Mervyn King on connectivity in reporting
The International Federation of Accountants (IFAC) has published a piece from Professor Mervyn King on ‘Stepping-stones for connectivity in financial and non-financial corporate reporting.’ Among his many roles, King has chaired the King Committee on Corporate Governance in South Africa, the Global Reporting Initiative (GRI) and the International Integrated Reporting Council (IIRC), giving him unique insights. The article is adapted from his opening statement at the 7th Colloquium of the Good Governance Academy, which can also be watched online.
King discusses recent reporting history at first hand, including questions of how to report on intangibles, environment, social, and governance (ESG) issues, and the emergence of integrated reporting and the <IR> Framework. “When I was Chairman of the United Nations Committee on Governance and Oversight and Chairman of the GRI, IFAC held a meeting at the United Nations. We discussed how directors were not discharging their duties of accountability in the following cases: annual reports consisting of only financial statements that did not reflect the make-up of the market cap; and financial statements and reporting on the impacts of the company on the economy, society and the environment that was divorced from reality as these things work together, not in silos. The discussions then started about connecting or integrating this information.
He also addresses the emerging ESG reporting frameworks and the need for consistency, as well as the particular issue of the positioning of the <IR> Framework within the IFRS Foundation. He believes that ongoing collaboration and consolidation is laying stepping-stones across the river, from clutter and confusion on one side to a global, comprehensive corporate reporting system on the other. “What is intriguing in the developing standards and regulations — the EU’s European Sustainability Reporting Standards (ESRS), China’s statements, the ISSB Standards, and the U.S. Securities and Exchange Commission’s regulations — is that there is common cause: a need for connectivity between financial and non-financial information.”