1. We have made history together – thank you!
In this final blog as IIRC Chief Executive, Paul Druckman reflects on the scale and
pace of change that the <IR> movement has been instrumental in bringing about
When Harvard Business Review published its annual ranking of the world’s best
performing CEOs in November 2015, for the first time incorporating broader
issues such as governance (20%) alongside financial performance (80%), the
results were astonishing. Jeff Bezos of Amazon scored highest on a purely
financial analysis, but once you “account” for a broader perspective of value
creation Lars Sorensen, CEO of Novo Nordisk, rose to the top of the league table
and then again in 2016. Bezos’ new score was 87th
!
An increasing number of businesses in the world are explaining their purpose and
providing information in context, a key way of securing the trust and confidence
of dedicated stakeholders and demonstrating the impact of businesses in creating
the conditions for broad-based prosperity. Inclusive and integrated governance,
where silos are diminished and management prioritizes communication with
stakeholders, attracts long-term investors, improves risk management and cuts
the cost of capital.
From an <IR> perspective, the change in thinking and behavior away from an
unrelenting focus on short-term factors towards the longer term horizon has been
a key development over the last five years and is one of the three economic shifts
that have been at the core of our thinking. As Lars Sorensen himself says, “The
business of business is business – but with a long-term perspective”. How our
capital markets system creates and distributes wealth and resources is a critical
question that must be addressed with urgency. Our contribution to this debate
has been the International <IR> Framework and the philosophical underpinning
encapsulated by the six capitals. If economies, businesses and investors broaden
their capital base, investment in their people, ideas and the protection of society
and the environment will be prioritized alongside, and be consistent with,
sustained financial performance. That is why <IR> is fundamental to the
governance of institutions and economies in the 21st
century.
How markets create value and distribute resources to maximize equity has led to
calls for a fundamental reform of our capitalist system. I believe that our multi-
capitals approach steers a course between a respect for the full range of finite

2. resources that sustain our planet and society, while enhancing the quality of
investment that will secure our economic future. In short, it contributes towards
financial stability and sustainable development. This agenda is encapsulated by
the work of global organizations such as the Coalition for Inclusive Capitalism and
Focusing Capital on the Long Term, as well as national regulators such as the UK’s
Financial Reporting Council, which has done so much to bring attention to the
importance of board culture in embedding long-term business success. While
these movements, and many more, are flourishing, they are not yet embedded
and that is the challenge for the next five years.
The IIRC has been more than a witness to these changes: we have actively
campaigned and agitated for change in policy, regulatory approach, investment
mandates and business behavior. While the Framework provides much needed
credibility, we have participated in broader movements to ensure that what is
innovation today becomes the norm tomorrow. That is the legacy of the IIRC’s
first five years of existence.
A number of global events have influenced our work and thinking, often
strengthening the case for <IR>. When we were formed the Deepwater Horizon
tragedy in the Gulf of Mexico was very fresh. The human and ecological tragedy
created was underpinned in large part by failures of corporate governance. A lack
of systems and of engagement; and a failure to value that which was most
valuable: the social bond within BP of its connection to the environment and
community. Today, as I write, ‘Deepwater Horizon’ is a box office hit, lending
immortality to a shocking series of failures that integrated thinking, effective
corporate governance and strong investors exercising their stewardship
responsibilities can help to address. We must never forget the real world impact
of governance and reporting. The IIRC is strengthened immeasurably by our close
connection to market participants who inform our work.
I began this article by talking about Novo Nordisk, one of the earliest pioneers of
integrated thinking and reporting. Today, <IR> is becoming the information
architecture in many capital markets around the world. Because what <IR> is
disrupting is the corporate reporting system, remodeling information so that it fits
with corporate governance and stewardship responsibilities and practice.
Nowhere has this been more effective than in Japan, where just this week the
Nikkei newspaper reporting that over 300 companies will produce integrated

3. reports next year. The new stewardship and corporate governance codes have
been a major driver, along with the report by Professor Ito which proposed a
number of reforms to improve the effectiveness of the capital market, the
adoption of <IR> being one such recommendation.
This focus on corporate reporting as an ally of effective corporate governance and
investor stewardship has also led to widespread adoption of <IR> in South Africa,
and the UK, and an increasing number of companies in Singapore, Malaysia,
Brazil, France, Germany, The Netherlands and very recently the exemplar of
reporting in the USA, GE. Indeed, <IR> is today practiced by businesses in over 30
economies globally, a testament to the universal applicability of the concepts and
its usefulness as a frame for embedding an integrated approach. What such
economies are recognizing is that it is impossible to have a modern, dynamic
capital market without a strong and effective information architecture.
We have witnessed a noticeable shift in the interest and support of governments
and regulators, particularly over the last two years. It has been a privilege to
represent the IIRC as part of the B20 (the business wing of the G20) over the last
three years during the Australian, Turkish and Chinese Presidencies. I am
particularly encouraged by the decision of China’s Ministry of Finance to join our
global Council and contribute to encouraging the adoption of <IR> in the world’s
second largest economy. We have also made a submission to the Financial
Stability Board taskforce on climate-related financial disclosures which will do so
much to address the concerns of Mark Carney and other senior policymakers that
long-term risks such as climate change are not properly factored in to today’s
economic and business decision-making. So what we have created – together – is
the momentum for change. When we created the IIRC five years ago, we had an
idea and the dedication of a committed family of supporters, advocates and
innovators. I am pleased that our family has grown into an army of champions
and early adopters – an army that is on course to transform the corporate
reporting landscape as we move to early majority adoption in the coming years.
I also want to record my ongoing passion for the accountancy profession and its
vital role in bringing about this transformed capital markets system. It is more
often than not the CFO in organizations who drives the adoption of <IR>, valuing
the strategic benefits of a more interconnected business where risks and
opportunities are spotted earlier. In professional practice, accounting firms

4. provide trusted advice and assurance that increases confidence in the governance
and reporting process. And accounting bodies create the thought leadership and
advocacy as part of local networks, encouraging market adoption. I do believe
that <IR> offers the profession with a path to the future, enhancing its relevance.
My vision is for profession that understands and accounts for value in its multiple
dimensions. It is an agenda that is there for the taking and the qualities, training,
expertise and insights that accountants possess means they are ideally placed to
take on this strategic and historic role. I encourage the profession to further step
up its commitment to <IR> as we move towards a breakthrough in many markets.
It has been my immense privilege to serve as the IIRC’s CEO during these
formative years. As I depart as Chief Executive, an exciting new chapter will open
and I cannot think of anyone better qualified or prepared to take on this role than
my successor, Richard Howitt. A leader and a friend, he will make a thoughtful
and energetic CEO and he will be brilliantly served by the talented IIRC team. I
must also acknowledge the truly remarkable leadership of Mervyn King, who
persuaded me to accept this role five years ago. It is fitting that on 1 November
the King IV corporate governance code will be launched in South Africa, the first
outcomes-based governance code in the world, and completely aligned to the
International <IR> Framework.
I could not write this final article without reflecting personally on the truly
amazing journey – literally – around the world in the last five years. Indeed, I took
51 flights in 2015, which is enough flying for anyone! It has been the best job I
have ever had. To all of those people I have met I say ‘thank you’. I have learnt
so much from you and have been inspired by your leadership and valued your
friendship. I genuinely believe we have changed the course of corporate
reporting, contributing towards a more resilient economy and, yes, to saving the
world! We have altered the terms of the debate in capital markets which will
benefit our economy, our society and our precious, albeit precarious, planet.