International Integrated Reporting Council

Definition

The International Integrated Reporting Council (IIRC) is a global organization that aims to promote and support integrated reporting as a way for organizations to communicate their value creation over time. The IIRC developed a framework for integrated reporting, encouraging businesses to include both financial and non-financial information, focusing on sustainability, governance, and stakeholder engagement. This approach helps organizations provide a holistic view of their performance, aligning with broader sustainability goals.

5 Must Know Facts For Your Next Test

1. The IIRC was established in 2010 and focuses on creating a framework that integrates financial and non-financial reporting.
2. Integrated reports encourage organizations to explain how they create value for stakeholders and society over time, beyond just short-term financial performance.
3. The framework emphasizes the importance of connectivity between different types of information, including strategy, governance, performance, and prospects.
4. Adopting integrated reporting can improve transparency and accountability for businesses, fostering trust among investors and stakeholders.
5. The IIRC works collaboratively with various standard-setting bodies to ensure alignment and consistency in reporting practices across industries.

Review Questions

• How does the IIRC's framework for integrated reporting enhance the transparency of organizations?
  • The IIRC's framework enhances transparency by encouraging organizations to disclose both financial and non-financial information in a cohesive manner. This integrated approach allows stakeholders to see how an organization creates value over time, considering factors such as sustainability, governance, and social impact. By providing a more holistic view of performance, businesses can build trust with their stakeholders and demonstrate accountability in their operations.
• Discuss the role of stakeholder engagement in the integrated reporting process promoted by the IIRC.
  • Stakeholder engagement is vital in the integrated reporting process as it helps organizations understand the expectations and concerns of those affected by their operations. The IIRC encourages companies to involve stakeholders in the reporting process to gain insights that can shape strategic decisions. By incorporating stakeholder feedback into their reports, organizations can better communicate how they address social and environmental issues, ultimately enhancing their credibility and fostering stronger relationships with their audiences.
• Evaluate the potential impact of integrated reporting on corporate decision-making and long-term sustainability initiatives.
  • Integrated reporting can significantly influence corporate decision-making by aligning business strategies with long-term sustainability goals. By providing a comprehensive view of performance that includes non-financial metrics, organizations can make informed choices that prioritize sustainable practices. This shift towards integrated thinking encourages companies to consider their social and environmental impacts alongside financial outcomes, leading to more responsible business operations and improved resilience in the face of global challenges.

Related terms

Integrated Reporting: A process that results in communication, most visibly through an annual report, about value creation over time. It combines financial and non-financial data to give a comprehensive picture of an organization's performance.

Sustainability Reporting: The practice of disclosing the environmental, social, and governance impacts of a company's operations, providing stakeholders with insights into its sustainability efforts.

Stakeholder Engagement: The process of involving individuals or groups that are affected by or can affect an organization's actions. This engagement is crucial for understanding expectations and enhancing transparency.