Paul Druckman: Companies can no longer think of themselves apart from society – they must be a part of society
Mr Paul Druckman is a well-known figure in the business and accounting profession worldwide. Currently the CEO of the International Integrated Reporting Council (IIRC), Mr Druckman has experience both in the private and public sectors, and has been spearheading the global movement to encourage companies to adopt integrated reporting <IR>. Singapore Compact was honoured to host Mr Druckman for a dialogue session with 60 of its members as well as members of ACCA, which was the first global professional accounting body to introduce integrated reporting into its qualifications.
Mr Druckman, who has just been voted ‘Personality of the Year’ by the International Accounting Bulletin, explained succinctly that IR is a “concise communication of value over time”, the value creation story that an organisation wants to tell its audience through sharing its business strategy in the short, medium and long term. Hence, the focus of the report is the audience, and not satisfying regulatory requirements.
Mr Druckman highlighted that companies can no longer think of themselves apart from society. They must instead be a part of society. An integrated report allows a company to present a more cohesive view to help its audience connect the financial, manufactured, intellectual, human, social and natural capitals of the company with its business strategies. The company in turn benefits from the value creation process. Mr Druckman shared that of the 104 companies that have piloted the IR framework which was released in December last year, 79% of them felt that producing the IR has helped improve their decision making for business, while 78% saw better collaborative thinking by the Board of the company’s goals and targets. More importantly, 92% of these companies saw an improved understanding of how business created value.
Questions flowed freely from the audience during the Q&A, moderated by ACCA’s Head of Policy, Asia Pacific Mr Chiew Chun Wee. In response to a question, Mr Druckman shared that the biggest audience of IRs not investors, but employees of companies who want to know about the strategy of the company. He acknowledged that awareness of IR is still lagging for most investors. Corporates, Mr Druckman opined, must lead in presenting sustainability and value creation, to combat the short-termism that is seen often in today’s capital markets. When asked if regulations is the way to encourage reporting, Mr Druckman opined that at such an early stage of development it may be more appropriate to let the market decide how IR should develop through exemplars and allowing good companies to flourish.
On the impact of IR on sustainability reporting, Mr Druckman said that IR does not replace sustainability reporting, as the data is still required in producing an IR. Rather, IR is about putting data into context and connecting it to the business of the company. However, producing an IR would save company resources as there is no need to produce more than one report. He also shared some creative ways in which pilot companies have presented their IR, including the use of websites and mobile application where users can customised the information that they require of the company.
In parting, Mr Druckman urged companies in Singapore to get involved and shape the conversation of IR’s development in the future, “so that it will happen in the way that suits you”.