Last week US SIF issued a letter to Mervyn King, Chairman of the International Integrated Reporting Committee (IIRC), regarding its discussion paper, “Towards Integrated Reporting: Communicating Value in the 21st Century”.

US SIF stated that while they support the IIRC’s efforts to develop an integrated reporting framework with both financial and non-financial data (environmental, social and governance (ESG) data), their primary interest is the disclosure of the most robust ESG data possible.

Because of this, US SIF would prefer to see a separate and comprehensive ESG report rather than an abridged version in an integrated report. They acknowledge the fact that there is often a division of labor between Investor Relations and sustainability departments, which results in conflicting messages and absence of internal knowledge. Further, an integrated reporting framework would force companies to understand how sustainability issues relate to every day business practices, as well as long-term strategies. It’s important that ESG data and performance progress should be made known to all types of equity and alternative investment analysts.

US SIF made five broad points in regard to the discussion paper:

  1. Ensure integrated reporting doesn’t diminish the quality of good ESG reporting that currently exists
  2. Reconsider the mandate that only senior management determines what are the most material issues to an organization
  3. While US SIF would prefer to see a separate ESG report, they ask the IIRC to broaden its definition of what must be provided in integrated reports
  4. Less input from accountancy firms and more input from sustainable and responsible investors (who are the primary users of these reports)
  5. Greater synergies between the integrated reporting process and the GRI reporting framework

To read the full letter please click here.

What do you think of US SIF’s position on integrated reporting, and its letter to the IIRC? Do you agree or disagree? Discuss!