When evaluating companies, investors firmly focus on the future. Last year’s earnings may be a good starting point, but what about the company’s strategy and its progress in implementing it? How will this drive value? Although corporate reports could answer these questions, many don’t.
There’s a gap between what investors need to know about business plans and long-term strategy and what corporate reports are telling them. This reporting gap makes it harder for investors to discern the true drivers of value creation in a business.
"Investors would like to see corporate reporting that effectively and credibly links performance measures both to strategy and the drivers of business value. Integrated Reporting is an ideal tool to help companies describe their businesses and to find measures that reflect all aspects of their ability to create value."
Lead: Investor Engagement, International Integrated Reporting Council (IIRC)
Regulators have a role to play in closing the gap. National regulatory initiatives have sought to prompt companies to provide more information on strategy and progress, but practice does not always live up to the regulatory ambition.
The IIRC's Integrated Reporting Framework provides a tool that can help companies close the reporting gap.
The IIRC's SlideShare, produced in association with KPMG, explains:
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