INTEGRATED REPORTING Lecture 2 2000s

PHD. LECT. DUMITRU MADALINA

2000 Inside Out: Reporting on shareholder value. The Institute of Chartered Accountants in Eng and and !a es. Led "# Chair$an %en Le&er' (inance Director of To$)ins PLC' this Institute of Chartered Accountants in Eng and and !a es *teering Grou+ e$+hasi,ed shareholder primacy the belief that investors needs should be the focus of the annual report. The re+ort asserted that' in its +resent for$' the annua re+ort inc uded too little strategic and other future oriented information for it to fu fi its +ur+ose as a source of infor$ation for in&estors. Lead"eater' Char es. New Measures for the New Economy. The Institute of Chartered Accountants in Eng and and !a es. This Institute of Chartered Accountants in Eng and and !a es re+ort $ade the case for "etter accounting $easures of intangi" e assets. After a -... /e0+osure draft1' the G o"a Re+orting Initiati&e re eased its first ustainability Reporting guidelines. 2001 trengthening !inancial Mar"ets: #o investors have the information they need$ Report of an E%&inspired tas" force 2The Garten Re+ort3. In Octo"er -...' for$er Chair$an of the *ecurities and E0change Co$$ission' Arthur Le&itt' as)ed Dean 4effre# E. Garten of the 5a e *choo of Manage$ent to for$ a tas) force to oo) into t6o 7uestions8 Do current co$+an# disc osure re7uire$ents +ro&ide in&estors 6ith the infor$ation the# need to assess co$+an# &a ue9 !hat' if an#thing' shou d the go&ern$ent' "usiness organi,ations' and cor+orate $anage$ent do to i$+ro&e co$+an# disc osures9 The tas) force $ade t6o reco$$endations8 2-3 to create a ne6 fra$e6or) for su++ e$enta re+orting of intangi" e assets and o+erating +erfor$ance $easures and 2:3 create an en&iron$ent that encourages inno&ation in disc osures. ustainability and %orporate Reputation: 'ey points from a %entre for (usiness )erformance roundtable. The Institute of Chartered Accountants in Eng and and !a es. *u$$ari,ing the )e# +oints fro$ an Institute of Chartered Accountants in Eng and and !a es Centre for ;usiness Perfor$ance roundta" e' this re+ort argued that "usiness re+orting $ust de$onstrate that there is a lin" between sustainability and the creation of shareholder value. teering %ommittee Report 2The %o ton Re+ort3' ;usiness Re+orting Research Pro<ect' (inancia Accounting *tandards ;oard. Pau %o ton' for$er Chair$an of the A$erican *toc) E0change' ed a -=>+erson *teering Co$$ittee re+resentati&e of (A*;?s constituencies. Their 6or) inc uded three se+arate studies8 a stud# of &o untar# disc osures of "usiness infor$ation' the e ectronic distri"ution of "usiness infor$ation' and redundancies "et6een U.*. GAAP and *EC disc osure re7uire$ents. 2002 'ing Report on %orporate *overnance for outh +frica ,--,. This re+ort' co$$on # )no6n as %ing II' ca ed for /integrated sustaina"i it# re+orting1 and reco$$ended' /E&er# co$+an# shou d re+ort at east annua # on the nature and e0tent of its socia ' transfor$ation' ethica ' safet#' hea th and en&iron$enta $anage$ent +o icies and +ractices. The "oard $ust deter$ine 6hat is re e&ant for disc osure' ha&ing regard to the co$+an#?s +articu ar circu$stances.1

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No surprises: .or"ing for better ris" reporting: + position paper from /he Institute of %hartered +ccountants in England 0 .ales . The Institute of Chartered Accountants in Eng and and !a es. This re+ort fo o6ed u+ to ear ier re+orts on the re+orting ris) ca s on +u" ic co$+anies to include a statement of business ris" in their annual reports1 The G o"a Re+orting Initiati&e re eased the second version of its sustainability reporting guidelines at the !or d *u$$it for *ustaina" e De&e o+$ent in 4ohannes"urg in August. The A$erican Institute of Certified Pu" ic Accountants ;oard of Directors in Dece$"er a++ro&ed for$ation of the pecial %ommittee on Enhanced (usiness Reporting. 4effre#s' *i$on. %ommunicating the 2alue of 3our Investment Management (usiness: /he investment management 2alueReporting survey results. Price6aterhouseCoo+ers. Partici+ants in this P6C sur&e# 6ere as)ed to deter$ine the re ati&e i$+ortance of a set of @A "usiness dri&ers in $anaging and ana #,ing an in&est$ent $anage$ent co$+an#. The sur&e# resu ts re&ea ed 6ea)nesses in the $ar)et?s a"i it# to accurate # assess an in&est$ent $anage$ent "usiness?s a"i it# to create &a ue "ecause of a ac) of infor$ation andBor ac) of sharing that infor$ation. Rough # ha f of the e0ecuti&es at in&est$ent $anage$ent fir$s sur&e#ed said their current shares 6ere under+riced' i$+ #ing that ana #sts and in&estors did not +ro+er # &a ue the$ at that ti$e. 5et in&estors and ana #sts said the# faced nu$erous infor$ation ga+s that inhi"ited their a"i it# to fu # <udge a fir$. (or e0a$+ e' though e0ecuti&es in this sur&e# considered asset gro6th for$ +roduct cash f o6s an i$+ortant indicator of the success of in&est$ent strateg# and +roduct offerings' this infor$ation 6as not genera # re+orted to the $ar)et+ ace. Not sur+rising #' ana #sts and in&estors in the stud# +ointed to that $easure as one area 6here the# sa6 an infor$ation ga+. ;ra#' Michae . New #irections in (usiness Reporting: )erformance reporting4 communications and assurance. %PMG. The re+ort +u" ished "# the Institute of chartered Accountants in Austra ia oo)ed at "usiness +erfor$ance re+orting' co$$unications and assurance. It focused on 6hat 6as +ossi" e' unconstrained "# the current re+orting and co$$unications. Novo5ymes +u" ished 6hat is genera # ac)no6 edged as the first integrated re+ort. The GRI re ocated to A$sterda$ and 6as incor+orated as an inde+endent' not>for>+rofit organi,ation in the Nether ands. A en !hite' then acting CEO' handed o&er the he $ to Ernst Ligteringen' 6ho 6as a++ointed as CEO and as a $e$"er of the GRI ;oard. 2003 Eustace' C ar)' editor. /he )rism Report ,--6: Research findings and policy recommendations. No. : 2Octo"er3. A$ong the conc usions of this re+ort 6as a finding that the e0isting accounting s#ste$ does a satisfactor# <o" of tracing the $onetar# f o6s in and out of the $odern enter+rise' ho6e&er' intangi" es cha enged this $ode "ecause their &a ue for an organi,ation 6as not on # in)ed to transactions "ut a so' and $ore i$+ortant #' to the i$aginati&e e0+ oitation of the core acti&ities of inno&ation' +roduction and distri"ution' e&eraged "# net6or)s. The cost>"ased accounting $ode ca$e under increasing +ressure "ecause the hea th and +erfor$ance of )e# sectors of the $odern econo$# 6as decreasing # re ated to financia infor$ation geared to earnings re eases. /he !uture +ccounting of the )rofession' The -A@rd A$erican Asse$" #' No&e$"er -@>-C' The A$erican Asse$" # D Co u$"ia Uni&ersit#. In the 6a)e of the Enron and !or dCo$

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PHD. LECT. DUMITRU MADALINA

de"ac es and the +assage of the *ar"anes>O0 e# Act' CE $en and 6o$en' inc uding eaders fro$ the 6or ds of accounting' finance' a6' acade$ia' in&est$ent "an)ing' <ourna is$' and non>go&ern$enta organi,ations' as 6e as regu ator# officia s' $et to de"ate the +resent state of the accounting +rofession' its desired future state' and the actions necessar# to reach that goa state. Information for (etter Mar"ets: New reporting models for business . The Institute of Chartered Accountants in Eng and and !a es. The Institute su$$ari,ed -- +ro+osa s for ne6 "usiness re+orting $ode s and e0a$ined the reasons 6h# none had succeeded in gathering genera su++ort. Ne6 re+orting $ode s for "usiness -. The ;a anced *corecard 2/he (alanced corecard: /ranslating trategy into +ction 2-..FG "ased on a -..: artic e3 H Professor Ro"ert *. %a+ an and Da&id P. Norton3 :. The 4en)ins Re+ort 2Improving (usiness Reporting + %ustomer !ocus 2-..=3 H A$erican Institute of Certified Pu" ic Accountants3 @. To$orro6?s Co$+an# 2/omorrows %ompany: /he Role of (usiness in a %hanging .orld 2-..C3 H Ro#a *ociet# of Arts and ooner4 harper4 impler: + 7ean 2ision of an Inclusive +nnual Report 2-..I3 H Centre for To$orro6?s Co$+an#3 =. The :-st Centur# Annua Re+ort 2/he ,8st %entury +nnual Report9)rototype plc 2-..I3 and )erformance Reporting in the #igital age 2-..I3 H "oth ICAE!3 C. The Ine&ita" e change 2(usiness Reporting: /he Inevitable %hange$ 2-...3 H ICA*3 F. Inside Out 2Inside Out: Reporting on hareholder 2alue 2-...3 H ICAE!3 E. Ja ue D#na$ic 2%rac"ing the 2alue %ode: :ow uccessful (usinesses are %reating .ealth in the New Economy 2:AAA3 H Arthur Andersen3 I. GRI 2 ustainability Reporting *uidelines 2:AAAG re&ised :AA:3 H G o"a Re+orting Initiati&eTM3 .. The ;roo)ings Institution 2;nseen .ealth: Report of the (roo"ings /as" !orce on ;nderstanding Intangible ources of 2alue 2:AA-3 and Professor ;aruch Le&?s Intangibles: Management4 Measurement4 and Reporting 2:AA-3 H "oth ;roo)ings Institution3 -A. Ja ueRe+ortingTM 2/he 2alueReporting/M Revolution: Moving (eyond the Earnings *ame 2:AA-3 and (uilding )ublic /rust: /he !uture of %orporate Reporting 2:AA:3 H "oth Price6aterhouseCoo+ers3 --. The Her$es Princi+ es 2The Her$es Princi+ es8 !hat *hareho ders E0+ect of Pu" ic Co$+anies H and !hat Co$+anies *hou d E0+ect of Their In&estors 2:AA:3 H Her$es Pensions Manage$ent Li$ited3 <uality and /ransparency in (usiness Reporting: + call for action in the public interest . The AICPA *+ecia Co$$ittee on Enhanced ;usiness Re+orting' 6ritten in coo+eration 6ith

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PHD. LECT. DUMITRU MADALINA

;aruch Co ege' The Cit# Uni&ersit# of Ne6 5or). The *+ecia Co$$ittee on Enhanced ;usiness Re+orting +u" ished a +a+er ca ing for disc osure of a 6ide range of nonfinancia infor$ation and $ade the case that this infor$ation shou d "e audited. Natura %osmetics +u" ished an integrated re+ort. Ittner' Christo+her' and Da&id Larc)er. =%oming up short on nonfinancial performance measurement>' Har&ard ;usiness Re&ie6' &. I-' no. --. Ittner and Larc)er argued that e&en though $an# co$+anies $easured /intangi" es1 such as e$+ o#ee satisfaction' RDD' and custo$er o#a t#' &er# fe6 co$+anies $ade an atte$+t to identif#' ana #,e' and act on nonfinancia $easures that $ight actua # ad&ance their chosen strateg#. 2004 Le&' ;aruch. = harpening the intangibles edge>' Har&ard ;usiness Re&ie6 24une :AA=3. In this artic e' Le& argued that neither $ar)ets nor $anagers accurate # &a ued intangi" es' 6hich resu ted in a $isa ocation of resources. Report of the )ublic %ompany /as" !orce to the pecial %ommittee on Enhanced (usiness Reporting. A$erican Institute of Certified Pu" ic Accountants. The Tas) (orce identified se&era re+orting and assurance issues and offered +otentia so utions' 6hich 6ere ref ected in a sa$+ e enhanced re+ort for a h#+othetica techno og# co$+an# na$ed Lintun *o utions. In addition' the Tas) (orce aunched a 6e"site to i ustrate ho6 re+orting cou d "e enhanced "# using the Internet. /he Enhanced (usiness Reporting %onsortium 6as incor+orated on *e+te$"er -@. (ounding $e$"ers 6ere the A$erican Institute of Certified Pu" ic Accountants' Grant Thornton LLP' Microsoft Cor+oration' and Price6aterhouseCoo+ers. Enterprise Ris" Management Integrated framewor". Co$$ittee of *+onsoring Organi,ations of the Tread6a# Co$$ission 2CO*O3. CO*O e0+anded its Internal %ontrol Integrated framewor" "# adding a $ore ro"ust and e0tensi&e focus on the "roader su"<ect of enter+rise ris) $anage$ent. /he )harmaceutical ector: + long&term value outloo". )harma !utures. Phar$a (utures de&e o+ed three scenarios a"out the future of the +har$aceutica industr# and re&ie6ed the i$+ ications of each one for institutiona in&estors' +har$aceutica e0ecuti&es' and go&ern$ents. In addition' the Phar$a (utures grou+ identified se&en )e# findings facing the industr# and its in&estors. Ris" 0 Opportunity (est )ractice in Non&!inancial Reporting . The G o"a Re+orters :AA= *ur&e# of Cor+orate *ustaina"i it# Re+orting' *tandard D Poor?s' *ustainA" it#' and UNEP. *ur&e#ing a sa$+ e of -AA re+orts fro$ around the 6or d' this sur&e# found that so$e co$+anies $ade $assi&e +rogress in res+onding to de$ands for i$+ro&ed trans+arenc# on )e# issues of cor+orate res+onsi"i it#. The "ad ne6s 6as that $ost co$+anies sti fai ed to identif# $ateria strategic and financia ris)s and o++ortunities associated 6ith the econo$ic' socia ' and en&iron$enta i$+acts ca+tured "# the /tri+ e "otto$ ine1 agenda. Novo Nordis" re eased its first integrated re+ort. 2005 %orporate Reporting !ramewor"s. Price6aterhouseCoo+ers.

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PHD. LECT. DUMITRU MADALINA

!hite' A en L.' /New wine4 new bottles: /he rise of non&financial reporting 1. + (usiness (rief by (usiness for ocial Responsibility. In this re+ort' s+onsored "# ;usiness for *ocia Res+onsi"i it#' A en !hite introduced the reader to the /ne0t>generation re+orting1 "# instructing the$ to /"ro6se the :AA= Annua Re+ort of No&o Nordis)1. After a "rief discussion of the /e$"r#onic1 nature of integrated re+orting and the $ore $ature state of nonfinancia re+orting' !hite offered a &ision of t6o scenarios. /One scenario of the future sees stead# +rogress a$ong $u tinationa co$+anies' 6ith gradua +enetration into the s$a > and $ediu$>si,e enter+rises' es+ecia # those that ser&ice $u tinationa su++ # chains1. /An a ternati&e scenario "egins i)e the first' "ut is <o ted "# une0+ected e&ents that +ro+e go&ern$ent to ta)e strong correcti&e action in the face of serious disc osure "rea)do6ns a)in to the Enron>era *ar"anes>O0 e# egis ation in the U.*.1 !hite conc uded' /Integration of financia and non>financia disc osure 6i acce erate' e0e$+ ified "# the fe6 eading fir$s1. O!R and ustainability Roundtable: E?amining the impact of the O!R on sustainable development and corporate reporting. Uni&ersit# of Ca$"ridge' 4udge Institute of Manage$ent and Chartered Institute of Manage$ent Accountants 24une3. A grou+ of e0+erts fro$ a 6ide &ariet# of "ac)grounds discussed the effect of the ne6 $andator# O+erating and (inancia Re&ie6 2O(R3 on co$+anies? sustaina"i it# +ractices and re+orting. The s+ecific issue of sustaina"i it# 6as chosen "ecause $an# co$+anies found co ecting and re+orting infor$ation a"out sustaina"i it#>re ated issues a cha enge. In addition' a though the O(R 6as addressed to the $e$"ers of the co$+an#' the infor$ation 6as a so of re e&ance to other sta)eho ders. It 6as therefore an area 6here there cou d "e conf ict "et6een the directors? <udg$ent of 6hat 6as $ateria and sta)eho ders? de$ands for trans+arenc#. Integrated Reporting: Issues and implications for reporters . *o stice *ustaina"i it# !or)s' Inc. and Jancit#. Jancit# and Citi,ens ;an) co$$issioned *o stice *ustaina"i it# !or)s' Inc. in this e0+ orator# research to "etter understand the issues in&o &ed in integrated re+orting and their i$+ ications for re+orting organi,ations. (ourteen re+orters and other e0+erts 6ere inter&ie6ed and t6e &e current e0a$+ es of integrated re+orts 6ere re&ie6ed. The Enhanced ;usiness Re+orting Consortiu$ re eased the first public version of a reporting framewor" for nonfinancial information. The fra$e6or) 6as a deri&ati&e of the P6C 2alueReportingTM (ra$e6or). #iscussion )aper Management %ommentary: + paper prepared for the I+ ( by staff of its partner standard&setters. Internationa Accounting *tandards ;oard. The Internationa Accounting *tandards ;oard issued a discussion +a+er see)ing co$$ents on nine s+ecific 7uestions that 6ou d infor$ the IA*; on 6hether to de&e o+ standards or guidance for $anage$ent co$$entar#. E0a$+ es of 7uestions8 Kuestion -8 Do #ou agree that MC shou d "e considered an integra +art of financia re+orts9 If not' 6h# not9 Kuestion :8 *hou d the de&e o+$ent of re7uire$ents for MC "e a +riorit# for the ;oard9 If not' 6h# not9 If #es' shou d the IA*; de&e o+ a standard or non>$andator# guidance or "oth9

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PHD. LECT. DUMITRU MADALINA

Kuestion @8 *hou d entities "e re7uired to inc ude MC in their financia re+orts in order to assert co$+ iance 6ith I(R*s9 P ease e0+ ain 6h# or 6h# not.

E+stein' Marc 4.' and %ir) O. Hanson. /he accountable corporation. !est+ort' CT8 Praeger Pu" ishers. The "oo) is a and$ar) co ection of essa#s on the ro e of "usiness in societ#. In recent #ears' issues of "usiness ethics' socia res+onsi"i it#' and accounta"i it# ha&e "een at the forefront of cor+orate' +o ic#$a)ing' and +u" ic concerns. Dra$atic stories of a"use of sta)eho der trust and outright cri$ina "eha&ior at co$+anies i)e Enron' G o"a Crossing' and T#co ha&e triggered a ree0a$ination of the ro e of cor+orations in societ# and the res+onsi"i ities of e0ecuti&es and $anagers' "oard $e$"ers' and the accountants 6ho are su++osed to 6atch o&er the$. This and$ar) set of essa#s "rings ne6 c arit# to the issues' as societies around the 6or d "egin to ho d cor+orations and their eaders to higher standards of conduct. 2006 E?tended )erformance Reporting: +n overview of techni@ues. Institute of Chartered Accountants in Austra ia. This re+ort' co$$issioned "# the Institute of Chartered Accountants in Austra ia' ai$ed to re&ie6 the $a<or for$s of /e0tended +erfor$ance re+orting1. This ter$ /co&ers atte$+ts $ade to re+ort on the intangi" e assets of an organi,ation as 6e as those that see) to $a+ its effects on the +h#sica and socia en&iron$ent of an organi,ation. This u$"re a ter$ inc udes cor+orate socia res+onsi"i it# accounting' sustaina"i it# re+orting' en&iron$enta re+orting' inte ectua ca+ita re+orting' etc.1 Reporting tatement: Operating and financial review. Accounting *tandards ;oard 2United %ingdo$3. This &o untar# /standard1 reco$$ended that a ;oard +re+are an O+erating and (inancia Re&ie6' 6hich ana #,ed the "usiness and identified those trends and factors that affected current +erfor$ance and 6ere i)e # to affect future "usiness +erfor$ance. In res+onse to the GRI E0+osure Draft of the G@ Guide ines' ;o" Ecc es and Mi)e %r,us +re+ared and su"$itted + :ypothetical Integration of the *lobal Reporting Initiative A*RIB *6 *uidelines and the Enhanced (usiness Reporting %onsortium AE(R%B !ramewor" on "eha f of the E;RC. %ruse' C audia' and ;ra$en *ingana#aga$' Management Incentives and trategies: (usiness drivers and metrics across ,- sectors' Euro+e E7uit# Research' 4.P. Morgan 2A+ri 3. This re+ort identified )e# trends in :A sectors and the "usiness dri&ers of co$+anies in each sector. On that "asis' %ruse and *ingana#aga$ discussed the "ey sector&specific performance measures that 6ou d genera # +ro&ide the "est a ign$ent "et6een incenti&es and co$+an# strateg#. *uide to 'ey )erformance Indicators: %ommunicating the measures that matter . Price6aterhouseCoo+ers. This +u" ication continued the P6C series of +ractica guides on trans+arent cor+orate re+orting. It i ustrated 6hat good %PIs oo)ed i)e and +resented a co ection of good +ractice e0a$+ es dra6n fro$ the U% and e se6here. E0a$+ es8

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PHD. LECT. DUMITRU MADALINA

;an)ing Custo$er retention Custo$er +enetration Asset 7ua it# Ca+ita ade7uac# Assets under $anage$ent Loan oss

Petro eu$ Ca+ita e0+enditure E0+ oration success rate Refiner# uti i,ation Refiner# ca+acit# Jo u$e of +ro&en +ro"a" e reser&es

Retai Ca+ita e0+enditure *tore +ortfo io changes E0+ected stores return on ne6

Custo$er satisfaction and *a$e storeB i)e>for> i)e sa es *a es +er s7uare footB$etre

Reser&e re+ ace$ent costs

*lobal %apital Mar"ets and the *lobal Economy: + vision from the %EOs of the international audit networ"s. G o"a Pu" ic Po ic# Co$$ittee 2No&e$"er3. This +a+er 6as +u" ished "# the chair$en of the si0 argest g o"a audit net6or)s to "egin a +u" ic discussion a"out ho6 g o"a "usiness and financia re+orting and +u" ic co$+an# auditing +rocedures $ust ada+t to "etter ser&e in&estors and ca+ita $ar)ets around the 6or d. Intellectual +ssets and 2alue %reation: Implications for corporate reporting . Organi,ation for Econo$ic Co>o+eration and De&e o+$ent. The re+ort out ined the rising i$+ortance of inte ectua assets and the associated need to +ro+er # infor$ $ar)ets. The GRI +u" ished ustainability Reporting *uidelines 2ersion 61-' $ore co$$on # )no6n as GRI G@ Guide ines. +racru5 2 ater !ibria3 +u" ished and integrated re+ort. 7ong&/erm4 7ong&Only Investing: a consultation paper . Marathon C u". The Marathon C u" 6as co$+rised of a++ro0i$ate # :A $e$"ers' inc uding fro$ institutiona fund trustees' senior e0ecuti&es' or senior s+ecia ists 6ith +ro&en trac)>record in + a#ing a re e&ant eadershi+ ro e in +u" ic and +ri&ate institutiona funds and endo6$ents. The o&era goa of the C u" 6as to sti$u ate +ension funds' endo6$ents and other institutiona in&estors 2/Institutiona (unds13 and their agents to "e $ore ong>ter$ in their thin)ing and actions' and + ace $ore e$+hasis on "eing res+onsi" e and acti&e o6ners. This +a+er ad&ocated for ong>ter$' ong>on # in&est$ent. 2007 %orporate Reporting + /ime for Reflection: + survey of the !ortune *lobal C-companies narrative reporting. Price6aterhouseCoo+ers. This +a+er 6as another e0a$+ e of P6C?s research in the g o"a in&estor co$$unit#. The o"<ecti&e 6as to disco&er 6hat infor$ation those co$+anies re eased to the +u" ic in their +ri$ar# co$$unications in narrati&e for$. The sur&e#?s findings 6ere si$+ e. Co$+anies +ro&ided 6hat so$e ca ed /conte0tua and non>financia infor$ation1 a"out their +erfor$ance and +ros+ects' ho6e&er'

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to+ re+orters +ro&ided a great dea $ore than a&erage ones. (ro$ the in&estor co$$unit#?s +ers+ecti&e' there 6as + ent# of roo$ for i$+ro&e$ent. (ro$ the co$+an#?s +ers+ecti&e' enriching their narrati&e +resentations and acco$+an#ing $etrics offers the o++ortunit# to +ro&ide a &ie6 Lthrough the e#es of $anage$ent? that in&estors 6ou d high # &a ue. 4ar"oe' %enan Patric)' Measuring Intangibles: + summary of recent activity. Athena A iance. This +a+er su$$ari,ed &arious atte$+ts to $easure intangi" es and high ighted a nu$"er of issues. It +ointed to the +ro iferation of c assification fra$e6or)s for intangi" es' a 6ithout genera su++ort. It a so discussed the need to refine and standardi,e $ethods used to &a ue intangi" es. CERE* In&estor Net6or) for C i$ate' )etition for Interpretive *uidance on %limate Ris" #isclosure 2*e+te$"er -I' :AAE3' and etter to 4ohn !. !hite' Director Di&ision of Cor+oration (inance' *ecurities and E0change Co$$ission. CERE* fi ed a +etition 6ith the *EC as)ing that it issue inter+reti&e guidance c arif#ing a +u" ic co$+an#?s o" igation under e0isting regu ations to disc ose $ateria infor$ation concerning the effect of c i$ate change and regu ation of greenhouse gas e$issions on their financia condition and "usiness o+erations. In addition' the se+arate etter as)ed the Di&ision of Cor+oration (inance to de&ote +articu ar attention to the ade7uac#' under e0isting regu ations' of disc osures concerning c i$ate ris). *utton' *te&en G.' Jic)# Arno d' 4ean ;edard' and 4i ian Phi i+s. Research on !inancial Reporting implification: ;nderstanding investor decision ma"ing behavior and disclosure preferences. Re+ort on Professiona In&estors. At the re7uest of the Enhanced ;usiness Re+orting Consortiu$?s Re+orting *i$+ ification Tas) (orce' the authors studied in&estor use of financia re+orting infor$ation' decision "eha&ior' and +erce+tions on infor$ation &a ue and re ia"i it#. The stud# 6as e0ecuted "# ta)ing an e0isting co$+an#?s annua re+ort 2a tered to +rotect confidentia it#3 a ong 6ith additiona financia infor$ation fro$ the co$+an#?s 6e"site and $a)ing this infor$ation a&ai a" e through a fu # 6e"> in)ed on ine s#ste$. The Enhanced ;usiness Re+orting Consortiu$' Euro+ean (ederation of (inancia Ana #sts *ocieties' Ministr# of Econo$#' Trade' and Industr# 24a+an3' Organi,ation for Econo$ic De&e o+$ent' Uni&ersit# of (errara 2Ita #3' and !aseda Uni&ersit# 24a+an3 agreed to for$ the .orld Intellectual %apital Initiative 2!ICI3 in a $eeting at the 4a+an Patent Office in To)#o. (+ ! ado+ted integrated re+orting. The Prince?s Accounting for *ustaina"i it# Pro<ect +u" ished /he %onnected Reporting !ramewor"' 6hich identified ten e e$ents re7uired to e$"ed sustaina"i it# successfu # in an organi,ation8 -. ;oard and senior $anage$ent co$$it$ent :. Understanding and ana #,ing the )e# sustaina"i it# dri&ers for the organi,ation @. Integrating the )e# sustaina"i it# dri&ers into the organi,ation?s strateg# =. Ensuring that sustaina"i it# is the res+onsi"i it# of e&er#one in the organi,ation 2and not <ust of a s+ecific de+art$ent3

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C. ;rea)ing do6n sustaina"i it# targets and o"<ecti&es for the organi,ation as a 6ho e into targets and o"<ecti&es that are $eaningfu for indi&idua su"sidiaries' di&isions and de+art$ents F. Processes that ena" e sustaina"i it# issues to "e ta)en into account c ear # and consistent # in da#>to>da# decision>$a)ing E. E0tensi&e and effecti&e sustaina"i it# training I. Inc uding sustaina"i it# targets and o"<ecti&es in +erfor$ance a++raisa .. Cha$+ions 6ithin the organi,ation to +ro$ote sustaina"i it# and ce e"rate success -A. Monitoring and re+orting sustaina"i it# +erfor$ance. (uilt to 7ast: !ocusing corporations on long&term performance . A *tate$ent "# the Research and Po ic# Co$$ittee of the Co$$ittee for Econo$ic De&e o+$ent. This re+ort e0a$ined ho6 efforts to "ui d +u" ic trust and ong>ter$ &a ue coa esced to encourage $an# arge' g o"a cor+orations to +a# greater attention to their onger>ter$ interests "# stri)ing a "a ance "et6een short>ter$ co$$ercia +ursuits and such societa concerns as the en&iron$ent' a"or standards' and hu$an rights. 2008 CERE* In&estor Net6or) for C i$ate Ris) 24une -:' :AAI3 etter to Nanc# M. Morris' *ecretar# *ecurities and E0change Co$$ission' Re8 !ile No1 D&CDE: Re@uest for Interpretive *uidance on %limate Ris" #isclosure . This etter e0a$ined de&e o+$ents in egis ation' regu ation' and itigation concerning c i$ate change' greenhouse gas regu ation' energ# +o ic#' and financia disc osures re ating to c i$ate change' and other i$+ortant re+orts and studies' 6hich indicated the need for i$+ro&ed disc osure. Recasting the Reporting Model: :ow to simplify and enhance communications . Price6aterhouseCoo+ers. This discussion +a+er high ighted opportunities and issues that a interested +arties needed to de"ate in esta" ishing the +ara$eters of a ne6 cor+orate re+orting $ode . (or e0a$+ e' re+orting of ris)s has co$e under the $icrosco+e as a resu t of the financia crisis. It &aries 6ide # "et6een co$+anies H so$e of the to+ CAA co$+anies in the 6or d do not re+ort on ris) at a ' 6hi e others re+ort in e0cess of =A ris)s. (eed"ac) fro$ in&estors has sho6n that in either case' 6ithout c ear re+orting of those ris)s that are )e#s to the "usiness and the ste+s "eing ta)en to $itigate and $anage the$' it is harder to identif# an# +otentia i$+act on co$+anies? +erfor$ance and sustaina"i it#. The financia crisis has high ighted' for e0a$+ e' the i$+ortance of e0+ aining the d#na$ics of the "usiness $ode and the $ar)et conte0t in 6hich it o+erates. !hi e EAM of co$+anies in the G o"a CAA de&ote $ore than FAM of their re+orts to narrati&e infor$ation' 6e shou d "e 7uestioning ho6 $uch &a ue this +ro&ides and 6hether the effort cou d "e redirected to de i&er "etter insight into a co$+an# and its +erfor$ance. The +a+er a so identified a nu$"er of mar"et&driven initiatives that a read# e0isted and 6ere 6or)ing to6ards so utions in +articu ar areas of $easure$ent and re+orting.

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These inc ude the %onnected Reporting !ramewor" de&e o+ed "# the Prince of !a es as +art of his Accounting for *ustaina"i it# +ro<ect. This fra$e6or) +ro&ides a &ision of ho6 the $ode can "e recast to e$"race en&iron$enta and socia issues. The !or d Inte ectua Ca+ita Initiati&e has a so de&e o+ed a high&level corporate reporting framewor" and is using a !i)i+edia>st# e internet + atfor$ to faci itate co a"oration across interested $ar)et organi,ations. !inal report of the +dvisory %ommittee on Improvements to !inancial Reporting to the ;nited tates ecurities and E?change %ommission 2August -' :AAI3. The chartered Ad&isor# Co$$ittee on I$+ro&e$ents to (inancia Re+orting e0a$ined the U.*. financia re+orting s#ste$ in order to $a)e reco$$endations intended to increase the usefu ness of financia infor$ation to in&estors 6hi e reducing the co$+ e0it# of the financia re+orting s#ste$ to in&estors' +re+arers' and auditors. Reco$$endations focused on8 2-3 increasing the usefu ness of infor$ation in *EC re+orts 2:3 enhancing the accounting standards>setting +rocess 2@3 i$+ro&ing the su"stanti&e design of ne6 accounting standards 2=3 de ineating authoritati&e inter+reti&e guidance' and 2C3 c arif#ing guidance on financia restate$ents and accounting <udg$ents. ;o" Massie organi,ed the first $eeting of the Consu tation on *ustaina"i it# and Trans+arenc#>United *tates 2CO*T>U*3 at Tufts Uni&ersit#. ustainability 6as defined as the interde+endent effects that ad&ance the +ros+erit# and hea th of the +eo+ e and the + anet 6ithout oss to future generation. /ransparency is defined as the +rinci+ e of si$+ icit#' c arit#' and candor concerning the $oti&ations' actions' and i$+acts of a +erson or organi,ation. Trans+arenc#' +articu ar # cor+orate trans+arenc#' is 6ide # regarded as a necessar# "ut not a sufficient condition of sustaina"i it#. !ICI re eased a fra$e6or) and ta0ono$# for nonfinancia infor$ation at the N;RL> Internationa conference in !ashington' DC. The fra$e6or) co$"ined the 4a+an METI Guide ines for Inte ectua Asset>"ased Manage$ent and the Enhanced ;usiness Re+orting Consortiu$ fra$e6or). 5oshi)o *hi"asa)a 2%PMG>4a+an3 and Mi)e %r,us ed the de&e o+$ent tea$. N;RL 2eNtensi" e ;usiness Re+orting Language3 O a free # a&ai a" e' o+en' and g o"a standard for e0changing "usiness infor$ation. This Institute of Chartered Accountants in Austra ia re+ort introduced the ter$ /"road "ased "usiness re+orting1' 6hich had si$i arit# to the Ecc esB%r,us usage of /integrated re+orting1. (road (ased (usiness Reporting. The Institute of Chartered Accountants in Austra ia. ;road ;ased ;usiness Re+orting 2;;;R3 is an enhanced re+orting $echanis$ increasing # used "# "usiness to "etter $eet the infor$ation needs of their )e# sta)eho ders. ;;;R is focused on +ro&iding sta)eho ders 6ith a $uch greater understanding of "usiness +erfor$ance.

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The +a+er contains a +ro>for$a re+orting of %PIs as it fo o6s8 A* PRE*ENTED IN ;;;R PAGE -@

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Integrated E * into Mainstream )ortfolios . Res+onsi" e In&estor. This +a+er' +re+ared in connection 6ith an RI conference' 6as a co$+i ation of se&en artic es on integrating E*G factors into in&est$ent ana #sis' as it fo o6s8 -3 Integrating E*G issues into in&est$ent decision>$a)ing shou d ead to a shift to6ards see)ing rea &a ue' 6ith a "etter understanding of ris) and o++ortunit#' "# 4a$es Gifford

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:3 (RR' the (rench +ensions reser&e fund' cou d "e a"out to start o""#ing the co$+anies in 6hich it in&ests on their E*G records' "rea)ing ne6 ground a$ong (rench in&estors' "# Hugh !hee an @3 A ne6 initiati&e "# eading Nor6egian in&estors ai$s to +ersuade co$+anies to de&e o+ res+onsi" # and +ro&ide their shareho ders 6ith ong>ter$ &a ue' "# 4eanett ;ergan =3 !i enhanced ana #sis rea # de i&er socia and en&iron$enta "enefits9 "# Ror# *u i&an' Rache Cross e# and 4ennifer %o,a) C3 !hat $a)es engage$ent effecti&e and ho6 can its success "e $easured9 "# Eri) ;reen F3 The i$+ortance of consistent and co$+ara" e E*G data' "# Christo+her Green6a d E3 U* shareho der itigation and Euro+ean in&estors' "# Darren Chec). /elecoms 0 ustainable #evelopment. Oddo *ecurities. !ithin the fra$e6or) of Oddo?s E*G $ethodo og#' the tea$ de&e o+ed an inte ectua ca+ita a++roach' focused on an ana #sis of the ecos#ste$ a++ ied to the Euro+ean and U.*. soft6are sector. /Ecos#ste$1 as defined "# Oddo had three co$+onents8 c ient ca+ita ' +artner ca+ita ' and "rand ca+ita . Ecc es and %r,us co$+ eted the first draft of an out ine for 6hat 6as then ca ed /Unified *ta)eho der Re+orting1. E&en though the ter$ /integrated re+orting1 had #et to a++ear' the seed of the conce+t 6as ta)ing root8 /The infor$ation needs of shareho ders are con&erging 6ith other sta)eho ders 2e.g.' NGOs' e$+ o#ees' custo$ers' su++ iers and co$$unities in 6hich co$+anies o+erate3 and the distinction "et6een financia Pshou d 6e sa# "usiness9Q re+orting and Cor+orate *ocia Res+onsi"i it# 2C*R3 re+orting is no6 an artificia one due to a funda$enta rethin)ing of &a ues and ti$e fra$es 6hich has "een cr#sta i,ed "# the financia $ar)et crisis and c i$ate crisis1. In addition' in a section tit ed /Ho6 the CEO shou d res+ond1' the authors co$$ented /Through the research 6e ha&e conducted o&er the +ast decade' 6e ha&e "egun to create an integrated infor$ation fra$e6or) that redefines the "road sco+e of infor$ation that needs to "e co$$unicated and R e$"races the 6a# co$+anies create &a ue R inc uding acco$$odating sustaina"i it# re+orting1. A),oNo"e ' A sto$' A&i&a' ;T' (MO' H*;C' No&artis' Phi i+s' United Techno ogies' and Jan Ganse6in)e Groe+ a +u" ished their first integrated annua re+orts. ')M* International urvey of %orporate Responsibility Reporting ,--F. %PMG Internationa . The +ur+ose of this sur&e# 6as to trac) re+orting trends in the 6or d?s argest co$+anies. The sa$+ e of o&er :':AA co$+anies inc uded the G o"a (ortune :CA and the -AA argest co$+anies "# re&enue in :: countries' Ro$ania as 6e . *ee sur&e#' +age .= for Ro$ania.

%ount Me In: /he readers ta"e on sustainability reporting . %PMG Internationa and *ustainA"i it# Ltd. This re+ort +resented the findings and ana #sis fro$ the first GRI

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Readers? Choice sur&e# of readers of sustaina"i it# re+orts. The Readers? Choice sur&e# oo)ed for the first ti$e at the readers' their +references and "eha&ior. Near # :'@AA readers and non>readers fro$ around the 6or d ans6ered the sur&e# 7uestions' 6ith ana #sis and resu ts a so +resented. The )e# $essages of the res+ondents of this sur&e# 6ere8 Readers ha&e si$i ar e0+ectations Across user grou+s and geogra+h#' and "et6een current readers and non>readers' there is &irtua unani$it# a"out 6hat $a)es a good sustaina"i it# re+ort. Readers of a sorts "e ie&e re+orters are $ost i)e # to o$it fai ures fro$ their sustaina"i it# re+orts. The res+ondents 6ant re+orters to address sta)eho ders? needs in the re+orting +rocess and $anage$entG and to see sta)eho ders? &ie6s inc uded in the sustaina"i it# re+ort.

(ai ures fe t to "e $issing

A stronger ro e for sta)eho ders

Integrating sustaina"i it# in core "usiness Readers are ca ing for re+orters to e0+ ain +rocesses the connection "et6een the sustaina"i it# strateg# and the core "usiness strateg#. Re+utation and trust A sustaina"i it# re+ort has a +ositi&e i$+act on a re+orter?s re+utationG ho6e&er readers 6ant to "e confident of a re+orter?s co$$it$ent to sustaina"i it#. A "a anced tone' in&o &e$ent of sta)eho ders' re+orting standards and assurance contri"ute to ensuring credi"i it#.

Ensuring credi"i it#

I$+ro&ing co$$unication a"out the &a ue of Re+orters are as)ed to de$onstrate the sustaina"i it# for "usiness +erfor$ance "enefits of addressing sustain>a"i it# issues for "usiness +erfor$ance and to e0+ ain ho6 inno&ati&e thin)ing is used to so &e to$orro6?s cha enges. Addressing the needs of non>readers Non>readers co$+ ain of not ha&ing the ti$e to na&igate ength# re+orts or 6e"sitesG and of ac)ing understanding of the &a ue of sustaina"i it# re+orting for their needs.

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;ar)er' Terr#. /owards new thin"ing in economics. The Ca$"ridge Trust for Ne6 Thin)ing in Econo$ics. Ne6 thin)ing in econo$ics 6as an interdisci+ inar# a++roach to econo$ic +ro" e$s that ac)no6 edged and res+ected the insights and ana #sis fro$ other disci+ ines' es+ecia # those fro$ ethics' histor#' and engineering as 6e as co$+ e0it# and e&o utionar# theor#. (our issues 6ere high ighted' each of 6hich had "een either ignored "# traditiona econo$ic $ode ing of the +ro" e$ or treated in a $is eading 6a# that discounted the insights fro$ heterodo0 econo$ics and other disci+ ines. -3 The econo$# is a co$+ e0' non> inear d#na$ic s#ste$ 6ith $ethodo ogica change inherent in econo$ic gro6th. Man# econo$ic +o ic# issues are +otentia # non> $argina changes to the s#ste$ in the conte0t of strong uncertaint#. :3 Man# issues of econo$ic +o ic# 2traditiona # ca ed /6e fare econo$ics13 are +ri$ari # ethica >econo$ics in nature' and shou d "e infor$ed "# $ora +hi oso+h# rather than econo$ics in iso ation. Traditiona econo$ic $ode s ado+t an e0tre$e for$ of uti itarianis$' 6ith a 7uestiona" e choice and use of discount rates' ignoring the +hi oso+hica iterature and the conce+t of <ustice. @3 Engineering and histor# infor$ econo$ics through studies of the +roduction +rocesses in&o &ing the su++ # and de$and of $ateria s' energ#' s)i s and entre+reneurshi+. Econo$ic histor# is critica in understanding the re ationshi+ "et6een econo$ics and techno ogica change "ecause the techno ogies e&o &e in res+onse to econo$ic conditions' e.g. car"on>+rice signa s. Traditiona $ode s assu$e continuit# and +ath inde+endence. =3 The +o itics of $itigation i$+ ies unsta" e a iances and trade>offs "et6een go&ern$ents and +o itica +arties. ;# the use of the socia 6e fare function 2re7uired for the ca cu us3' traditiona econo$ists si$+ if# socia choices and +re>e$+t +o itica negotiation' c ai$ing and o+ti$a it# for their su"<ecti&e assu$+tions and $ar)et inter+retations. Lecture 3 2009 /oward *reater /ransparency: Moderni5ing the ecurities and E?change %ommissions #isclosure ystem. :-st Centur# Disc osure Initiati&e8 *taff Re+ort. This re+ort considered ho6 the *EC cou d transition its disc osure s#ste$ fro$ the +a+er>"ased a++roach "orn of -.@As techno og# to an interacti&e data "ased a++roach using :- st centur# techno og#. To achie&e this goa ' the Co$$ission has to focus on four guiding +rinci+ es8 > > > > Disc osure infor$ation and other data shou d "e su"$itted and stored in an interactive formatG The Co$$ission shou d consider esta" ishing a data warehouse' 6ith a +rinci+ es> "ased fra$e6or) for $anaging dataG The Co$$ission shou d consider +ro&iding for multiple submission methods for disclosuresG The Co$$ission shou d consider +ro&iding for multiple dissemination methods for disclosures.

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The essons earned during the Ricoh' Munich Re.' A ian,' and ;M! inter&ie6s are ca+tured in Ecc es and %r,us out ine on this date8 /Indications that in&estors and ana #sts $a# "e gro6ing 6ear# of cu ing through se+arate 2-3 financia 2:3 en&iron$enta and 2@3 socia re+orts H integrated financia and C*R re+orts 6ith c ear in)s fro$ C*R acco$+ ish$ents and targets to re&enue gro6th and cost sa&ings 6ou d "e "etter than toda#?s se+arate re+orts1. A so' an out ine section' =!rom Multiple Reports to One Integrated Information E?perience> a++eared. The second $eeting of the Consu tation on *ustaina"i it# and Trans+arenc#>United *tates 2CO*T>U*3 6as he d at ;oston Uni&ersit#. ;o" Massie 6as the faci itatorB$oderator. %orporateRegister1com announced the first a6ard for integrated re+orting at The CR Re+orting A6ards :AAI. The a6ard has granted to No&o Nordis). The ter$ /One Report1 a++eared in an out ine for the first ti$e. The Ecc es and %r,us "oo)?s 6or)ing tit e 6as no6 /One Report: Real /ransparency for Real Results1. IN%R upplemental petition to E% and letter to Mary chapiro. (ort#>one treasurers' contro ers' institutiona in&estors' and asset $anagers re+resenting a++ro0i$ate # S-.= tri ion in assets sent a etter to the *EC as)ing that ste+s "e ta)en to i$+ro&e disc osure of c i$ate change>re ated ris)s' and $ateria en&iron$enta ' socia and go&ernance ris)s' in securities fi ings. Mi)e %r,us tra&e ed to the G o"a Re+orting Initiati&e?s A$sterda$ office to $eet 6ith Ernst Lighteringen' Leontien P ugge' and *ean Gi "ert. Ernst and Mi)e agreed8 2-3 the GRI and !ICI shou d co a"orate on 6riting intero+era" e ta0ono$ies for their res+ecti&e re+orting fra$e6or)s 2:3 Ernst 6ou d e0+ ore interest in integrated re+orting 6ith GRI?s sta)eho ders' and 2@3 a +arties 6ou d co a"orate on de&e o+ing integrated re+orting content for the Ma# :A-A GRI "iennia conference. E?posure #raft Management %ommentary. Internationa Accounting *tandards ;oard. The Internationa Accounting *tandards ;oard re&ised its dor$ant $anage$ent co$$entar# +ro<ect 6ith a +ro+osa for voluntary presentation. The stated goa 6as /to +ro&ide a "asis for the de&e o+$ent of good $anage$ent co$$entar#1. The +ro+osa offered a MC fra$e6or) that cou d "e ada+ted for different nationa <urisdictions and econo$ic circu$stances. The Prince?s Accounting for *ustaina"i it# Pro<ect and the G o"a Re+orting Initiati&e host a $eeting at C arence House. ;o" Ecc es and Mi)e %r,us $et 6ith )e# in&estors' standard setters' co$+anies' accounting "odies' UN re+resentati&es' and ci&i societ# to discuss the draft $anuscri+t of One Report and the conce+ts under #ing integrated re+orting. *ir Mar) Mood#>*tuart $ade a suggestion that the C arence House grou+ 6or) to6ard getting integrated re+orting on the G:A agenda. A consensus 6as reached to as) the G:A to /ca for creation of an internationa "od# tas)ed 6ith the de&e o+$ent of an integrated sustaina"i it# and financia re+orting fra$e6or) in res+onse to the g o"a en&iron$enta crisis.1

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*outh Africa?s 'ing III %ode on *overnance 6as re eased and reco$$ended that co$+anies +re+are and +u" ish integrated re+orts. ;et6een *e+te$"er :AA. and (e"ruar# :A-A the Euro+ean Co$$ission Enter+rise and Industr# Directorate hosted a series of F 6or)sho+s to e0+ ore ho6 co$+anies disc ose en&iron$enta ' socia and go&ernance 2E*G3 infor$ation. Internationa Cor+orate Go&ernance Net6or)' /I%*N tatement and *uidance on Non& financial (usiness Reporting1 2No&e$"er3. The +ur+ose of the ICGN *tate$ent 6as to e$+hasi,e the i$+ortance on nonfinancia infor$ation 6ithin the o&era conte0t of co$+an# re+orting and ho6 it +ro$oted $ore understanda" e disc osures and assisted co$+anies in $eeting the e0+ectations of in&estors. The "asic re7uire$ents fro$ a shareo6ner and in&estor +ers+ecti&e' as stated "# this re+ort are8 > > > ;e genuine # infor$ati&e and inc ude for6ard> oo)ing e e$ents 6here this 6i enhance understandingG ;e $ateria ' re e&ant and ti$e #G Descri"e the co$+an#?s strateg#' and associated ris)s and o++ortunities' and e0+ ain the "oard?s ro e in assessing and o&erseeing strateg# and the $anage$ent of ris)s and o++ortunitiesG ;e accessi" e and a++ro+riate # integrated 6ith other infor$ation that ena" es in&estors to o"tain a 6ho e +icture of the co$+an#G Use )e# +erfor$ance indicators that are in)ed to strateg# and faci itate co$+arisonsG Use o"<ecti&e $etrics 6here the# a++ # and e&idence>"ased esti$ates 6here the# do notG ;e strengthened 6here +ossi" e "# inde+endent assurance that is carried out ha&ing regard to esta" ished disc osure standards a++ ica" e to non>financia "usiness re+orting' such as those issued "# the IA*;.

> > > >

The Prince?s Accounting for *ustaina"i it# Pro<ect hosted an in&itation>on # roundta" e at *t. 4a$es?s Pa ace in London that 6as attended "# a"out :C +eo+ e. *ir Michae Peat' the Princi+ e Pri&ate *ecretar# to The Prince of !a es and Chair$an of the A=* *u+er&isor# ;oard' ed the roundta" e discussion. *ir Michae as)ed 7uestions or a o6ed re$ar)s on the integration of financia and sustaina"i it# re+orting. During his re$ar)s' Professor Ti$ 4ac)son of the Uni&ersit# of *urre# referred to a con&ersation that The Prince of !a es had 6ith G:A re+resentati&es a"out /an infor$a 6or)ing grou+ on integrated re+orting.1 The grou+ reached a unani$ous agree$ent on the fo o6ing A=* +ro+osa s8 -. Esta" ish a 6or)ing grou+ co$+rising re+resentati&es fro$ those organi,ations 6ith an acti&e interest and e0+ertise in different as+ects of an Integrated Re+orting (ra$e6or) to coordinate action' share research findings and conso idate reco$$endations. :. De&e o+ o+tions for the go&ernance structure re7uired for the creation of an Internationa Integrated Re+orting Co$$ittee' ensuring a++ro+riate re+resentation and in)s to e0isting organi,ations.

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PHD. LECT. DUMITRU MADALINA

@. Mo"i i,e "roader su++ort for the +ro+osa s 2i.e' an Integrated Re+orting (ra$e6or) and Internationa Integrated re+orting Co$$ittee3 a$ong )e# sta)eho der grou+s internationa #' in +articu ar' 6or) to6ards inc usion of integrated re+orting for a sustaina" e econo$# on the agenda of the 4une :A-A G:A $eeting in Canada. The Roundta" e agree$ent 6as announced at the Accounting for *ustaina"i it# (oru$' 6hich 6as attended "# :CA +eo+ e. There 6ere se&era significant re$ar)s. The Chair$an of A&i&a announced his +ersona su++ort for the A=* +ro+osa s a"o&e and + edged that A&i&a 6ou d <oin the fight for integrated re+orting. Professor Mer&#n %ing ta )ed a"out the %ing Re+ort reco$$endations for integrated re+orting and the 4ohannes"urg *toc) E0change isting re7uire$ents for integrated re+orting "eginning on 4une -' :A-A. Professor %ing ta )ed a"out the need to integrate financia and sustaina"i it# re+orting and said so$ething &er# c ose to /integrated re+orting' or as Har&ard ;usiness *choo 6ou d ca it' One Re+ort.1 During Pau Druc)$an?s c osing re$ar)s' he said that in deference to Professor %ing' +erha+s the ti$e had co$e to sto+ $a)ing reference to Connected Re+orting 2the A=* ter$3 and si$+ # refer to integrated re+orting. A$erican E ectric Po6er' Ang e P atinu$' Ra"o"an)' and TNT Logistics <oined the ran)s of co$+anies +u" ishing integrated re+orts.

2010s 2010 Ecc es' Ro"ert G.' and Michae P. %r,us' =Integrated reporting for a sustainable strategy1> (inancia E0ecuti&e 2March3. The first "oo) on integrated re+orting 6as re eased8 =One Report: Integrated reporting for a sustainable strategy1> Ne6 5or)8 4ohn !i e# D *ons' Inc. ;o" Ecc es' %# e Ar$"rester' and Mi)e %r,us aunched a socia $o&e$ent 6e"site 2666.integratedre+orting.org3 around the conce+t of integrated re+orting. E0eter Consu ting and Grant Thornton LL +ro&ided financia su++ort. Integrated Reporting: %losing the loop of strategy . %PMG *ustaina"i it#' Nether ands. This +u" ication 6as +ri$ari # ai$ed at )e# decision $a)ers H "oard $e$"ers' C*R $anagers' and co$$unication $anagers. %PMG?s o"<ecti&e 6as to +ro&ide these constituencies 6ith )e# considerations on ho6 to decide a"out further integrating cor+orate re+orting. Integrated Reporting: .hat does your reporting say about you$ Price6aterhouseCoo+ers. P6C argued that $anage$ent?s a"i it# to a ign and integrate the infor$ation used in the "usiness fro$ the to+ to the "otto$' fro$ e0terna re+orting to "oard and $anage$ent re+orting' he +ed create the en&iron$ent 6here sta)eho ders can sa# 6ith confidence' /I understand this "usiness.1 The 4ohannes"urg *toc) E0change a$ended its isting re7uire$ents to $a)e the fi ing of integrated re+orts $andator#. The Association for *a&ings and In&est$ent *A' ;usiness Unit# *outh Africa' Institute of Directors *A' 4ohannes"urg *toc) E0change Ltd' and The *outh African Institute of

INTEGRATED REPORTING

PHD. LECT. DUMITRU MADALINA

Chartered Accountants announced the for$ation of the Integrated Reporting %ommittee AIR%B. Professor Mer&#n %ing 6as the Chair$an of the IRC. The IRC 6as to issue guide ines on good +ractice in integrated re+orting. A research re+ort +u" ished in 4une "# the Initiati&e for Res+onsi" e In&est$ent 2IRI3' a +ro<ect of the Hauser Center for Non+rofit Organi,ations at Har&ard Uni&ersit#' +ut forth a $ode s#ste$ for de&e o+ing "ey performance indicators 2%PIs3 a++ro+riate for $andator# sustaina"i it# re+orting. The re+ort 6as 6ritten in con<unction 6ith Aru+. The re+ort 6as na$ed =!rom /ransparency to )erformance: Industry (ased ustainability Reporting on 'ey Issues>. The Prince?s Accounting for *ustaina"i it# Pro<ect and the G o"a Re+orting Initiati&e <oint # announced the for$ation of the International Integrated Reporting %ommittee. Har&ard ;usiness *choo ?s (usiness and Environment Initiative hosted the first e&er conference on integrated re+orting8 =#eveloping an +ction )lan for Integrated Reporting1> The +ur+ose of the conference 6as to de&e o+ a set of reco$$endations for the ra+id and "road ado+tion of integrated re+orting on a g o"a "asis. It 6as not a"out de&e o+ing a fra$e6or) for integrated re+orting' "ut it 6as a"out designing a +rocess "# 6hich such fra$e6or) 6ou d "e de&e o+ed and i$+ e$ented. In #ecember ,-8- IA*; +u" ished Management %ommentary: + framewor" for presentation. 2011 The Integrated Re+orting Co$$ittee re eased its first #iscussion )aper !ramewor" for Integrated Reporting and the Integrated Report. I(AC +u" ished I!+% ustainability !ramewor" ,1-. International urvey of %orporate Responsibility Reporting ,-884 %PMG. This re+ort is +resented as the argest and $ost co$+rehensi&e sur&e# of CR re+orting trends e&er +u" ished. Thirt#>four hundred co$+anies re+resenting the nationa eaders fro$ @= countries around the 6or d' inc uding the argest :CA g o"a co$+anies "ased on the (ortune G o"a CAA ran)ing 6ere inc uded in the research. The high ights regarding the integrated re+orting are the fo o6ing8 > T6ent#>se&en +ercent of G:CA and :A +ercent of N-AA co$+anies inc ude so$e for$ of CR re+orting in their annua re+ortG -I +ercent of G:CA and -- +ercent of N-AA co$+anies inc ude a cha+ter addressing CR issues' "ut 6ithout the 7ua it# and $easura" e data of a re+ort. Current #' F: +ercent of the G:CA that co$"ine CR and financia re+orting segregate condensed CR infor$ation into a s+ecia >+ur+ose section of the annua re+ort.

>

/he value of e?tra&financial disclosure1 .hat investors and analysts said . The Prince?s Accounting for *ustaina"i it# Pro<ect. This research is "ased on a sur&e# 6hich e0+ ores ho6 @= in&estors and @C ana #sts source' use and are inf uenced "# e0tra>financia infor$ation H often a so referred to as non>financia infor$ation. O&er IAM of the research sa$+ e "e ie&e that e0tra>financia infor$ation is &er# re e&ant or re e&ant to their in&est$ent decision> $a)ing or ana #sis. In&estors and ana #sts a++ear to ha&e c ear +references for 6here the# source financia and e0tra>financia infor$ation H t#+ica # sho6ing a +reference for sources

INTEGRATED REPORTING

PHD. LECT. DUMITRU MADALINA

6hich are $ore co$+rehensi&e. There is a +reference for inear digita for$ats 6ith C.M of in&estors and ana #sts stating that the on>screen PD( is their +referred for$at. Near # ha f 2=FM3 of in&estors and ana #sts state that direct engage$ent 6ith the CEO or C(O is &er# i)e # to inf uence their in&est$ent decisions or co$+an# ana #sis. O&er IAM of in&estors and ana #sts "e ie&e that integrated re+orting 6i de i&er "enefits to their ana #sis and co$+an# assess$ents. Jo untar# fra$e6or)s for re+orting e0tra>financia infor$ation + a# an i$+ortant ro e in infor$ing in&estor decisions and co$+an# ana #sis. F-M of the in&estors and ana #sts find socia infor$ation difficu t to co$+are. Assurance is i$+ortant H "ut in&estors and ana #sts do not re # $uch on the content of the i$ited assurance state$ent 6ith ess than :AM of in&estors and ana #sts stating the# are significant # affected "# these. 2012 In Guly ,-8, IIRC re eased the Draft Out ine of the Integrated Re+orting (ra$e6or). %orporate reporting1 !rom compliance to competitive edge ' Price6aterhouseCoo+ers. The ana #sts re&ie6ed for the sur&e# :.I re+orts for +eriods ended "et6een - A+ri :A-A and @March :A-- H -AA in the (T*E -AA and -.I in the (T*E :CA. Each re+ort 6as e0a$ined against $ore than IA data +oints re ated to the Price6aterhouseCoo+ers integrated re+orting $ode . The re&ie6 sho6s a genera trend of i$+ro&e$ent in 7ua it# and effecti&eness' "ut this i$+ro&e$ent is not uni&ersa . The o&era re+orting effecti&eness $easure sho6s that so$e co$+anies in "oth the (T*E -AA and :CA achie&e &er# high standards or re+orting. The "est re+orters in the (T*E :CA are as good as those in the (T*E -AA. ;ut no sing e co$+an# in either grou+ achie&ed the highest 7ua it# across a areas of its narrati&e re+ort.

Conc usions8

INTEGRATED REPORTING

PHD. LECT. DUMITRU MADALINA

Chapter 2 INTERNATIONAL BODIE IN!OL!ED IN T"E TANDARDI#ATION $ROCE O% T"E INTE&RATED RE$ORTIN&

1' I(tr)*uct+)( Cor+orate socia re+orting has "een de&e o+ed to e0tend the traditiona $ode of financia re+orting 6hich e$+hasi,es co$+an#?s econo$ic +ros+erit#' to incor+orate socia and en&iron$enta di$ensions 2E )ington' -...3. Cor+orate re+orting and assurance guide ines are no6 $ore than si$+ # o+tiona and &o untar# re+orting $easures for isted co$+anies. Cor+orate *ocia Res+onsi"i it# 2C*R3 disc osure has "een of increasing interest as organi,ations recogni,e that their actions ha&e conse7uences that affect a their sta)eho ders. The recent accounting scanda s oo) different 6hen &ie6ed fro$ the +ers+ecti&es of the +o itica B regu ator# +rocess and of the $ar)et for cor+orate go&ernance and financia re+orting 2;a ' :AA.3. In the face of the $a<or crisis in cor+orate go&ernance and financia re+orting' the accounting research co$$unit#?s res+onse has "een a$enta" # s o6 and inade7uate 2Par)er' :AAE3. Re+orting cor+orate socia and en&iron$enta infor$ation has $atured o&er the +ast decades' "ut there sti re$ained a ac) of ade7uate standardi,ation. E7ua # significant is the gro6ing $o&e$ent "# the $a<or accounting organi,ations to "eco$e in&o &ed in the de&e o+$ent of standards for cor+orate socia re+orting' auditing and &erification. In the current en&iron$ent of confusion and uncertaint#' sustaina"i it# re+orting fra$e6or)s ha&e $uch to contri"ute. Triggered "# the financia crisis' issues of co$+rehensi&e ris) $anage$ent' ong>ter$ +erfor$ance and ethics are ra+id # gaining re e&ance and consideration. Restoring confidence and trust in $ar)ets 6i re7uire a shift to ong>ter$ sustaina" e &a ue creation' and cor+orate res+onsi"i it# $ust "e an instru$ent to6ards this end. A so' co$+anies decision 6hether or not to see) inde+endent' e0terna assurance of their socia and en&iron$enta re+orting 6i gain $ore and $ore su++ort and a++ iance in cor+orate re+orts. ;ased on iterature re&ie6 6e ha&e identified the $ain internationa initiati&es on socia and en&iron$enta re+orting as8 G o"a Re+orting Initiati&e' United Nations G o"a Co$+act Princi+ es' AccountA"i it# -AAA Assurance *tandard 2AA -AAA A*3' Internationa Auditing and Assurance *tandard @AAA 2I*AE @AAA3' I*O -=AAA and I*O :FAAA standards. 2' &,)-a, Rep)rt+(. I(+t+at+/e 0&RI1 Histor#8

INTEGRATED REPORTING 5ear :AAA :AA: :AAF :A-To "e aunched in Ma# :A-@ Guide ine?s &ersion GRI -.A GRI :.A GRI @.A GRI @.GRI =.A

PHD. LECT. DUMITRU MADALINA

The G o"a Re+orting Initiati&e 2GRI3 defines the goa of sustaina" e de&e o+$ent as meeting the needs of the present without compromising the ability of future generations to fulfill their own needs. *ustaina"i it# re+orts "ased on the GRI Re+orting (ra$e6or) disc ose outco$es and resu ts that occurred 6ithin the re+orting +eriod in the conte0t of the organi,ation?s co$$it$ents' strateg#' and $anage$ent a++roach. Its +ur+ose is to co$$unicate c ear # and o+en # a"out sustaina"i it# and to "e used "# organi,ations of an# si,e' sector' or ocation 2GRI' :AAF3. According to GRI (ra$e6or)' the principles of preparing a sustainability report are8 > > > > Materia it#G *ta)eho der inc usi&enessG *ustaina"i it# conte0t' and Co$+ eteness.

Materiality for sustaina"i it# re+orting shou d co&er to+ics and Indicators that8 > > Ref ect the organi,ation?s significant econo$ic' en&iron$enta ' and socia i$+acts' or that !ou d su"stanti&e # inf uence the assess$ents and decisions of sta)eho ders.

The re+orting organi,ation shou d identif# its sta"eholders and e0+ ain in the re+ort ho6 it has res+onded to their reasona" e e0+ectations and interests. *#ste$atic sta)eho der engage$ent enhances the rece+ti&it# and the usefu ness of the re+ort. The re+ort shou d +resent the organi,ation?s +erfor$ance in the 6ider conte0t of sustainability. %ompleteness8 co&erage of the $ateria to+ics and Indicators and definition of the re+ort "oundar# shou d "e sufficient to ref ect significant econo$ic' en&iron$enta ' and socia i$+acts and ena" e sta)eho ders to assess the re+orting organi,ation?s +erfor$ance in the re+orting +eriod. GRI (ra$e6or)s under ines a nu$"er of principles for @ualitative disclosure1 Those are8

INTEGRATED REPORTING > > > > > > ;a anceG Co$+ara"i it#G Accurac# Ti$e iness C arit#' and Re ia"i it#.

PHD. LECT. DUMITRU MADALINA

A balanced disclosure $eans that the re+ort shou d ref ect +ositi&e and negati&e as+ects of the organi,ation?s +erfor$ance to ena" e a reasoned assess$ent of o&era +erfor$ance. Re+orts shou d c ear # distinguish "et6een factua +resentation and the re+orting organi,ation?s inter+retation of infor$ation. Re+orted infor$ation shou d "e +resented in a $anner that ena" es sta)eho ders to ana #,e changes in the organi,ation?s +erfor$ance o&er ti$e' and cou d su++ort ana #sis re ati&e to other organi,ations. The re+orted infor$ation shou d "e sufficient # accurate and detailed for sta)eho ders to assess the re+orting organi,ation?s +erfor$ance. Re+orting $ust occur on a regular schedule and infor$ation $ust "e a&ai a" e in ti$e for sta)eho ders to $a)e infor$ed decisions. The re+ort shou d +resent infor$ation in a 6a# that is understandable4 accessible4 and usable "# the organi,ation?s range of sta)eho ders. Reliability of re+orting $eans that infor$ation and +rocesses shou d "e gathered' recorded' co$+i ed' ana #,ed and disc osed in a 6a# that cou d "e su"<ect to e0a$ination and that esta" ishes the 7ua it# and $ateria it# of the infor$ation. /he *uidelines identif# infor$ation that is re e&ant and $ateria to $ost organi,ations and of interest to $ost sta)eho ders for re+orting the three t#+es of standard disc osures8 trategy and )rofile8 Disc osures that set the o&era conte0t for understanding organi,ationa +erfor$ance such as its strateg#' +rofi e' and go&ernance. Management +pproach8 Disc osures that co&er ho6 an organi,ation addresses a gi&en set of to+ics in order to +ro&ide conte0t for understanding +erfor$ance in a s+ecific area. )erformance Indicators8 Indicators that e0tract co$+ara" e infor$ation on the econo$ic' en&iron$enta ' and socia +erfor$ance of the organi,ation.

Re+orting organi,ations are encouraged to fo o6 this structure in co$+i ing their re+orts' ho6e&er' other for$ats $a# "e chosen. A content inde0 is +ro&ided for entities re+orting on

INTEGRATED REPORTING

PHD. LECT. DUMITRU MADALINA

GRI (ra$e6or) in order to identif# infor$ation "# referring to +age nu$"ers the standard disc osure can "e found. The GRI guide ines identif# nu$erous performance indicators that an entit# can use to sho6 ho6 the# ha&e +erfor$ed o&er the +eriod. The indicators are8 > Core Indicators are those Indicators identified in the GRI Guide ines to "e of interest to $ost sta)eho ders and assu$ed to "e $ateria un ess dee$ed other6ise on the "asis of the GRI Re+orting Princi+ es. Additiona Indicators are those in Indicators identified in the GRI Guide ines that re+resent e$erging +ractice or address to+ics that $a# "e $ateria to so$e organi,ations "ut not genera # for a $a<orit#.

>

According to *618 *uidelines these indicators are "ro)en do6n into three categories 26e inc ude here the disc osure on $anage$ent a++roach as 6e 3. Economic This categor# inc udes +rotoco s co&ering8 PAG :I Econo$ic +erfor$ance Mar)et +resence Indirect econo$ic i$+acts.

Environmental This categor# co&ers +rotoco s that inc ude8 PAG @A ocial Materia s Energ# !ater ;iodi&ersit# E$issions' eff uents and 6aste Products and ser&ices Co$+ iance Trans+ortG and O&era .

INTEGRATED REPORTING

PHD. LECT. DUMITRU MADALINA

The socia categor# is su">di&ided into four categories that dea 6ith the fo o6ing8 La"our +ractices and decent 6or) PAG @@ o e$+ o#$ent o a"ourB$anage$ent re ations

o occu+ationa hea th and safet# o training and education o di&ersit# and e7ua o++ortunit#G and o e7ua re$uneration for 6o$en and $en. Hu$an rights PAG @E o in&est$ent and +rocure$ent +ractices o non>discri$ination o freedo$ of association and co ecti&e "argaining o chi d a"our o +re&ention of forced and co$+u sor# a"our o securit# +ractices o indigenous rights o assess$entG and o re$ediation. *ociet# PAG =A o Loca co$$unities o Corru+tion o Pu" ic Po ic# o Anti>Co$+etiti&e ;eha&iorG and o Co$+ iance Product res+onsi"i it# o custo$er hea th and safet# o +roduct and ser&ice a"e ing o $ar)eting co$$unications

INTEGRATED REPORTING o custo$er +ri&ac#G and o co$+ iance. E?ample:

PHD. LECT. DUMITRU MADALINA

Oi s+i s of - "arre or $ore fe in :AAF to =-E s+i s co$+ared to C=- in :AAC. The co$+an# is introducing dua >fue diese e ectric +ro+e ed shi+s into its f eet. These shi+s consu$e "et6een @A>=A tones +er da# ess fue . ;P ha&e a tea$ of -@F co$+ iance and ethics eaders 6ho ha&e continued e$"edding the co$+ iance and ethics +rogra$$e in their "usiness areas through acti&ities such as +ro$oting a6areness of O+en Ta ) and su++orting the annua co$+ iance and ethics +rocess. Greenhouse gas e$issions in :AAF 6ere F=.= $i ion tones of CO: co$+ared to FF.I $i ion tones in :AAC. 3' The 2(+te* Nat+)(s &,)-a, C)3pact 02N&C1 The United Nations G o"a Co$+act' a so )no6n as G o"a Co$+act or UNGC' is a United Nations initiati&e to encourage "usinesses 6or d6ide to ado+t sustaina" e and socia # res+onsi" e +o icies' and to re+ort on their i$+ e$entation. It is a strategic +o ic# initiati&e for "usinesses that are co$$itted to a igning their o+erations and strategies 6ith ten uni&ersa # acce+ted +rinci+ es in the areas of hu$an rights' a"our' en&iron$enta and anti> corru+tion. These +rinci+ es are e0+osed in the fo o6ing ta" e. UN G o"a Co$+act?s ten +rinci+ es Princi+ es? area Hu$an Rights Princi+ es content )rinciple 8 ;usinesses shou d su++ort and res+ect the +rotection of internationa # +roc ai$ed hu$an rights. )rinciples , Ma)e sure that the# are not co$+ icit in hu$an rights a"uses. )rinciple 6 ;usinesses shou d u+ oad the freedo$ of association and the effecti&e recognition of the right to co ecti&e "argaining. )rinciple D The e i$ination of a for$s of forced and co$+u sor# a"our. )rinciple C The effecti&e a"o ition of chi d a"our. )rinciple H The e i$ination of discri$ination in res+ect of e$+ o#$ent and occu+ation. )rinciple E ;usinesses shou d su++ort a +recautionar# a++roach to

La"our *tandards

En&iron$ent

INTEGRATED REPORTING en&iron$enta cha enges.

PHD. LECT. DUMITRU MADALINA

)rinciple F Underta)e initiati&es to +ro$ote greater en&iron$enta res+onsi"i it#. )rinciple I Encourage the de&e o+$ent and diffusion of en&iron$enta # friend # techno ogies. )rinciple 8- ;usinesses shou d 6or) against corru+tion in a its for$s' inc uding e0tortion and "ri"er#.

Anti>Corru+tion

One of the e0+ icit co$$it$ents that a co$+an# $a)es 6hen it +artici+ates in the G o"a Co$+act is to +roduce an annua +u" ic Co$$unication on Progress 2COP3. A COP is a +u" ic co$$unication to sta)eho ders 2consu$ers' e$+ o#ees' organi,ed a"our' shareho ders' $edia' go&ern$ent3 on the +rogress the co$+an# has $ade in i$+ e$enting the ten +rinci+ es in their "usiness acti&ities and' 6here a++ro+riate' in su++orting "roader UN goa s through +artnershi+s. The criterions are8 UN G o"a Co$+act Ad&anced Criterion *trateg#' Go&ernance and Criterion -8 The COP descri"es )e# as+ects of the co$+an#?s Engage$ent high> e&e sustaina"i it# strateg# in ine 6ith G o"a Co$+act +rinci+ es Criterion :8 The COP descri"es effecti&e decision>$a)ing +rocesses and s#ste$s of go&ernance for cor+orate sustaina"i it# Criterion @8 The COP descri"es engage$ent 6ith a i$+ortant sta)eho ders UN Goa s and Issues Criterion =8 The COP descri"es actions ta)en in su++ort of "roader UN goa s and issues Hu$an Rights Criterion C8 The COP descri"es ro"ust co$$it$ents' strategies I$+ e$entation or +o icies in the area of hu$an rights Criterion F8 The COP descri"es effecti&e $anage$ent s#ste$s to integrate the hu$an rights +rinci+ es Criterion E8 The COP descri"es effecti&e $onitoring and e&a uation $echanis$s of hu$an rights integration Criterion I8 The COP descri"es )e# outco$es of hu$an rights integration La"our Princi+ es Criterion .8 The COP descri"es ro"ust co$$it$ents' strategies I$+ e$entation or +o icies in the area of a"our Criterion -A8 The COP descri"es effecti&e $anage$ent s#ste$s to integrate the a"our +rinci+ es Criterion --8 The COP descri"es effecti&e $onitoring and e&a uation $echanis$s of a"our +rinci+ es integration Criterion -:8 The COP descri"es )e# outco$es of integration of the a"our +rinci+ es En&iron$enta Criterion -@8 The COP descri"es ro"ust co$$it$ents' strategies

INTEGRATED REPORTING *te6ardshi+ I$+ e$entation

PHD. LECT. DUMITRU MADALINA

or +o icies in the area of en&iron$enta ste6ardshi+ Criterion -=8 The COP descri"es effecti&e $anage$ent s#ste$s to integrate the en&iron$enta +rinci+ es Criterion -C8 The COP descri"es effecti&e $onitoring and e&a uation $echanis$s for en&iron$enta ste6ardshi+ Criterion -F8 The COP descri"es )e# outco$es of integration of the en&iron$enta +rinci+ es Criterion -E8 The COP descri"es ro"ust co$$it$ents' strategies or +o icies in the area of anti>corru+tion Criterion -I8 The COP descri"es effecti&e $anage$ent s#ste$s to integrate the anti>corru+tion +rinci+ e Criterion -.8 The COP descri"es effecti&e $onitoring and e&a uation $echanis$s for the integration of anti>corru+tion Criterion :A8 The COP descri"es )e# outco$es of the anti> corru+tion +rinci+ e Chain Criterion :-8 The COP descri"es i$+ e$entation of the G o"a Co$+act +rinci+ es in the &a ue chain and Criterion ::8 The COP +ro&ides infor$ation on the co$+an#?s +rofi e and conte0t of o+eration Criterion :@8 The COP incor+orates high standards of trans+arenc# and disc osure Criterion :=8 The COP is inde+endent # &erified "# a credi" e third>+art#

Anti>Corru+tion I$+ e$entation

Ja ue I$+ e$entation Trans+arenc# Jerification

*te6ardshi+ O the res+onsi"i it# to ta)e good care of resources. A ste6ard is a +erson entrusted 6ith $anage$ent of another +erson?s +ro+ert#' for e0a$+ e' 6hen one +erson is +aid to oo) after another +erson?s house 6hi e the o6ner goes a"road on ho ida#. The G o"a Co$+act e0ists to assist the +ri&ate sector in the $anage$ent of increasing # co$+ e0 ris)s and o++ortunities in the en&iron$enta ' socia and go&ernance rea $s. ;# +artnering 6ith co$+anies in this 6a#' and e&eraging the e0+ertise and ca+acities of a range of other sta)eho ders' the G o"a Co$+act see)s to e$"ed $ar)ets and societies 6ith uni&ersa +rinci+ es and &a ues for the "enefit of a . 4' I O a(* )c+a, Resp)(s+-+,+t4 I*O -=AAA standards are a++ ica" e to the en&iron$enta as+ects of the organi,ations? acti&ities that can "e contro ed and need to "e inf uenced. It is a &o untar# one and does not re+ ace egis ati&e re7uire$ents. Therefore' co$+anies $ar)ed i$+ortant resources for en&iron$enta +o ic# de&e o+$ent. The $ost s+read en&iron$enta +o ic# e0+osed in annua re+orts is to reduce consu$+tion of energ# and ra6 $ateria s' ess +o uting discharges fro$ + ants and de&e o+$ent of +roducts that co$+ # 6ith future en&iron$enta standards.

INTEGRATED REPORTING

PHD. LECT. DUMITRU MADALINA

I*O -=AA-8:AA= s+ecifies re7uire$ents for an en&iron$enta $anage$ent s#ste$ to ena" e an organi,ation to de&e o+ and i$+ e$ent a +o ic# and o"<ecti&es 6hich ta)e into account ega re7uire$ents and other re7uire$ents to 6hich the organi,ation su"scri"es' and infor$ation a"out significant en&iron$enta as+ects. It a++ ies to those en&iron$enta as+ects that the organi,ation can contro and inf uence' and does not state s+ecific en&iron$enta +erfor$ance criteria. I*O -=AA=8:AA= +ro&ides guidance on the esta" ish$ent' i$+ e$entation' $aintenance and i$+ro&e$ent of an en&iron$enta $anage$ent s#ste$ and its coordination 6ith other $anage$ent s#ste$s. !hi e the guide ines in I*O -=AA=8:AA= are consistent 6ith the I*O -=AA-8:AA= en&iron$enta $anage$ent s#ste$ $ode ' the# are not intended to +ro&ide inter+retations of the re7uire$ents of I*O -=AA-8:AA=. I*O had aunched the I*O :FAAA standard +ro&iding &o untar# guidance on socia res+onsi"i it#. I*O :FAAA contains guidance' not re7uire$ents' and therefore it is not used as a certification standard i)e I*O .AA-8:AAA and I*O -=AA-8:AA=. The standard addresses organi,ations of a t#+es in "oth +u" ic and +ri&ate sectors' in de&e o+ed and de&e o+ing countries. I*O :FAAA adds &a ue to e0isting socia res+onsi"i it# 6or) "#8 De&e o+ing an internationa consensus on 6hat *R $eans and the *R issues that organi,ations need to address. Pro&iding guidance on trans ating +rinci+ es into effecti&e actions and refining "est +ractices that ha&e a read# e&o &ed and disse$inating the infor$ation 6or d6ide for the good of the internationa co$$unit#.

I*O :FAAA disti s a g o"a # re e&ant understanding of 6hat socia res+onsi"i it# is and 6hat organi,ations need to do to o+erate in a socia # res+onsi" e 6a#. It is consistent 6ith and co$+ e$ents re e&ant dec arations and con&entions "# the United Nations and its constituents' nota" # the Internationa La"or Organi,ation 2ILO3' the United Nations G o"a Co$+act Office 2UNGCO3 and the Organi,ation for Econo$ic Coo+eration and De&e o+$ent 2OECD3' 6ith 6ho$ I*O has esta" ished a Me$orandu$ of Understanding to ensure consistenc#. 5' C)rp)rate Resp)(s+-+,+t4 Assura(ce ta(*ar*s5 AA1000 a(* I AE 3000 Assurance O An engage$ent in 6hich a +ractitioner e0+resses a conc usion designed to enhance the degree of confidence of the intended users other than the res+onsi" e +art# a"out the outco$e of the e&a uation or $easure$ent of a su"<ect $atter against criteria 2Internationa Audit and Assurance *tandards ;oard Hand"oo)3. The audit of the financia state$ents is a t#+e of assurance ser&ice. Re+orting organi,ations and their sta)eho ders increasing # acce+t that ro"ust inde+endent e0terna assurance is a )e# 6a# of increasing the credi"i it# and effecti&eness of their sustaina"i it# re+orting' and u ti$ate # their +erfor$ance. In itse f' e0terna assurance is not intended to +ro&ide a"so ute &erification on ho6 effecti&e # an organi,ation is $anaging its sustaina"i it# +erfor$ance. Enhancing trust in an organi,ation?s re+orting and sustaina"i it# +erfor$ance de+ends first and fore$ost on effecti&e interna $anage$ent and contro .

INTEGRATED REPORTING

PHD. LECT. DUMITRU MADALINA

Inde+endent assurance co$+ e$ents interna audit acti&ities to ensure that infor$ation re+orted is re e&ant' re ia" e' and co$+ ete. GRI encourages the inde+endent assurance of sustaina"i it# re+orts and the de&e o+$ent of standards and guide ines for the assurance +rocess to "e fo o6ed "# assurance +ro&iders. Ho6e&er' inde+endent assurance of a sustaina"i it# re+ort is not a re7uire$ent for GRI re+orting. A si$i ar initiati&e has a so "een introduced "# I*EA 2K6en' :AA@3. The standard is ca ed Accounta"i it# AA-AAA assurance standard and is si$i ar to GRI. Ho6e&er' AA-AAA does not direct # concern itse f 6ith +rescri"ing re+orting for$ats and is therefore not as strict in ter$s of re+orting guide ines. Another assurance standard is Internationa *tandard on Assurance Engage$ents 2I*AE @AAA3' designed to address ethica re7uire$ents' 7ua it# contro ' engage$ent acce+tance' + anning' e0+ert $ateria s' o"taining e&idence' docu$entation' and +re+aring assurance re+orts. AA -AAAA* and I*AE @AAA are 6ide # recogni,ed assurance standards to guide assurance +ro&iders. Ho6e&er' there are difficu ties in +ro&iding assurance on sustaina"i it# re+orting 6here an organi,ation has not used a standard defined re+orting fra$e6or). !here organi,ations use the GRI Re+orting Guide ines' for e0a$+ e' assurance +ro&iders can use this (ra$e6or)' "ut 6here the GRI is not used it is $ore difficu t for the assurer to co$$ent on co$+ eteness in the a"sence of a defined sco+e. AA -AAA tended to resu t in a narrati&e state$ent high ighting the strengths and 6ea)nesses of re+ort content' as 6e as the organi,ation?s under #ing $anage$ent s#ste$s and its res+onsi&eness to sta)eho der concerns. On the other hand' I*AE @AAA + aced greater e$+hasis on the i$itations and 6ea)nesses of co$+an# re+orting. The sco+e and 7ua it# of assurance e&o &es' as does the 7ua it# of re+orting. (ro$ an organi,ationa +ers+ecti&e' the 7ua it# of the assurance of sustaina"i it# re+orting can "e inf uenced "# ser&ice +ro&ider inde+endence and co$+etenc#' "usiness understanding' and a++reciation of user e0+ectation. A %PMG 2:AAI3 sur&e# sho6s a &ariation in the sco+e of the assurance engage$ent and the a++roach and $ethodo ogies used. In arge co$+anies' the use of the Internationa *tandard for Assurance Engage$ents 2I*AE3 @AAA is +redo$inant +articu ar # as it has "eco$e o" igator# for accounting fir$s underta)ing cor+orate res+onsi"i it# assurance if there is no nationa a ternati&e. AA-AAAA* is designed to co$+ e$ent and acco$$odate other assurance +ractices such as I*AE @AAA. E?ample: Co$+an# PEMEN Re,at+)( -et6ee( the &RI I(*+cat)rs a(* the 2N&C $r+(c+p,es UNGC Princi+ es Hu$an Rights GC Princi+ e GRI Indicator C*R Re+ort?s Cha+ter

ECC' LA=' LAF>.' LA-@' Trans+arenc# and Dia ogue

INTEGRATED REPORTING

PHD. LECT. DUMITRU MADALINA LA-=' HR->.' *OC' PR-' Hea th and *afet# PR:' PRI HR->.' *OC De&e o+$ent of E$+ o#ees

GC Princi+ e :

PEMEN

La"our GC Princi+ e @ GC Princi+ e = GC Princi+ e C GC Princi+ e F En&iron$ent GC Princi+ e E GC Princi+ e I GC Princi+ e .

LA=' LAC' HR->@' HRC' Trans+arenc# and Dia ogue *OC Hea th and *afet# HR->@' HRE' *OC HR->@' HRF' *OC ECE' LA:' LA-@' LA-=' De&e o+$ent of PEMEN HR->=' *OC E$+ o#ees EC:' EN-I' EN:F' EN@A' De&e o+$ent of the Nation *OC Trans+arenc# and Dia ogue EN->@A' *OC' PR@' PR= EN:' ENC>E' EN-A' EN-I' C i$ate Change EN:F' EN:E' EN@A' *OC En&iron$ent Protection En&iron$enta Perfor$ance Kua it# of *er&ices Products and

Anti>corru+tion GC Princi+ e -A

*O:>F

Trans+arenc# and Dia ogue De&e o+$ent E$+ o#ees of PEMEN

The inde0 descri"es the re ation "et6een the GRI Indicators and the United Nations G o"a Co$+act Princi+ e. This re ation 6as $ade fo o6ing the guidance /Ma)ing the Connection1' docu$ent that introduces and e0+ ores 6a#s to address GRI and G o"a Co$+act re7uire$ents si$u taneous #. Assurance disc osure referring to and I*AE @AAA The reference to AA -AAA standard is $ade in a se+arate section of the re+ort' tit ed )rinciples that govern this report and "rief # touch the $ain re7uire$ents of the standard. Disc osure $ode is as it fo o6s8 //his report is based on the ,--6 version of the ++8--- +ssurance tandard4 ta"ing into account the )rinciple of inclusivity: as a commitment to identify impacts among the three sustainability dimensionsJ materiality: as a principle to state whether the Reporting Organi5ation has included the information re@uired by its ta"eholdersJ completeness: as a

INTEGRATED REPORTING

PHD. LECT. DUMITRU MADALINA

principle to evaluate the e?tent to which the Reporting Organi5ation can identify and understand material aspects of its ustainability )erformanceJ and responiveness: as a principle to evaluate whether the Reporting Organi5ation has responded to ta"eholder concerns4 as well as to an ade@uate communication1>A)EMEK ocial responsibility report4 ,--FB1 If the references to AA -AAA Assurance *tandard are' in so$e re+orts' detai ed according to the co$+an#?s acti&it#' on the I*AE @AAA' cor+orate re+orts contain on # a co$+ iance 6ith standards si$+ e $ention inc uded in the assurance state$ent. !e found detai ed infor$ation in the H*;C Ls re+ort' and 6e +resent the$ as disc osing sa$+ e8 /+ssurance wor" performed .e conducted this limited assurance engagement in accordance with the International tandard on +ssurance Engagements 6--- A RevisedB&+ssurance Engagements other than +udits or Reviews of :istorical !inancial Information issued by the International +uditing and +ssurance tandards (oard A LLI +E 6---MMB1 NOP + limited assurance engagement is less in scope than a reasonable assurance engagement under I +E 6--->1 A :( % :oldings ustainability Report4 ,--FB E0a$+ e disc osures8 (a$ had the fo o6ing tangi" e fi0ed assets at @- Dece$"er :AAN8 Cost Land CAA'AAA ;ui dings =AA'AAA P ant and $achiner# -'F-@'AAA (i0tures and fittings @.A'AAA Assets under .-'AAA construction :'..='AAA De+reciation > IA'AAA =CI'AAA -=A'AAA > FEI'AAA N;J CAA'AAA @:A'AAA -'-CC'AAA :CA'AAA .-'AAA :'@-F'AAA

In the #ear ended @- Dece$"er :AANT- the fo o6ing transactions occur8 -3 (urther costs of C@'AAA $u are incurred on "ui dings "eing constructed "# the co$+an#. A "ui ding costing -AA'AAA $u is co$+ eted during the #ear. :3 A de+osit of :A'AAA $u is +aid for a ne6 co$+uter s#ste$ 6hich is unde i&ered at the #ear end. @3 Additions to + ant are -C='AAA $u. =3 Additions to fi0tures' e0c uding the de+osit on the ne6 co$+uter s#ste$' are =A'AAA $u. C3 The fo o6ing assets are so d.

INTEGRATED REPORTING Cost

PHD. LECT. DUMITRU MADALINA

De+reciation "rought Proceeds for6ard P ant :EE'AAA -.C'AAA IF'AAA (i0tures =-'AAA @-'AAA :'AAA F3 Land and "ui dings 6ere re&a ued at - 4anuar# :AANT- to -'CAA'AAA $u' of 6hich and is 6orth .AA'AAA $u. The re&a uation 6as +erfor$ed "# Messrs 4ac)son D Co' Chartered *ur&e#ors' on the "asis of e0isting use &a ue on the o+en $ar)et. E3 The usefu econo$ic ife of the "ui dings is unchanged. The "ui dings 6ere +urchased ten #ears "efore the re&a uation. I3 De+reciation is +ro&ided on a assets in use at the #ear end at the fo o6ing rates. ;ui dings P ant (i0tures Re7uired8 *ho6 the disc osure under IA* -F /Pro+ert#' P ant and E7ui+$ent1 that is re7uired in the notes to the +u" ished accounts for the #ear ended @- Dece$"er :AANT-. :M +er annu$ straight ine :AM +er annu$ straight ine :CM +er annu$ reducing "a ance