Four months ago, I wrote about the International Integrated Reporting Council’s (IIRC’s) efforts to update its 2013 sustainability reporting model. The world has confronted numerous new challenges since that time, and the financial community has risen to these challenges by pouring resources into ESG focused index funds.
As of the last quarter, for instance, a quarter of a trillion dollars were invested in such funds. Furthermore, the amount of capital that flowed into sustainable funds in 2019 was roughly four times as great as the amount in 2018, and six times as great as the amount in 2013.
It thus appears reasonable that the IIRC wishes to update its 2013 model to account for new developments, doesn’t it? Four months ago, for instance, I noted that the IIRC’s “String to Spring” approach bore some helpful similarities to COSO’s relatively new 2017 Helix model of Enterprise Risk Management. So how far from the IIRC’s original 2013 framework has its 2020 revision progressed?
Page 13 of the “Companion Document” of the 2020 revision contains the details. It compares the original 2013 Framework to a “mock-up” of the revised framework. How many of the proposed changes are radically new?
In a word? None. Indeed, the new mock-up merely contains five clarifications of the original Framework:
“Outcomes” are now referred to as “Short, Medium, and Long-Term Outcomes” to emphasize that organizations must assess impact throughout the time horizon.
“Business Activities” are now referred to as “Activities” to incorporate the non-business activities of organizations.
“Mission and Vision” are now expanded to “Purpose, Mission, Vision” to emphasize that a holistic sense of purpose should define all strategic activities.
“External Environment” now appears above the organization and not below it to emphasize that organizations must survive within their environments.
“Value Creation” is now expanded to “Value Creation, Preservation, or Erosion Over Time” to explicitly remind organizations that their actions may destroy value as easily as they build it.
None of these revisions is truly new. In fact, these concepts were already embedded in the original 2013 guidance. The 2020 mock-up simply presents these implicit points in a more explicit manner.
Thus, a model that was developed seven years ago to address the world of 2013 has been updated to address the radically transformed world of 2020. And yet this update does not include any radically new concepts at all.
It appears that the original Integrated Reporting Framework was built to last. Like the QWERTY keyboard — a model that remains just as indispensable on a 2020 Apple Macbook as on an 1893 Remington typewriter — the Integrated Reporting Framework perseveres as the leading standard of sustainability reporting.