By Leigh Roberts
CEO of the IRC of SA
After ten years the International <IR> Framework is being refreshed by the IIRC. Fear not, it’s not a wholesale revision, but rather a modernisation. And a few tweaks and tucks is really all that is needed for the <IR> Framework has stood the test of time over the past decade since its launch.
The revision process kicked off on 20/2/2020 with the release by the IIRC of three Topic Papers covering various themes: Responsibility for an Integrated Report; Business model considerations; and, Charting a path forward. The three Topic Papers are open for a 30-day feedback period to 20 March 2020. (While this is a tight deadline, there are only five questions to answer in each Topic Paper.)
The IIRC will use the feedback on the Topic Papers to update the <IR> Framework. This will be released in early May 2020 as a Consultation Draft that will be open for a 90-day feedback submission period. The updated International <IR> Framework is expected in December 2020.
So go on – have your say in the revision of the <IR> Framework that gets used by companies and organisations in South Africa and around the world. Your comments on the Topic Papers and the Consultation Draft can be submitted to the IIRC on the online forms in the documents.
Here are my suggested tweaks and tucks to our beloved <IR> Framework:
- Better understanding of value creation: It’s not shared value companies; it’s both the positive and negative effects on the 6 capitals.
- No ‘net’ value creation: Having lotsa social benefits with and equal or greater negative effects on the natural environment is just not on (and is so short-term thinking). There can never ever be a netting of effects. Aim to enhance your positive effects on the capitals and ameliorate or mitigate (using the words of King IV) the negative effects on the capitals.
- Purpose of the integrated report (aka it’s that old audience issue): The IR is the value creation story of the company. If there is growing global recognition that a company relies on the contribution of 6 capitals (and has resulting effects on them that can impact the company going forward) then why single out a specific stakeholder group? The IR is the story of the company. It is the report you will read first to learn about the company (i.e. it’s the head of the octopus). In the 21st century can we please move beyond singling out investors as the prime audience of the IR (or better said can the rest of the world catch up with King IV please).
- The business model: Designed to be a simple little diagram showing the inputs from the 6 capitals, the outputs produced (goods and services), and the resulting outcomes on the 6 capitals. Not sure where the confusion sets in on this one, but a technically perfect business model in the IR is rare indeed.
- All 6 capitals are material to all companies: The Cape Town drought (and actually the global climate change effects too) are a clear lesson that natural capital (both how you use it and your resulting effects) is material to each and every company and organisation. No water, no business. High temperatures and dramatic weather events, no business (nor animals, plants and humans).