The future of corporate reporting is Integrated!

1. The future of corporate reporting is Integrated! • Хеннинг Драгер • Relationships Manager • International Integrated Reporting Council (IIRC) • МИРБИС - 18 апреля 2012

2. Agenda • What is Integrated Reporting (IR) and why do we need it? • Evolving reporting trends – where are we going? • About the IIRC and IR Pilot Project • Russian engagement needed!

3. The global context is changing! Greenhouse gas emissions keep rising The world could be running out of some resources Driving increased demand for disclosure! Environmental degradation jeopardises people’s quality of life Our footprint is growing!

4. Our choice… • “Window dressing” • Business as usual reporting • Strategic accounting for & integration • of all impacts • Strategic resource allocation

5. The importance of reporting • Influences decisions and actions of management • An essential element of corporate governance • Influences decisions and actions of shareholders and • other stakeholders • Affects resource allocation (financial, natural and • human resources) in society • Critical for investor confidence • Influences perceptions of the company’s customers, • vendors, and employees • Shapes how a company sees itself

6. Challenges Non-financial Financial • Lack of standards • Lack of common terminology • Definition of “materiality” • Underdeveloped audit methodologies • Controversial role of the Global Reporting Initiative • Competing standard setters • Complexity • Meaningful narrative information • Reporting on risk, executive compensation and corporate governance • Auditing for fraud

7. Prudential annual report pages 1850-2008 Corporate Reports: Increasing length and complexity Source: Investis research - PwC

8. “Corporate reporting…has got too big, too cumbersome and incomprehensible …” Source: Tomorrow’s Corporate Reporting : A Critical System at Risk – CIMA and PwC

9. INTEGRATED REPORTING IS...

10. The evolution of Reporting…

11. …Integrated Reporting – the Future

12. IR Elements

13. Central themesBusiness model & value creation

14. Chairman - Professor Mervyn King, King report on corporate governance Deputy Chairman - Christy Wood, Chairman ICGN Chief Executive Officer - Paul Druckman Chairman of the working group - Ian Ball, CEO IFAC Corporate networks UN Global Compact BSR CERES Global Alliance WEF Companies RosAtom Rosneft Microsoft GE Natura 100 Group Novo Nordisk China Light & Power Nestlé HSBC EnBw The IIRC - some of the participating organisations

15. Regulators, Standards Setters IASB FASB GRI CDSB Stock Exchanges IOSCO Tokyo Stock Exchange London Stock Exchange/100 Group Financial Stability Board (observer) Investor networks UN PRI UNEP-FI ICGN INCR Investors Aviva Investors APG EFFAS Hermes EOS General Commissioner, France Railpen IGOs UNCTAD World Bank IFAC ACCA JICPA SAICA Accounting ICAEW PwC, E&Y, GT Deloitte, KPMG, BDO Civil Society Transparency International WWF WRI A4S Academia Harvard University University Sao Paolo University New South Wales Volans The IIRC – more stakeholders

16. About stakeholder expectations (1) On reading a corporate report users should be able to tell that: • The company has not profited at the expense of the environment, human rights, a lack of integrity or society; • There are adequate controls in place to monitor and manage material risks and opportunities;

17. About stakeholder expectations (2) • Remuneration is linked to overall performance which includes social, environmental and financial aspects; • There is an interactive communication with the stakeholders who are strategic to the company’s business; and • The company is conducting a sustainable business

18. 82 international companies have joined the Integrated Reporting Pilot Programme which launched in October 2011 • Pilots will explore <IR> in the context of their organisations and be critical to the development of an Integrated Reporting Framework • Leading companies and investors developing and exchange good practice in this two year programme

19. Current reporting - what is an IR?

20. Actual and expected benefits of <IR> so far • Two primary benefits identified: • reporting against KPIs which align to the corporate strategycooperation and collaboration across the business • Numerous other benefits include: • telling the story about what the core business does • risk assessment focused on material risks • wider knowledge of non-financial business drivers • discussing the future considering finance and sustainability • knowledge across the business and sharing best practice

21. Continue developing the IR Framework • draw on Pilot Programme experiences • Exposure Draft in 2012 • Work with others on measurement and reporting relevant to IR • Explore with regulators etc opportunities to harmonise reporting requirements within and across jurisdictions • Conduct regional roundtables and other engagement and communications activities + public consultation regarding ongoing governance of Integrated Reporting • G20 Moscow 2013 – support for mandatory, global standard development Our Future Direction

22. IR Framework needs Russian input to be truly global! • RosAtom and Rosneft are leading the way – will other corporates • follow? • Corporate Governance and transparency issues can be covered • by adopting IR • MIRBIS demonstrating the importance of academia and educational • involvement – development of future skill sets • We welcome you to join the IR Pilot Programme, IIRC working • groups and get the word out about IR!

23. CПАСИБО Please contact us: Henning Dräger @: henning.drager@theiirc.org Mobile: +38 050 452 20 37 Work: +38 044 393 26 87 www: theiirc.org