed decisions
■ Improved basis for capital allocation
■ Big implications for the accounting profession
The KPMG Better Business Reporting Journey
© 2012 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International).
Liability limited by a scheme approved under Professional Standards Legislation.
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