business reporting leaders forum - brlf · business reporting leaders forum. kpmg sydney monday 5...

$: Business Reporting Leaders Forum - BRLF · Business Reporting Leaders Forum. KPMG Sydney Monday 5 November 2018 and KPMG Melbourne on Friday 9 November 2018. ... advising that direc\൴ors$
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Business Reporting Leaders Forum

KPMG Sydney Monday 5 November 2018 and

KPMG Melbourne on Friday 9 November 2018

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BRLF welcome and introduction

Nick Ridehalgh

Presenter

Presentation Notes

A lot of activity in recent months AICD <IR> policy in October 2017 ASIC guidance note in December 2017 – advising that directors consider the principles of integrated reporting when preparing their OFRs Talk about ASX CG principles today A growing need for <IR> as can be seen from the Royal Commission – ethics. JVS change to focus on ‘doing things right AND doing the right thing’ Also growing literature and aligned research – The Ethical Kaleidoscope Others today with Carol Adams – SDGs, Jo Cain on Assurance of integrated reports and Danny Davis on a developing approach around governance over value creation

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Agenda

Time Subject Presenter

12.30 Welcome and introduction Nick Ridehalgh

12.35 IIRC Developments – Momentum Phase Richard Howitt

1.05 IIRC Board developments Michael Bray

1.15 Corporate Reporting Dialogue Ian Mackintosh

1.25 NZ Developments Warren Allen

1.35 Other developments• Draft 4th Edition of ASX Corporate Governance Principles & Recommendations• Assurance

Nick Ridehalgh

1.45 Q&A Nick Ridehalgh (Facilitator)

1.55 Close Nick Ridehalgh

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IIRC – Momentum Phase

Richard Howitt, CEO IIRC

International Integrated Reporting CouncilNovember 2018

Welcome to the Momentum Phase

© International Integrated Reporting Council

Australia (Draft ASX CG Principles, 4th edition)

Current adoption


Think

Global Adoption Phase

Momentum Phase

Breakthrough Phase

Level of support and adoption of integrated reporting

2014-2017 2018-2020 2021-2025

Creation Phase

2010-2011

Feasibility Phase

2012-2014

Journey so far


The next phase in the IIRC’s strategic journey will build on the achievements of the Breakthrough Phase.

It will deliver accelerated action towards our goal for integrated thinking and reporting to be the global norm.

It will leverage the support of our partners to create the scale and pace needed to deliver a step change in adoption.

It will popularise the message from the International Federation of Accountants (IFAC) that integrated reporting is ‘the future of corporate reporting’.

The Momentum Phase


Our mission is to normalise integrated reporting and thinking within mainstream business practice in the public and private sectors.

Our objective is to change the corporate reporting system so that integrated reporting becomes the global norm.

Defining our mission


The Momentum Phase will create impetus and energy across our target markets and in key sectors.

We will also make progress towards greater alignment of the corporate reporting system, a further driver of our future success.

The purpose

The three-year Momentum Phase will prepare the IIRC and our stakeholders for the next big shift in our strategic direction – the Global Adoption Phase.

Building momentum towards global adoption


The Momentum Phase represents a strategic repositioning rather than an entirely new strategy. There will be a tonal shift, a hardening of our ‘ask’ of the market, businesses, investors, regulators and all those involved in the corporate reporting system.

Our Theory of Change will create a narrative around the impact of the economic and societal changes integrated reporting is capable of bringing about – and it will unite our coalition around a core set of beliefs about how we can shape the future.

Shaping the future


What is new for the Momentum Phase?


• Demonstrate and catalyse continued progress in the adoption of integrated reporting by advancing integrated thinking as a driver of effective corporate governance and bringing the adoption of Integrated Reporting to new markets and sectors

• Mobilise the ‘investor pull’ for integrated reporting • Promote the objectives of integrated reporting in, and

facilitate the alignment of, the corporate reporting system• Make it easier to adopt integrated reporting• Foster a policy and regulatory environment that supports

moves towards integrated reporting• Maintain a viable and effective organization.

Key themes


Breakthrough• Grow awareness• Spread initial adoption

Momentum• Grow adoption• Emphasis on what drives

momentum in target markets

Progress in the adoption of integrated reporting:


Breakthrough Momentum• Specific investor

engagement in IIRC• IIRC to engage in investor

initiatives on shifting to the long-term and in sustainable finance

Mobilizing the ‘investor pull’


Breakthrough Momentum

Alignment of the Corporate Reporting System

• Corporate Reporting Dialogue focus on ‘dialogue’

• Corporate Reporting Dialogue focus on ‘alignment’



Easier to adopt

• Best practice • Guidance, research, training



A supportive policy and regulatory environment

• Corporate Governance codes and Stock Exchange guidance

• Securities Market Regulators



A viable and effective IIRC

• Convening power of the Council

• A key tool for external trends: SDGs, technological change, purposeful and inclusive capitalism


Priorities for the IIRC• Build adoption in United States and China

• Focus on integrated thinking

• Work with national accountancy institutes

• Engage with investors towards sustainable finance

• Support review of Principles for Responsible Investment Reporting Framework

• New strategic partnership with the CFA Institute

• Corporate Reporting Dialogue alignment project

• IASB Management Commentary Practice Statement review

• Emphasis on reducing cost and complexity of corporate reporting

• Guidance programme following the global <IR> Framework feedback exercise

• Expand the capacity of the <IR> Academic Network, developing evidence base for integrated reporting

• Expand the IIRC training programme

• Maintain momentum for inclusion in Corporate Governance codes

• Work with Stock Exchanges to develop guidance

• Increase signposting by Securities Market Regulators

• Maintain and develop convening power of the Council

• Implement review of key relationships to build partnerships across the global network

• Reinforce relevance as a key tool for megatrends.


Integrated reporting is supporting wider changes:

• Value creation is becoming a core concept of corporate governance, enabling multi-capital thinking and decision-making

• Economies are calibrating this change, e.g. more long-term investor behaviour, and ESG factors embedded in business and investor decisions

• The debate on standardisation and metrics is gaining traction to drive comparability and credibility of the system.

Deep and enduring value


Seeking adoption by listed companies in the world’s leading capital markets will remain a key focus making use of the business case and robust academic evidence of the benefits to markets and society.

We will also intensify our engagement with SMEs, family-owned enterprises, private-equity backed companies and public sector/not-for-profit organizations.

Our work in Asia, Latin America and Africa has revealed strong demand for in emerging markets, and we will strengthen our engagement in these markets, which can ‘leapfrog’ more advanced markets.

Engaging the whole economy


There is a renewed urgency to bring coherence to the landscape brought about by market demand for greater alignment and also allied initiatives in the capital market and financial system space.

Advances in technology are also impacting the corporate reporting landscape. We should work to embed within this thinking, including specific policy and market developments.

The corporate reporting system


• Stewardship and corporate governance• Inclusive capitalism• Sustainable Development Goals and climate change• Globalization and interconnectedness• Technology• Energy and infrastructure.

A response to the world’s most pressing megatrends


WE LOOK FORWARD TO WORKING WITH YOU TO BUILD

MOMENTUM

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IIRC – Board Developments

Michael Bray, IIRC Board

International Integrated Reporting CouncilNovember 2018

IIRC Board Update

• Continuous progress on adoption of integrated thinking & reporting• Momentum phase - Richard• Networks• Academic database• Key market focus

• Mobilise investor pull for integrated reporting• More investors have signed IIRC Investor Statement• ICGN co-operation

• Promote objectives of integrated reporting in and facilitate alignment of corporate reporting system

• World Congress of Accountants • Corporate Reporting Dialogue• New MOU with GRI• Assurance focus• Appointed to IFRS Management Commentary Practice Statement

Group• Transparency and trust

Strategic focus areas

• Make it easier to adopt integrated reporting• Mapping of national reporting mechanisms to <IR> Principles /

Framework• Updated FAQs• Practice Note on The Capitals• Getting Started Guide• 15 <IR> Training Partners

• Foster a policy and regulatory environment that supports move towards integrated reporting

• National alignment• ASX CG Principles & Recommendations• G20 / B20• Corporate governance / investor stewardship drivers• IOSCO

• Maintain a viable and effective organisation• 2017 Integrated Report• Dominic Barton• Stakeholder survey

Strategic focus areas (cont)

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Corporate Reporting Dialogue

Ian Mackintosh, Chair of Corporate Reporting Dialogue

THE CORPORATE REPORTING LANDSCAPE TODAY

The Corporate Reporting Dialogue

• Coherence• Consistency• Comparability

• A comparison of materiality definitions and approaches

• Represents common foundational principles

• Broadly consistent with all forms of standards’ development and business reporting to stakeholders

The better alignment project

• ESG frameworks mapped against the TCFD recommendations and to each other

• Identify how non-financial metrics relate to financial outcomes

Better alignment of the frameworks for ESG reporting and a paradigm shift

towards the integration of financial and non-financial information.

Aims:

• Combat reporting fatigue and reduce burden• Enable effective reporting• Better pricing-in of ESG related externalities by financial markets• Driving long-term efficient allocation of capital• Aligning markets with changing nature of risks and opportunities

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NZ Developments

Warren Allen, CEO NZ XRB

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Other developments

Nick Ridehalgh, BRLF Project Lead

• Draft 4th Edition of ASX Corporate Governance Principles & Recommendations

• Assurance

40© 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

Document Classification: KPMG Confidential

Proposed changes – Overview Foundations for management & oversight

Structure board to add value

Act ethically and responsibly

Make timely and balanced disclosure

Respect the rights of security holders

Recognise and manage risk

Corporate reports of high quality & integrity

Remunerate fairly &responsibly

• Have and disclose board charter which includes: - Responsibility for defining the entity’s purpose & approving code of conduct and values- Receiving information about legal and regulatory breaches and misconduct

• Set gender diversity objectives all levels; ASX300 objective Board > 30% gender; annual review; broader diversity policy

• Review board skills matrix to address emerging & expanded business and governance issues

• Clarify and improve disclosure of potential independence issues

• Ensure program for induction and periodic review need for director professional educationto maintain skills necessary to fulfil duties

• Major changes to better instil & reinforce culture to act lawfully, ethically and in a socially responsible manner

• Acknowledge social licence is a valuable asset; easily damaged by unlawful, unethical & socially irresponsible actions

• Have and disclose: core values; full code of conduct; whistle-blower policy; anti bribery and corruption policy

• Board reporting of code of conduct and anti-bribery & corruption breaches; also cultural concerns

• Have and disclose formal & rigorous processes to validate to validate that allcorporate reports are accurate, balanced, understandable & meet investor appropriateinformation needs

• Consider Integrated Reporting principles in preparing reports to address market needs

• Ensure appropriate process in place to validate reporting; consider assurance on corporate reports

• Disclose continuous disclosure compliance policy in full

• Board to receive all ASX announcements promptly after release

• Release new investor presentation materials on ASX Platform ahead of the presentation

• Website should include links to its ‘other corporate reports’

• Seek opportunities to engage with retail investors/ understand their interests

• Resolutions at meetings should be decided by poll rather than show of hands

• Remuneration ‘aligned with creation of value for security holder over short, medium and long term’

• Have a rigorous process for setting remuneration

• Remuneration targets should align with short, medium and long term strategic objectives (as disclosed)

• Greater disclosure of consultancy arrangements with directors

• Risk management disclosures should focus on financial and non-financial critical success drivers over the short, medium long term

• Board should satisfy itself that entity is operating within risk appetite set by the board

• Acknowledge social licence as a valuable asset; and enhance reporting on environmental (TCFD) and social matters

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Document Classification: KPMG Confidential

© 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

WCOA 2018 Assurance of the Future

Assurance – what’s happening? The Ten Assurance Challenges

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Wrap up and Close

Nick Ridehalgh, BRLF Project Lead

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