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The present time is characterized by constant business changes, which have a major impact on the competitiveness, growth, efficiency, and survival of any enterprise. Business entities must respond to the ever-changing market situation and be able to adapt to these changes professionally.

The increase of entrepreneurial activities is a major issue on which the sustainability of future growth depends. Business entities do not only focus on financial aspects, but also must focus on development as ability to learn, innovation, and the use of information. Moreover, they must continually improve relationships with customers and suppliers. In this context, interest in and adoption of integrated reporting including a company’s financial, environmental, social, and governance performance is growing rapidly. Non-financial disclosures have always played a secondary role compared to financial disclosures, which have continuously been considered the most critical reporting tool for representing a company’s dynamics. Despite this, social and environmental budgets are rooted in the distant past. Initially, non-financial information was marginal and included in financial reports. However, the growing importance of social, environmental and governance issues in the last thirty years began to lead to the preparation of autonomous and independent non-financial reports. These reports have become increasingly more complex and articulate as they include a wide range of information aimed at satisfying the needs of various categories of stakeholders.

At first the separation between financial and non-financial disclosures brought information benefits due to the expansion of the topics disclosed; subsequently, instead, it eliminated the well-structured requirements of the reporting system. In some cases, the social and environmental reports were not coherent not only with respect to the reporting system but also with a business’ strategy (and the related competitive and financial dynamics). The autonomy to disclose non-financial information compared to financial disclosure obligations can be considered a consequence - and in some cases a cause - of a multi-capital dimension not being included in the vision, mission and strategy of a business.

The impact on non-financial performance appears to be strictly interconnected to financial performance (the ‘connectivity’ of the six capitals of integrated reporting), as the achievement of the objectives of each dimension favours the achievement of positive results in the others. Consequently, financial objectives must be combined synergistically with socio-environmental objectives. In this way, profit becomes the expression of a superior ability to satisfy the expectations of all interlocutors, which, in turn, generates stakeholder approval, producing trust, cohesion and motivation, increased competitiveness and, from a circular point of view, contributes to improve financial results.

Within this context, the need to integrate different types of information has become increasingly evident. A sustainable society requires its companies to have sustainable strategies, defined as those that create value for shareholders over the long term while meeting the needs of other stakeholders and not taking excessive or uninformed risks. Integrated reporting is both the most effective way to communicate a company’s performance in implementing a sustainable strategy and a form of discipline to ensure that it has a sustainable strategy in the first place that leads to long-term value cre

Universal adoption of integrated reporting needs to happen soon. The rapid and broad adoption of high-quality integrated reporting is an imperative for our capital markets and our society.

A sustainable society cannot be created if simply a small percentage of leading companies are practicing integrated reporting, no matter how large and important they are in terms of revenues, market capitalization, and reputation.

Regulation is necessary if the full value of integrated reporting is to be realized and enabling users to compare and benchmark companies, at least within a sector. Our capital markets would not be as large and efficient as they are today without accounting standards which establish comparisons that enable investors to allocate capital in the right way. Accounting standards also enable companies to benchmark their performance and encourage continuing improvement. Thus, regulation will be necessary to specify the framework for integrated reporting and what standards should be used for reporting on non-financial information.

There are significant challenges to accomplishing both of these goals, particularly doing so on a global basis. More difficult is the problem of determining standards for non-financial information. Various groups have made substantial contributions. Organizations seeking to establish standards for non-financial information, typically NGOs or professional associations, both cooperate and compete with each other. Competition can spur innovation and produce alternatives so that the best choice becomes clear. But it can also result in repeating history as happened when accounting standards were set by each country and there were multiple versions of Generally Accepted Accounting Principles (GAAP).

Establishing and enforcing reporting standards is a difficult and contentious terrain, especially doing so at a global level. IFAC’s Point of View on Enhancing Corporate Reporting, sets out IFAC’s perspective which maintains that the reporting ecosystem, consisting of multiple and competing reporting workstreams, does not best serve the interests of capital markets, companies or their stakeholders.  IFAC believes that integrated reporting, bringing together the relevant information about a company, provides a holistic picture of performance and provides insights on an organization’s ability to create sustainable value over time. 

While IFAC encourages regulators and standard-setters to use the International Integrated Reporting Framework as a foundation for incorporating and organizing information about value creation and impacts covering both financial and non-financial information,  the demand for standardization of non-financial information gathers pace. To this end, Accountancy Europe recently issued Interconnected Standard Setting for Corporate Reporting. This introduces four options for a global solution to interconnected standard setting in the corporate reporting system. The question is now whether there can be a concerted effort among a wide range of stakeholders to drive global standards.


Elbano de Nuccio

Prof. Elbano de Nuccio is a former IFAC Board member, nominated by the Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC) in Italy.

Prof. Elbano is a University Researcher in Business Administration at the University of Bari Lum Jean Monnet as well as a professor. He also owns a professional practice as Dottore Commercialista and statutory auditor with multi-year experience in business administration, corporate advisory services, accounting, taxation and financial advisory for private companies and public sector entities operating at national and international level and planning and management control.

Prof. Elbano is also the President of the Ordine dei Dottori Commercialisti and Esperti Contabili of Bari, local branch of ODCEC. In this role, as well as his previous role as Secretary Council Member, he is engaged in all the diverse areas of the profession, from ethics to the development of the profession, disciplinary proceedings to operations and financial administration of the entity, relations with relevant institutions to the compliance of the entity with relevant regulations and laws.

Prof. Elbano has been a member of Public Sector Entities Committee of CNDCEC (2006-2008). He is a member of SIDREA (Italian Association of Professors of Accounting and Business Administration) and he is currently a member of the Executive board of theOrganismo Italiano di Contabilità, the Italian accounting standard setter.

Mr. de Nuccio is a Chartered Accountant, a Certified Public Accountant (CPA) and a Registered Auditor with a Bachelor of Business (Accountancy) and a Ph.D. in Economics.