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Stakeholders’ Perspectives on the Role of Regulatory Reform in Integrated Reporting

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Abstract

This paper reports on an exploratory study of the preferences of users of non-financial reporting for regulatory or voluntary approaches to integrated reporting (IR). While it is well known that companies prefer voluntary approaches to non-financial reporting, considerably less is known about the preferences of the users of non-financial information. IR is the latest development in attempts over 30 or more years to broaden organisational non-financial reporting and accountability to include the wider social and environmental impacts of business. It promises to provide a more cohesive and efficient approach to corporate reporting by bringing together financial information, operational data and sustainability information to focus only on material issues that impact an organisation’s ability to create value in the short, medium and long term. The study found more support for voluntary approaches to IR as the majority of participants thought that it was too early for regulatory reform. They suggested that IR will become the reporting norm over time if left to market forces as more and more companies adopt the IR practice. Over time IR will be perceived as a legitimate practice, where the actions of integrated reporters are seen as desirable, proper, or appropriate. While there is little appetite for regulatory reform, half of the investors support mandatory IR because, in their experience, voluntary sustainability reporting has not led to more substantive disclosures or increased the quality of reporting. There is also evidence that IR privileges financial value creation over stewardship, inhibiting IR from moving beyond a weak sustainability paradigm.

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Notes

  1. The IIRC (2013, p. 33) defines ‘providers of financial capital’ as: “Equity and debt holders and others who provide financial capital, both existing and potential, including lenders and other creditors. This includes the ultimate beneficiaries of investments, collective asset owners, and asset or fund managers”.

  2. A civil society organisation is an organisation established in order to promote or secure a public good relating to sustainability (environmental, social and governance) (https://www.globalreporting.org/network/network-structure/stakeholder-council/).

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Acknowledgments

We are very grateful to CPA Australia for funding the research study. We would like to thank our research assistant, Val Sands, for her important contribution to the project.

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  1. Centre for Geography and Environmental Science, Monash University, Clayton, VIC, 3800, Australia

    Wendy Stubbs

  2. Deakin Business School, Deakin University, Burwood, VIC, 3125, Australia

    Colin Higgins

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Appendix 1: Australian Investment Supply Chain

Appendix 1: Australian Investment Supply Chain

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Stubbs, W., Higgins, C. Stakeholders’ Perspectives on the Role of Regulatory Reform in Integrated Reporting. J Bus Ethics 147, 489–508 (2018). https://doi.org/10.1007/s10551-015-2954-0

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