Integrated Reporting ACCA

ACCOUNTANTS FOR BUSINESS

Integrated Reporting: the Future of Corporate Accounting? ROUNDTABLE DISCUSSION SINGAPORE, 14 OCTOBER 2011

ACKNOWLEDGEMENTS ACCA would like to express its gratitude to all individuals who took part in the roundtable discussion and for their invaluable contributions to the discussion and to CSR Asia who was commissioned to facilitate the roundtable discussion and to subsequently produce this report.

ABOUT ACCA ACCA is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. We have 404,000 students and 140,000 members in 170 countries worldwide. ACCA has worked with governments, national organisations and development agencies in emerging economies – for over 20 years – promoting the accounting profession, to create value for the communities, businesses and individuals it serves. ACCA has been actively involved with the unfolding debate on sustainability since 1990 and is committed to the Sustainability and Corporate Social Responsibility (CSR) agenda.

CONTACT For any queries regarding the content of this report, please contact: ACCA Singapore Fazilah Muhammad Business Relationships Manager Contact number: +65 6637 8175 Email address: [email protected]

CSR Asia is the leading provider of information, training, research and consultancy services on sustainable business practices in Asia.

© The Association of Chartered Certified Accountants, 2011

Contents

Executive Summary.................................................................................. 2 Purpose.................................................................................................. 3 Background............................................................................................. 4 Roundtable Highlights.............................................................................. 6 Conclusion and Next Steps........................................................................ 12 Appendix................................................................................................ 13

Executive Summary

Invited panellists attended a Roundtable discussion hosted by ACCA and CSR Asia, to share their expertise and experience relating to integrated reporting. The theme of the discussion was “Integrated Reporting: the Future of Corporate Accounting?” This report is an account of the content of the discussion and reflects the opinions of the panellists. According to the International Integrated Reporting Committee (IIRC), “Integrated Reporting brings together material information about an organisation’s strategy, governance, performance and prospects in a way that reflects the commercial, social and environmental context within which it operates.” Currently, the mainstream business reporting model focuses largely on financial information, creating an information asymmetry for investors and stakeholders. The general consensus among the panellists was that integrated reporting will inevitably be introduced in Asia, despite the challenges involved. However, it will need more than three years to gain a foothold in Asia. Some of the key points made by the panellists were: 

Opportunity for Asia to leapfrog the West: Asian companies should learn from the sustainability story in the West and thus leapfrog their Western counterparts. Sustainability reporting took a long time to gain momentum and to evolve in the West, but by embracing integrated reporting, Asian companies can level the playing field between Asia and the West;

 Challenging times ahead for assurers of integrated reporting: Assurance needs to keep pace with reporting trends. The large accounting firms have started working committees to look into auditing sustainability factors; 

Integrated reporting requires support from the top: the disclosure committee responsible for integrated reporting should be chaired by the CEO, not the CFO;

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Remuneration should be tied to sustainability performance: the general consensus was that remuneration of C-suite executives should be tied to sustainability performance for integrated reporting to be successful;

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Downsize reports: many annual reports and sustainability reports are too long; reports which are over 100 pages are impractical. Integrated reports should be succinct and relevant to their users;

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Quantifiable impacts: sustainability quantifiers or indicators must make the vital connection to financial performance. While numbers alone may not capture all the risks to the business in terms of environmental, social and governance performance, quantifying sustainability performance is a good start; and,

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Manage expectations on what integrated reporting can do for the investor community: integrated reporting may help an organisation deliver some aspects of a long-term vision, however the organisation has limited ability to publicly disclose this vision.

This report is a summary of the roundtable discussion. The views expressed in this publication do not necessarily reflect the views of ACCA or CSR Asia.

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Purpose

Invited panellists attended a Roundtable discussion hosted by ACCA and CSR Asia, to share their expertise and experience relating to integrated reporting. The theme of the discussion was “Integrated Reporting: the Future of Corporate Accounting?” The panellists consisted of representatives from the academic, investment, corporate, civil society and securities communities based in Asia. This discussion followed a previous Roundtable on 22 October 2010 (entitled “Sustainability Reporting – Nice to have or Necessary?”) which involved key opinion makers in Singapore and garnered significant coverage by the media. This report of the second Roundtable discussion aims to summarise the panellists’ opinions of integrated reporting, including their concerns and its benefits as a strategic tool.

“INTEGRATED REPORTING: THE FUTURE OF CORPORATE ACCOUNTING?”

PURPOSE

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Background

WHAT IS INTEGRATED REPORTING? The International Integrated Reporting Committee (IIRC) states that, “Integrated Reporting brings together material information about an organisation’s strategy, governance, performance and prospects in a way that reflects the commercial, social and environmental context within which it operates. It provides a clear and concise representation of how an organisation demonstrates stewardship and how it creates and sustains value.” (International Integrated Reporting Committee, Sep 2011, p. 3) WHY INTEGRATED REPORTING? The current business reporting model focuses largely on financial information, creating an information asymmetry for investors and stakeholders. Non-financial information, including environmental, social and corporate governance (ESG) measures, is important too, because it helps to facilitate a holistic understanding of the organisation: the external factors that affect an organisation (for example societal issues); the relationships that are used and affected by the organisation; and most importantly, the interdependencies between the organisation’s business model, external factors and relationships. This will provide a broader framework to assess organisational performance, compared to traditional reporting. FRAMEWORK FOR INTEGRATED REPORTING The current publications on integrated reporting frameworks include the Connected Accounting Framework and the IIRC discussion paper. Developed by the Prince of Wales’ Accounting for Sustainability Project, the Connected Accounting Framework provides guidance to better report the connection between business strategy and sustainability factors. This framework serves as a prequel to the discussion paper by the IIRC, which makes the case for integrated reporting and proposes initial steps in the development of an international integrated reporting framework. The IIRC is implementing a pilot programme for integrated reporters. This aims to provide input from all those with a stake in integrated reporting, including both producers and users of reports.

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According to the IIRC (International Integrated Reporting Committee, Sep 2011, p. 12), the preparation of an Integrated Report is based on Five Guiding Principles: 1. Strategic Focus – an organisation’s strategic objectives and how they relate to other components of its business model; 2. Connectivity of information – the report should highlight the relationship between the components of an organisation’s business model; 3. Future orientation – management’s expectations about the future, and the prospects and uncertainties it faces; 4. Responsiveness and stakeholder inclusiveness – disclosure about the nature and quality of the organisation’s relationships with key stakeholders, and how their issues are handled and addressed; and 5. Conciseness, reliability, and materiality – the report should provide concise, reliable, and relevant information to help assess the organisation’s ability to create and sustain value in the short to long-term. These principles guide the contents of an integrated report as well as the presentation of the information.

Background

GLOBAL LEVELS OF INTEGRATED REPORTING Levels of integrated reporting are low in Singapore and Asia at large.

EXAMPLES OF INTEGRATED REPORTS IN ASIA Out of more than 200 integrated reports globally, there are 13 publicly disclosed integrated reports in Asia.

According to Corporate Register – an independent organisation that keeps a database of corporate responsibility reports globally – in 2010, more than 200 organisations worldwide purported to have produced integrated reports, up from 180 reports in 2009.

However, based on IIRC’s definition of integrated reporting, of the 13 in Asia, only three reports can be considered truly “integrated,” that is, showing how sustainability performance impacts the bottomline.

The winners of Corporate Register’s CR Reporting Awards 2011 for the best integrated reports are the Co-operative Group, General Electric Company and the Royal Dutch Shell PLC (in descending order of merit). The best reports combine non-financial aspects into their annual reports fully, rather than including just a small section of the non-financial information. The other winners include Banco Espirito Santo SA, Caja Navarra, British American Tobacco PLC, Banco Bradesco SA, City Developments Limited, Wipro Limited and State Street Corporation. (Corporate Register, March 2011, p. 26)

“INTEGRATED REPORTING: THE FUTURE OF CORPORATE ACCOUNTING?”

All three reports come from companies which are headquartered in Japan. They are automotive parts and systems manufacturer, Aisin Seiki Corporation, owner and operators of specialised tankers, Iino Lines and electronic components supplier, the Dainippon Screen Group. The other ten reports merely included CSR disclosure in a section in their annual report, which demonstrates a wide misunderstanding of the term “integrated report”.

BACKGROUND

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Roundtable Highlights

The Roundtable was facilitated by Jenny Costelloe, Country Director of CSR Asia. Representatives from the Singapore media and 20 observers were also present.

All panellists received briefing packs prepared by CSR Asia in advance, which contained references to recent developments and research in integrated reporting.

The panellists were: 1. Benjamin McCarron, Head of Research, Responsible Research 2. Chas Roy-Chowdhury, Head of Taxation, ACCA 3. K Sadashiv, Partner, Climate Change & Sustainability Services, Ernst & Young LLP 4. John Gollifer, Head of Investor Relations, Singapore Exchange 5. Kelvin W.F. Lee, Sustainability Manager, PowerSeraya Ltd 6. Associate Professor Patricia Mui Siang Tan, Accounting at the Nanyang Business School, Associate Dean for the Undergraduate programmes, Nanyang Technological University 7. Rebecca Lewis, Investment Analyst, Arisaig Partners 8. Reinhard Klemmer, Head of Accounting Advisory Services and the Department of Professional Practice, KPMG, Singapore

Jenny Costelloe briefed the panellists on the structure of the discussion, which was based around key questions on integrated reporting. The discussion was also periodically interrupted to invite panellists to vote on certain aspects of the debate.

The profiles of the panellists and the moderator are provided in the appendix.

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This publication is a summary of the Roundtable discussion. The views expressed in this publication do not necessarily reflect the views of ACCA or CSR Asia. DEFINITION OF INTEGRATED REPORTING The session started with a description of integrated reporting by one of the panellists: “it is about telling the story of the organisation in a connected fashion, communicating how the organisation creates value and its impact on the environment and the community in which it operates, and in turn, how the environment and the community impact on its business. It is as much about the process, as it is about the output of the process. With regards to the process, you are referring to the integrated internal management leading to integrated reporting, which is embedding sustainability in its operations and strategy. The output will be the communication of the information to the stakeholders, to enable them to assess the organisation’s ability to create and sustain value in the short-term, mid-term and long-term.” INTEGRATED REPORTING REQUIRES SUPPORT FROM TOP LEADERSHIP One panellist suggested setting up a disclosure committee, chaired by the CEO, not the CFO, because most investors want to hear about the strategy from the CEO. While there may be different “power centres” in an organisation, the main principle is that ideally the sustainability agenda should be driven by the top leadership. Another panellist suggested that other people in the organisation responsible for integrated reporting include a mixture of accountants, someone well-versed in technical sustainability indicators and someone who has an overview of the organisation. Another suggestion was how sustainability managers can gain support from the C-suite executives, for example by framing sustainability issues in a language that is apt for C-suite executives. This can be done by linking sustainability performance to the bottomline, or showing how sustainability performance can complement or enhance the corporate strategy. REMUNERATION SHOULD BE TIED TO SUSTAINABILITY PERFORMANCE For integrated reporting to work, a number of the panellists suggested that the remuneration of the C-suite executives should be linked to the organisation’s sustainability performance. One panellist described an example of how BHP Billiton has linked the remuneration of its top management to the quality of its license to operate and the environmental indicators.

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However, others pointed out that in practice, it may be hard to implement such measures. Remuneration is generally structured around a 12 month period, rather than a longerterm time horizon. Hence, given that sustainability decisions generally require more than 12 months for results to show, linking remuneration to sustainability performance may be difficult. Perhaps organisations should start by identifying the material issues, developing Key Performance Indicators (KPIs) for those issues and finally, linking remuneration to the KPIs. 1

COMMUNICATING MATERIAL ISSUES One panellist pointed out that on occasion, organisations may believe that some sensitive issues – such as child labour – are not significant risks to their particular business. However the challenge for such organisations is how to communicate this position without appearing callous. At the same time, there is a need to downsize reports. In general, annual reports are too lengthy. 100-page integrated reports will not be popular with their readers. Focusing on the material issues will help to downsize reports, making the reports succinct and relevant for their users. It can be difficult for an organisation to identify the most material issues relevant to its operations. One panellist cited the case of a consumer organisation: the CFO struggled to identify the material issues for its organisation. Ultimately, this organisation focused on carbon and climate change, because of the associated, easily measured indicators, which can be tied to the organisation’s performance in sustainability. From an accounting perspective, it is easier to quantify carbon indicators than “woolly goals” which are harder to quantify. Whilst the CFO recognised that climate is not the main material issue for his company, the CFO felt that the organisation could make a difference by focusing on one thing and by taking baby steps, even at the expense of ignoring other material issues. In summary, disclosure on sustainability demands reporting on a broad range of material issues, whilst integrated reporting necessitates linking these material issues to numerical values. Until the integrated reporting frameworks have evolved to provide quantifiable measures for all issues, the most practical approach is for organisations to narrow their focus to a couple of easily quantifiable issues.

In the context of sustainability reporting, “material issues” are those which address the organisation’s significant economic, environmental and social impacts (GRI) “INTEGRATED REPORTING: THE FUTURE OF CORPORATE ACCOUNTING?”

ROUNDTABLE HIGHLIGHTS

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QUANTIFYING SUSTAINABILITY PERFORMANCE The general feedback from the panel is that it is challenging to find suitable quantifiers (or indicators) that can be linked to sustainability performance. Quantifying indicators allow for comparison of performance between companies, or to set benchmarks to motivate more positive behaviour and performance. Moreover, one panellist highlighted that numbers alone may not be able to capture the inherent risks to the business in terms of environmental, social and governance performance. Accountants have long realised that financial numbers do not give the whole picture of an organisation’s performance. The key shortcoming of the mainstream reporting framework is its failure to capture the qualitative data that matter. A solution proposed by one of the panellists to address the weakness of the mainstream accounting framework is the balanced scorecard, which assists in the compilation of non-financial disclosure. Nonetheless, indicators for non-financial disclosure are very subjective and will always encounter disagreements. Another panellist suggested a principles-based approach (as 2 opposed to rules-based) , to provide measurable indicators for quantifying sustainability performance. On the other hand, non-financial disclosure sometimes involves providing information which may be good for corporate transparency, but bad for market competitiveness. This can be partially resolved by articulating the context of the sustainability performance indicators. Integrated reporters should explain why certain sustainability indicators cannot be disclosed, such as market share in certain niche, newly developed sectors. By providing rich, contextual information for users of integrated reports, reporters can help facilitate understanding on why some indicators cannot be disclosed for competitive reasons.

ROLE OF ASSURANCE IN INTEGRATED REPORTING Currently, according to one of the panellists, assurance by accounting professionals is meant for either financial or sustainability disclosure, but not an integrated report. One panellist noted that “we currently provide assurance services over a wide range of things, not just financial statements. The question is how to broaden this framework to fully cover integrated reporting.” With respect to integrated reporting, depending on the principles behind the data in the integrated report and the scope of reporting, the type of assurance differs. The abovementioned panellist noted that “any change will involve questions such as: does it create any form of risk? Can we handle it? How do we capture them? What do we do about these risks?” Professional assurance for integrated reporting requires specialist technical expertise to become a mainstream practice. The majority of the mainstream audit professionals are technically trained in accounting, by the conventional definition. Most importantly, one panellist highlighted that assurance can only assure the quality of the data in the reports. That is, the assurer evaluates the data in the report to verify that it is a reasonably accurate portrayal of the organisation, but it neither assures nor judges the quality of the organisation’s business model and the organisation’s sustainability practices. Perhaps clarity in the assurance language will help enhance users’ understanding of the intent of assurance services on integrated reports.

VOTING RESULT: INTEGRATED REPORTING WILL REPLACE SUSTAINABILITY REPORTING The panel was invited to vote on whether integrated reporting will replace sustainability reporting in the long run:  Three panellists voted ‘no’  Five panellists voted ‘yes’ The general consensus among the panellists is that integrated reporting will eventually replace sustainability reporting, but not in the near future. 2

A term commonly used in the accounting profession, a principles-based approach provides general guidance, while a rules-based approach provides specific guidance, with quantifiers for details. Both approaches have their inherent strengths and weaknesses, and their merits are thus highly debated within the profession.

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ROLE OF THE ACCOUNTANTS IN THE INTEGRATED REPORTING PROCESS The current style or format of data provided by accountants may be the cause for short-term thinking by investors. There were suggestions from the panel that financial reporting, typically done on a quarterly, retrospective basis, encourages a certain behaviour in investors – a behaviour which tends to ignore the long-term sustainability of a business. Thus, accountants have a role to play in raising awareness amongst investors of the long-term sustainability of organisations, by changing corporate reporting to a longer-term basis and, by adopting integrated reporting to be more forward-looking. This is a real opportunity for accountants to change the investors’ focus to the long-term. Nevertheless, one panellist warned that this may not work in practice unless there are ways to incentivise investors to think in a long-term manner. The presence of many short-term trading mechanisms in the market means that it is difficult to get investors to think beyond the annual performance and be forward-looking. MANAGE EXPECTATIONS OF WHAT INTEGRATED REPORTING CAN DO FOR THE INVESTOR COMMUNITY Whilst the true value of an organisation may come from companies being forward-looking and supplying forward-looking information, no organisation is able to predict and promise to deliver a long-term vision. One panellist observed that while integrated reporting may help the organisation deliver some aspects of long-term vision, the organisation is still limited in its ability to publicly disclose this vision. Moreover, too much forward-looking information may be detrimental to the organisation for competitive reasons. Organisations will have to carefully balance the extent to which forward-looking information can be publicly shared.

THE IDEAL FRAMEWORK FOR INTEGRATED REPORTING One panellist proposed that G33 framework is a good start for integrated reporting. The other framework to consider is the Connected Accounting Framework. Integrated reporters can too, gather more information from the IIRC’s discussion paper. VOTING RESULT: INTEGRATED REPORTS WILL REPLACE ANNUAL REPORTS The panel was invited to vote whether integrated report will replace the annual report.  Seven panellists voted ‘yes.’  One panellist voted ‘no’ The panellist who voted ‘no’ felt that unless sustainability information can connect financial information in a seamless fashion, there will always be a dichotomy between the two. NOTE ON THE VOTING RESULTS The previously mentioned voting results (on whether integrated reporting will replace sustainability reports, or annual reports) appear to be inconsistent. However, it is possible to hypothesise from the Roundtable discussion and the voting that the panellists felt that integrated reports were more likely to replace annual reports, than replace sustainability reports, because most companies produce annual reports. Given the low numbers of sustainability reports in Asia, the panellists intimated that the number of sustainability reports is unlikely to increase and instead we can expect to see a change in the already widespread annual reports, towards integrated reports.

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The G3 framework refers to the Sustainability Reporting Framework, which provides guidance on how organisations can disclose their sustainability performance. The framework is produced by the Global Reporting Initiative, a global network-based organisation. (GRI) “INTEGRATED REPORTING: THE FUTURE OF CORPORATE ACCOUNTING?”

ROUNDTABLE HIGHLIGHTS

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COUNTRIES WHERE INTEGRATED REPORTING HAS GAINED SIGNIFICANT GROUND A panellist singled out companies in South Africa as very advanced in terms of integrated reporting. These companies 4 currently subscribe to the King III Code of Governance. The reason for the receptivity is likely due to the country’s 5 regulators’ “comply or explain” approach , which allows companies some flexibility to communicate their sustainability issues. Moreover, the presence of many resource-based companies in the economy with their high-impact operations, as well as a traditional social movement of black empowerment, provides a conducive environment for integrated reporting. Another panellist highlighted the Six Swiss Stock Exchange, where there is an “eco-system” (such as social and political climate) to support transparency in corporate governance. 6

As for Asia, other panellists highlighted Malaysia . However, it was mentioned that even though all listed companies on Bursa Malaysia have to publish their corporate social responsibility (CSR) activities, the reports on sustainability are not necessarily connected to the financial report. A LONG WAY TO GO FOR INTEGRATED REPORTING IN SINGAPORE AND ASIA AT LARGE The general consensus about integrated reporting in Asia is that it is a step too far. Companies are only beginning to take baby steps towards integrated reporting and it is a maturing process. For integrated reporting to become common place in Asia, companies need to know their end goals for sustainability and to be more long-term with strategic decisions. A panellist suggested that given the active role of the Singaporean government in the business landscape and investors’ influence on the companies’ market values, both the government in Singapore and investors play important roles in popularising integrated reporting. The Singapore Exchange issued Sustainability Disclosure Guidelines for listed companies in June 2011, to help lay down some of the basic principles for sustainability reporting, which is a good foundation for integrated reporting in Singapore.

In the opinion of some of the panellists, the inherent characteristics of the Asian culture, such as a reticence to voice opinions, make it difficult to engage stakeholders effectively and hence, this complicates the process of gathering vital feedback for sustainability strategies. Moreover, there are not many investment analysts who are focused on environmental, social and governance (ESG) performance in Singapore. ESG performance is still not popular among the investor community. On an optimistic note, the Bloomberg terminal currently provides modules on ESG performance of companies. ASIAN COMPANIES SHOULD LEAPFROG THE WEST IN TERMS OF INTEGRATED REPORTING One panellist suggested that: “A lot of countries have problems adopting international financial standards. Why not just leapfrog, and go into integrated reporting directly? I think this is an opportunity for Asian countries. Why follow the painful ways that were paved by the Western countries?” Another panellist thought this may be quite challenging. In practice, setting up the process for gradual adoption is very important. For example, the issue of human rights in Singapore is particularly challenging. “Leapfrogging” meant people will not appreciate the nuances and the complexities involved in providing innovative solutions for the issue of human rights in Singapore. Furthermore, very few companies in Singapore are working on sustainability reports. One panellist shared his experience that getting people in companies to provide basic data for a sustainability report is a very real challenge that sustainability managers face every day. It is still too early for companies in Singapore to embrace integrated reporting. Another panellist suggested, “Perhaps Asian companies should see integrated reporting as a competitive advantage in the market.” For example, companies such as Philips have 7 identified integrated reporting as a key business driver. Nonetheless, one panellist highlighted that there are very few “sticks (as opposed to carrots)” to encourage integrated

First published on 1 September 2009 The King Report on Governance for South Africa (King III) is a listing requirement of the Johannesburg Stock Exchange (JSE). Part of the requirement of the King III is that companies listed on the JSE are required to produce an integrated report in place of their annual financial report and sustainability report. (The South African Institute of Chartered Accountants (SAICA), 2010) 5 This refers to an approach where companies have to comply or explain why they are not complying. If the organisations’ board believes a practice is not in the best interest of the company, it can adopt a practice different from that recommended in the code, but it must be able to explain the reason for their decision. 6 Bursa Malaysia first published its CSR Framework for voluntary reporting in 2006. (Bursa Malaysia , 2011) As part of the listing requirements, all public listed companies are required to disclose their CSR activities or practices (and of their subsidiaries) and to explain if there is none. 4

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reporting. Investors in Asia generally are limited in their ability to influence the corporate agenda. This is due to the general ownership structure of companies that relies more on debt financing, rather than equity. There is also greater family ownership of companies. Thus, in general, investors do not have much leverage in influencing corporate agenda in Asia. Another suggestion for encouraging integrated reporting among Asian companies is to increase the understanding that integrated reporting enhances the current financial reporting framework, by linking financial metrics with sustainability indicators. The indicators in the sustainability report are often too technical for investors to understand, who are largely familiar with financial metrics. By tying sustainability indicators to financial performance, integrated reporting can help sustainability strategies to drive corporate agenda. For example, one panellist highlighted Heineken as an example of how its 8 sustainability practices have helped reduce operational costs.

EDUCATION AND TRAINING INITIATIVES REQUIRED FOR INTEGRATED REPORTING TO GAIN TRACTION At the Nanyang Technological University, courses about sustainability are being gradually introduced into the accounting syllabus. Many students are aware of sustainability issues, but they are not aware how sustainability can be connected to financial disclosure (as opposed to financial performance). One panellist also shared that in most large local accounting firms, there are working committees set up to understand the process required for auditing sustainability factors, rather than a full-fledged, rolled-out process to provide integrated reporting training for the staff.

VOTING RESULT: INTEGRATED REPORTING WILL NEED MORE THAN THREE YEARS TO GAIN RECEPTIVITY IN ASIA Integrated reporting is not easy, as it is difficult to link the sustainability indicators directly to financial performance, as there are “many linkages” before making the final connections. Hence, a question was posted to the panellists: “When do you think we will see integrated reporting in Asia?” All the panellists thought that integrated reporting will need more than three years to gain receptivity in Asia.

According to Philip’s EcoVision4 in its 2010 Annual Report, Philips has committed to generate 30% of its total revenue from Green Products by 2012. (Philips, 2010) For example, Heineken’s subsidiary in Poland sold its waste for EUR3 million, helping it to cut down on costs. (Heineken, 2010)

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“INTEGRATED REPORTING: THE FUTURE OF CORPORATE ACCOUNTING?”

ROUNDTABLE HIGHLIGHTS

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Conclusion and Next Steps

To conclude the Roundtable discussion, the panel was asked to vote whether integrated reporting is a fad, or whether it will be here to stay. The question posed to the panel was: “We have iPhones, iPods and iPads… is iReporting here to stay or is it another trend?”

Going forward, here are some of the recommendations required for integrated reporting gain a foothold in Asia:

As highlighted by the panellists, some of the key challenges for integrated reporting in Asia include:

 Identify indicators to quantify sustainability performance and link it to financial disclosure;  Educate the investor community on what integrated reporting can and cannot do, as well as to be more forward- looking in their approach;  Introduce more sustainability-related modules into the syllabus for tertiary education in Singapore; and  Provide more training for audit organisations on connecting sustainability performance to financial disclosure.

 Lengthy reports: with some sustainability reports reaching 50 pages, an integrated report which includes the financial pages will not be palatable for busy readers;  No common consensus on metrics: there are no indicators required to measure social and environmental impacts in the short, medium and long-term; and  No history of regular sustainability reporting by Asian companies.

The IIRC is currently implementing a pilot programme to seek input from investors, standard setters, companies, accounting bodies and United Nations representatives. It has put forth a discussion paper which offers initial proposals for the development of an International Integrated Reporting Framework and outlines the next steps towards its creation and adoption, including the publication of an Exposure Draft in 9 2012.

All the panellists felt that integrated reporting is here to stay despite the challenges involved, but not within the next three years.

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(International Integrated Reporting Committee, Sep 2011, p. 2)

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Appendix

PROFILE OF MODERATOR

PROFILES OF PANELLISTS

Ms Jenny Costelloe Jenny is country director of CSR Asia in Singapore. She has extensive corporate experience, including twelve years of communications roles in the oil and gas sector, which included communicating and reporting CSR activities.

Benjamin McCarron, Head of Research, Responsible Research Benjamin is Head of Research at Responsible Research, heading a team of eight analysts based in Singapore.

Jenny advises companies and other organisations on CSR, working recently with Unilever, Singapore Pools, Aviva and the National University of Singapore, amongst others. She has lived and worked in Singapore for four years, before that she lived in Zambia, the UK and Germany. Jenny has a BSc in Natural Sciences (Physics) from the University of Bath (UK), a professional diploma in Marketing Communications and recently completed an MBA in Strategy (graduating on the Dean’s List) from Nanyang Technological University in Singapore.

“INTEGRATED REPORTING: THE FUTURE OF CORPORATE ACCOUNTING?”

Benjamin was most recently at The Co-operative Asset Management (TCAM), where he led integration of environmental and social analysis in their investment and engagement processes. During his time at The Co-operative Benjamin was the lead author of the Good Companies Guides, published in The Observer, which focused on issues such as gender balance and how sustainability affects business. He has been involved with several collaborative engagements through the PRI and sat as a steering group member on the Forest Footprint Disclosure project. Benjamin’s previous career as a fund manager included time as a small cap pension fund manager at AXA Framlington, where he managed £100m of small cap UK pension money and significantly outperformed the benchmark. He also co-managed a global technology fund covering IT and healthcare research. Benjamin is an Associate of the CFA Society of the UK. He graduated with joint honours in Maths and Philosophy from University College, Oxford.

APPENDIX

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Appendix

PROFILES OF PANELLISTS Chas Roy-Chowdhury, Head of Taxation, ACCA Chas Roy-Chowdhury is Head of Taxation at ACCA. He has a degree in Applied Economics as well as being a fellow of ACCA. He worked in public practice from 1980 until 1991 when he joined ACCA’s Technical Department.

K Sadashiv, Partner, Climate Change & Sustainability Services, Ernst & Young LLP Sadashiv is a Partner heading the Climate Change and Sustainability Services Practice for Ernst & Young across ASEAN and is based in Singapore.

He is a member of the Indirect and Direct Tax Working Parties at Fédération des Experts Comptables Européens (FEE) – the umbrella group for “first tier” European accountants – as well as a member of the Taxation Committee of the business grouping UEAPME.

Sada has over 25 years of advisory experience in assisting clients and advising them on their business, sustainability and related practices. He has worked with a large number of clients spanning Asia, W, Europe, N.America and the MiddleEast spanning a wide range of industries.

He is secretary to the ACCA Taxation Committee and is in regular contact with many Government departments such as the HM Revenue and Customs through formal committee and ad hoc meetings. His ongoing commitment to putting across the message on key tax issues to the broader public and opinion formers via the media has led to regular appearance across the full range of local, national and international television and radio stations as well as wide coverage in local, regional and national newspapers.

Sada is working with clients helping develop their carbon strategy spanning GHG footprinting, energy efficiency improvement, CO2 mitigation, peer benchmarking, CDM advisory and disclosure. Work relating to corporate sustainability reporting (CSR) includes providing pre-assurance advisory which covers advising on the choice of reporting indicators, their measures, benchmarking to global peers, and reporting and disclosing to international standards. Sada is currently working with a major NOC in helping them prepare for their sustainability reporting with the aim of assisting them to put out a CSR for assurance in the next reporting period.

As well as regularly providing evidence to Parliamentary Select Committees on the full spectrum of tax issues, Chas has made presentations on international tax issues to the European Parliament. He has also made presentations to international conferences and lectured for ACCA in its courses and for its tax exams in China. ACCA itself now has over 296,000 members and students operating in 170 countries world-wide. ACCA is generally regarded as a world-leader in environmental and social accounting, auditing and reporting issues. Further information on ACCA – including its research and environmental programmes – can be obtained via the ACCA homepage www.accaglobal.com

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Sada’s academic qualifications include a B.Tech (IIT, Madras) in Electrical Engineering, followed by an MBA (IIM, Bangalore) majoring in Marketing and Finance. He has also studied Strategic Business at Arthur D Little’s Management Education Institute, Boston and International Business at GATT, Geneva.

Appendix

PROFILES OF PANELLISTS John Gollifer, Head of Investor Relations, Singapore Exchange John Gollifer joined SGX in 2001 and heads up Investor Relations. John’s career spans over 20 years in Asian capital markets. Before SGX, he spent 15 years as an investment banker, most recently as Director of Equity Capital Markets at BNP Paribas. Prior to that, John spent his formative years at Barclays Bank and ABN AMRO Rothschild in corporate finance and equity capital markets. John teaches Investor Relations at the Singapore Management University. He holds a BA Honours degree from Loughborough University, UK and an MBA from Henley Business School, Reading University, UK.

Kelvin W.F. Lee, Sustainability Manager, PowerSeraya Ltd Kelvin is the Sustainability Manager at PowerSeraya Ltd, he leads the development and continuous updating of environmental and social performance measures tied to corporate goals to facilitate management reporting. He was instrumental in helping his company garner the “Best Sustainability Report” award at the ACCA Singapore Awards for Sustainability Reporting for two consecutive years (2009 and 2010). He developed PowerSeraya’s CSR strategy and continues to drive initiatives such as the REAP (Responsible Energy Advocates Programme) and Eco Office Label with the aim of internalising sustainability practices with in the organisation and extending this culture to the community. He previously was in the CDM (Clean Development Mechanism) Working Committee involved in helping the company gain project carbon credits and is currently a member of the parent company’s YTL Group Sustainability Committee. He currently sits in the company’s Productivity Taskforce with a hand in helping the organisation achieve business efficiency and effectiveness with sustainability in mind. Kelvin brings with him 15 years of working experience in the energy, shipping and logistics industries in multi-national as well as government-linked companies. He started his career in the shipping industry in a regional procurement role before assuming managerial positions in operations, marketing and corporate planning in the ports industry. Prior to PowerSeraya, Kevin worked in a German renewable energy company in a regional branding role covering the AsiaPacific region. His multi-functional work experience gained across various industries serves him well in his current role in PowerSeraya in driving sustainability for the company as well as other corporate functions. Kelvin has a multi-discipline academic background. He graduated with a MSc in Environment and Planning from RMIT University, Australia after completing his Graduate Diploma in International Environmental Management from the University of Adelaide, Australia (a UNEP endorsed programme). His first degree is a B.Eng (Electrical Engineering) from the Nanyang Technological University, Singapore before pursuing a company-sponsored B.Bus (Transport and Logistic) from RMIT University, Australia.

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Appendix

PROFILES OF PANELLISTS Associate Professor Patricia Mui Siang Tan, Accounting at the Nanyang Business School, Associate Dean for the Undergraduate programmes, Nanyang Technological University Associate Professor Patricia Mui Siang Tan is an Associate Professor in Accounting at the Nanyang Business School at Nanyang Technological University and the Associate Dean for the Undergraduate programmes. Her research interests are mainly in financial reporting issues. Her research has been published in both professional accounting and top academic journals in the field, and she has presented her research findings at numerous international conferences. She has also been studying the issue of sustainability and sustainability reporting. She is currently leading a team of professors to develop business courses on sustainability, and to consider how to embed sustainability issues into the main accounting curriculum. She has also attended various sustainability conferences and seminars including the AACSB Sustainability Conference (June 2010) and the MIT-NTU Sustainability as Social Well-Being program (March-April 2010).

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Rebecca Lewis, Investment Analyst, Arisaig Partners Rebecca Lewis is an investment analyst at Arisaig Partners, an investment management organisation that focuses exclusively on the listed dominant branded consumer businesses in emerging markets. Rebecca has a global mandate to integrate Environmental, Social and Governance data into the investment process and ownership practices of all three Arisaig Partners funds in Asia, Africa and Latin America. Previously, Rebecca was a Responsible Investment Analyst at Responsible Research, publishing reports on the ESG issues facing business in the consumer and real estate sector, as well as developing the Asian Sustainability Rating™, an ESG benchmarking tool that evaluated the performance of the largest companies in ten Asian markets. Rebecca has undertaken research projects for the United Nations Global Compact on the engagement of the private sector on climate change issues and has experience implementing sustainable development projects throughout Asia and Africa. Rebecca received both her Bachelors and Master Degree from Cambridge University and has completed her MBA at INSEAD.

Appendix

PROFILES OF PANELLISTS Reinhard Klemmer, Head of Accounting Advisory Services and the Department of Professional Practice, KPMG, Singapore Reinhard Klemmer heads the Accounting Advisory Services and the Department of Professional Practice at KPMG in Singapore. With over 15 years of professional experience within the KPMG global network, Reinhard specialises in accounting advisory and financial audit for the Financial Services Industry, with a focus on financial instruments for banks and major financial institutions. He was with the Department of Professional Practice in KPMG Germany as the partner-in-charge of Financial Instruments Accounting Advisory under IFRS and US GAAP.

In Singapore, he is a member of the Institute of Certified Public Accountants of Singapore (ICPAS) Financial Reporting Committee (Core Sub-Committee) as well as the Accounting Standards Council (ASC) IFRS Convergence Technical Committee. He is also the Chairman of the Finance Committee of the Singapore-German Chamber of Commerce. Reinhard speaks at KPMG as well as industry events regularly. He also contributes to business publications on topics related to accounting and reporting. Among some of his key clients include Deutsche Bank, Sumitomo Trust, Unilever, Citigroup, LBBW Bank, BHP Billiton and government entities in Singapore.

Among some of the key accounting projects he has led are the restructuring of large lending portfolios of a banking client following the global financial crisis; implementation of hedge accounting projects under both IFRS as well as US GAAP; as well as a number of technical accounting advisory projects in real estate sale and leaseback, share-based payment structures and structured financial products.

Reinhard graduated with a Bachelor Degree in Accountancy from the University of Passau, Germany. He is also a member of the Institute of Certified Public Accountants in Germany, as well as a qualified German Tax Advisor.

Reinhard’s country experience spans the United States of America, Europe and Asia Pacific. Based in San Francisco, he has spent two years serving major banking clients in the financial service audit practice. During the two years in the United Kingdom, he served not only as the key liaison to the Accounting Policy Group of one of our global key audit clients in the banking industry, but also as the partner-in-charge of several global business audits for the same client. He was a regular presenter at the meetings for the Heads of KPMG’s Accounting Policy to share on the updates on both global or industry developments.

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