“Most reports contained huge amounts of data which could have been placed in the sustainability report, or disclosed in their websites. An integrated report is meant to present material and information with which readers can appreciate performance and make assessments about future prospects,” he noted.
He said that overly long profiles of directors and management, detailed economic analysis, lengthy dialogues on employee gender, age and training, information on governance in processes and sustainability, compliance reports and detailed annual financial statements are not required.
“Some of these may be required in Sri Lanka, but the fact remains, they challenge the purpose of integrated reporting,” he said. Terry was also sceptical about the information presented in some of the reports.
“Most reports were filled with positive and progressive information; in fact they sound like they have been written by a public relations expert. However, a few outlined any challenges or negative circumstances. We all know no business exists without any challenges or negative things happening. Integrated reports need to present both positive and negative issues in a balanced manner,” he said.
Meanwhile, he outlined what should be included in integrated reports. “A few reported created value through capital and the inter dependence of capitals. Some companies were just following what others have done,” he said. He expressed that only financial analysis was done, instead of presenting customer and employee satisfaction surveys.
“There was no information on executive remuneration, which has a fundamental impact on corporate strategy and performance. As a stakeholder, I want to know how executives are incentivized and what the board and remuneration committee are doing to ensure the executives are managing the business effectively to create short to medium and long-term value,” he said.
He praised companies which created social and environmental values as their core business and criticized companies which treated them as corporate social responsibility (CSR) side projects. However, he commended all companies for achieving much in a short span of time.
“Participating companies can be proud of what they have achieved. On the positive side, it is gratifying to see that many companies have adopted the IR framework launched via December 2013 by the International Integrated Reporting Council,” Terry said.
He said that integrated reporting is a journey, which takes a long time to perfect. The Institute of Chartered Accountants of Sri Lanka was in the past hesitant to adopt integrated reporting standards citing its relevance to Sri Lanka, but embraced it this year. (Daily Mirror)