Investor-Business Dialogue Needed, Equity Chief Says

by | Jan 16, 2013

A better dialogue between company boards and their investors can lead to higher quality disclosures and a more informed capital market, a roundtable hosted by the International Integrated Reporting Council and corporate communications agency Black Sun has heard.

Tom Rotherham, director of Hermes Equity Ownership Services, said that investors and businesses need to be “on the same page” in order to achieve a commitment to long-termism, and that integrated reporting could help provide a better basis for discussion than current corporate reports.

According to Paul Druckman, IIRC chief executive, the global economy is “increasingly underpinned” by the value of knowledge and people, yet the standards and rules governing corporate behavior haven’t yet caught up with this new reality.

Discussion at the event reflected recently published research from Black Sun, which shows that businesses, particularly those in the IIRC’s pilot programme, are actively seeking input to help raise the quality of board discussions and decision-making.

The pilot program involves more than 80 private and public companies such as Volvo Group, Danone and Microsoft, and 25 institutional investors. Companies involved produce a periodic integrated report about their organization’s strategy, sustainability initiatives, governance, financial performance and prospects.

According to the research, 98 percent agreed that the shift towards integrated reporting leads to a better understanding of how the organization will create value over time. Furthermore, almost 93 percent of businesses say integrated reporting breaks down barriers between teams and leads to better connected departments.

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