Thumbnail: 

There is a unique opportunity for Asia to overtake the West in terms of corporate disclosure, finds a roundtable discussion, hosted by ACCA and facilitated by CSR Asia. 

The Roundtable, which focused on the evolving corporate reporting concept of integrated reporting – an integrated representation of financial and non-financial performance of an organisation – suggested that instead of following the long-drawn-out route taken by Western organisations to arrive at integrated reporting, which entailed a protracted period of development in CSR (corporate social responsibility) reporting, Asian organisations could ‘leapfrog’ the process of producing separate annual and CSR reports, and instead embrace integrated reports now.

The Roundtable panel comprised some of Singapore’s key opinion leaders and the discussion covered topics such as the linking management’s remuneration to sustainability performance, the challenges of integrated reporting, the role of accountants and sustainability professionals, the relevance of integrated reporting to investors, and the need to develop external assurance standards aligned to integrated reporting frameworks.

The findings are summarised below:

* Opportunity for Asia to leapfrog the West: Asian companies should learn from the sustainability story in the West and thus leapfrog their Western counterparts. Sustainability reporting took a long time to gain momentum and to evolve in the West, but by embracing integrated reporting, Asian companies can level the playing field between Asia and the West;

* Challenging times ahead for assurers of integrated reporting: assurance needs to keep pace with reporting trends. The large accounting firms have started working committees to look into auditing sustainability factors;

* Integrated reporting requires support from the top: the disclosure committee responsible for integrated reporting should be chaired by the CEO, not the CFO;

* Remuneration should be tied to sustainability performance: the general consensus was that remuneration of C-suite executives should be tied to sustainability performance for integrated reporting to be successful;

* Downsize reports: many annual reports and sustainability reports are too long; reports which are over 100 pages are impractical. Integrated reports should be succinct and relevant to their users;

* Quantifiable impacts: sustainability quantifiers or indicators must make the vital connection to financial performance. While numbers alone may not capture all the risks to the business in 

* terms of environmental, social and governance performance, quantifying sustainability performance is a good start; and

* Manage expectations on what integrated reporting can do for the investor community: integrated reporting may help an organisation deliver some aspects of a long-term vision, however the organisation has limited ability to publicly disclose this vision.

According to the International Integrated Reporting Committee (IIRC), integrated reporting brings together material information about an organisation’s strategy, governance, performance and prospects in a way that reflects the commercial, social and environmental context within which it operates.

"As investors get more sophisticated, companies will face increasing market pressures to communicate more than just their financial performance. Given the low numbers of sustainable reports in Asia, it is worthwhile to look more deeply into how we can shorten the learning curve and catch up with global standards," says Darryl Wee, country head of ACCA Singapore.

Wee adds that local accountants and auditors will have a major role to play if integrated reporting comes on board.
 

MORE ARTICLES ON CORPORATE DISCLOSURE

Quote Image: