The Connectivity Conundrum: (How) Will Integrated Reporting Fulfil Its Promise?

By Alan Willis, FCPA, FCA

In all the flurry of recent convergence initiatives, the establishment of the International Sustainability Standards Board (ISSB), and the urgency to mandate new requirements for investor-relevant climate related disclosures, whatever happened to integrated reporting? Has it been forgotten or overshadowed? With the imminent prospect of the ISSB issuing standards for climate-related and other sustainability disclosures to accompany IASB’s standards (IFRS) for financial statements, how is integrated reporting (<IR> and the International Integrated Reporting Framework going to fulfil its promise to connect financial and non-financial corporate reporting, thus enhancing their usefulness beyond what either alone can achieve?

A new article I have written for ThinkTWENTY20 (available for free download by clicking here) explores answers to such questions and examines ways in which integrated reporting and the <IR> Framework, now the intellectual property of the IFRS Foundation, can take on new life and gain momentum under the joint auspices of the ISSB and IASB. I see clear possibilities for the <IR> Framework to be drawn on in revising the IASB’s Management Commentary (MC) Practice Statement to produce a new version that, like a good MD&A, provides necessary contextual information and a holistic <IR>based view of how a company creates value. Such an MC or MD&A would provide connectivity between IFRS financial statements and ISSB-based sustainability disclosures.

First, my new article recalls how the International <IR> Framework for integrated reporting came about in 2013 following a landmark announcement in December 2009, that the Prince of Wales’ Accounting for Sustainability (A4S) project was going to collaborate with the GRI in establishing a new International Integrated Reporting Council. It goes on to summarize the purpose and key features of the new <IR> reporting model, as well as the importance of integrated thinking and a new mindset for boards and executives to implement and reap the benefits of integrated reporting.

I comment on the rather slow progress to date in uptake of integrated reporting, especially in North America, noting the challenges posed by the new mindset it calls for. Further, I look at the possibility of <IR> being overshadowed in the flurry of convergence initiatives since 2020, especially the focus on climate-related and other sustainability disclosures for investor purposes. I also call out an unfortunate confusion in use of the term “sustainability” for the name of the ISSB and explain the difference between “outside in” and “inside out” impacts, disclosures and reporting standards.

Fortunately, I note, the IFRS Foundation released encouraging statements In May and August, 2022, reaffirming that the ISSB and IASB are being expected to “actively encourage continued adoption of the <IR> framework to drive high quality corporate reporting.”

What is now emerging as a possible path forward, as noted above, is for the IASB and ISSB, working together, to draw on the <IR> Framework in renewing and advancing revision of the IASB Practice Statement on Management Commentary, a project initiated in 2017, but recently placed on “pause.” A new <IR> inspired concept of the MC (MD&A) based on a revised Practice Statement (and elevated to the level of a “standard”?) could facilitate and enable connectivity between IFRS financial statements and “outside in” sustainability information material to investors.

I strongly applaud a recent IFAC article by Professor Mervyn King, the founding chair of the IIRC (as well as former chair of the GRI), “Stepping Stones for Connectivity in Financial and Non-Financial Corporate Reporting.” This article is adapted from the proceedings of the 7th. Colloquium of the Good Governance Academy and sees the way to achieve a “global, comprehensive corporate reporting system.” Three quotations from those proceedings stand out:

“The Integrated Report provides an integrated, system, perspective of the organization and it is from this perspective that additional details can be sought, such as financial and sustainability information according to, for example, the IASB and ISSB”. Mervyn King

“The International Integrated Reporting Framework provides the strategic context and framework for global efforts to develop standards and ensures alignment between internal thinking and external reporting.”  A. Johnson, President, IFAC


“The system is not that difficult from a conceptual standard-setting perspective. It is not an alphabet soup. The answer is simple, the ISSB standards provide an ‘outside-in’ perspective (reporting on the environmental and social impacts on the company) and the GRI standards provide an ‘inside-out’ perspective (reporting on the impact of the company on society and the environment). These are two sides of the same coin and together provide the intended holistic view.” E. van der Enden, CEO, GRI

Regarding the GRI’s “inside out” sustainability reporting standards, I have expressed concern in earlier blogs that these, along with sustainability reporting as we have witnessed its strong worldwide emergence since the 90s, might be sidelined or overshadowed by the creation of the ISSB and the focus on meeting investors’ thirst for information about ESG or sustainability matters deemed material to them – as distinct from information for stakeholders in general about critical enterprise impacts on the planet and people.

My fears were considerably alleviated by reading earlier in 2022 first that the GRI reaffirmed its commitment to a two-pillar reporting landscape for financial and core sustainability reporting.  “Pillar 1 –  addressing financial considerations through a strengthened financial report which includes sustainability disclosures in the context of enterprise value” (the focus of the ISSB), and “Pillar 2  –  concentrating on sustainability reporting focusing on all external impacts a company is having on society and the environment” (the focus of the GRI), which thereby shows its contributions (positive or negative) to sustainable development, the UN SDGs and the possibility for future generations to thrive on a livable planet.”

Then it was even more encouraging to learn in March 2022 that the GRI and IFRS Foundation had announced in a Memorandum of Understanding their agreement to cooperate in their standard-setting activities and work programs, and take part in each other’s consultative bodies. As GRI’s CEO, Eelco van der Enden said at the time”

“The MoU between GRI and the IFRS Foundation is a strong signal to capital markets and society that a comprehensive reporting system, which combines financial and impact materiality for sustainability reporting, is possible on a global scale. Aligning GRI’s established and widely adopted standards for sustainability impacts with the investor-focused standards being developed by the ISSB will benefit both companies and investors, as well as a wide range of stakeholders around the world.”


As one possible step further to fulfilling the promise of integrated reporting, I finally suggest that <IR> based on the <IR> Framework could become an overarching cornerstone linking, on the one hand, reporting to all stakeholders about a company’s impacts on the environment, society and economy with, on the other hand, reporting primarily to investors about financial performance and value creation plus how these are or may in future be affected by ESG (environmental, social and governance) factors. The former reporting is shaped largely by the long-established but ever-evolving GRI Sustainability Standards, the latter by the IFRS Foundation’s IASB standards for financial statements and, going forward, the ISSB’s standards for sustainability-related disclosures material to investors.

This is an idea I set out in my monograph this summer “Corporate Reporting: Quo Vadis”, published by ThinkTWENTY20 in May 2022 and available for purchase at .

In the words of Mervyn King, “The IR framework has been tested over the last 10 years and its efficacy and resilience as an overarching framework connecting the financial and the non-financial has been proven.”

In conclusion, I emphasize the importance of ISSB and IASB members and staff receiving a solid orientation and grounding in integrated thinking and the <IR> Framework before undertaking their future work together on connectivity and Management Commentary.

Thanks to convergence and collaborations unimaginable a few years ago, we, and in particular the IFRS Foundation, the GRI, the investor community, the accounting profession, business enterprises and regulators, are now embarking on a project that should fundamentally change corporate reporting as it has been known for decades, if not eons.  We owe it to future generations to get on with all this – fast!