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Two types of mission-driven actors are influencing the momentum of the integrated reporting movement: supporting organizations and supporting initiatives. Both believe that integrated reporting will benefit society through better resource allocation decisions by companies and markets in order to create a more sustainable society—and more sustainable companies. In the previous chapter, we discussed the most important supporting organizations and initiatives. Here, we simply want to raise the issue of how these organizations and initiatives work together—or not—as each attempts to create system-level change.

The basic question is whether supporting organizations should collaborate with or compete against each other. An important argument in favor of collaboration is that it will eliminate, or at least reduce, confusion in the marketplace. Companies already complain about the "alphabet soup of acronyms" created by the various supporting organizations, asking if they somehow fit together or if the company has to choose one or two of them. While less affected, investors raise this question as well. To the extent that regulators are the targets of influence attempts by these organizations, they too will want to know if choices need to be made and if doing so will put them in the crosshairs of competing organizations and initiatives. A further argument for collaboration is that by reducing this confusion, each actor will actually enhance its ability to achieve its own separate mission, as well as to support integrated reporting, which all claim to believe in.

The argument in favor of competition holds that by "letting many flowers bloom," the most effective organization or initiative will "win" in the market and regulatory spheres. This framing is similar to that of those who support and do not support, respectively, convergence in accounting standards23—a framing based on two premises. The first is that there actually is competition, just as in product markets, and that the better product will get the biggest market share or at least, that each "product" will find its appropriate market niche. The second premise is that the resources spent on collaboration by these severely resource-constrained organizations and initiatives are better spent focusing on their main mission.

In reality, collaboration and competition will coexist. The real issue will be striking the right balance between the two. This is already the case today— with a tilt, in our view, toward "competition." We believe that the movement and its specific organizations and initiatives would benefit from more collaboration. It is our view that, on balance, the gains to each will exceed the costs. Of course, each supporting organization must make its own decisions about the nature and degree of collaboration with others. Some degree of competition will always exist—such as for funding, for companies to serve as pilots, and for investor and regulatory support. However, if "co-opetition," a game theory-based theory of strategy, can exist in the profit-driven product markets, it can also exist in the mission-driven sector, even though competition here sometimes makes the product markets look tame.24


In a corporate reporting context, regulators' role is to ensure that investors are getting the high-quality information they need in order to make informed decisions. At a system level, regulators are responsible for ensuring orderly markets. Exactly what these regulations are, the form in which they are issued (such as rules vs. principles-based), and which organization is responsible for making and enforcing them varies by country. In the United States, for example, this is the role of the Securities and Exchange Commission (SEC).25 All countries with a capital market have an SEC-equivalent and are members of the International Organization of Securities Commissions (IOSCO).26 In some countries, such as South Africa, the stock exchange has substantial regulatory powers. In others, such as in the United States, it has less.27 Any regulator that chooses to mandate integrated reporting, whether in a "hard" (you must do this) or "soft" (comply or explain) way, would do so out of a determination that integrated reporting would enable it to more effectively fulfill its legislated mandate. A regulator choosing to do so would have some degree of freedom, perhaps a great deal, to define what integrated reporting means in its jurisdiction.

Getting regulatory support will be difficult in the short term, especially in countries like the United States Consider the remarks made by U.S. SEC Chairman Mary Jo White in October 2013 where she expressed skepticism about whether the benefits of additional disclosure about environmental or social matters (both likely to be discussed as risks or opportunities in an integrated report) outweigh the costs associated with mandating such disclosure.28 White specifically mentioned rulemaking petitions seeking additional disclosures about environmental matters and companies' equal employment practices, noting that the SEC concluded, "disclosure of such non-material information regarding each of the identified matters would render disclosure documents wholly unmanageable and increase costs without corresponding benefits to investors generally."29 White also asked whether more disclosure makes it difficult for investors to focus on information that is material and most relevant to their decision-making. White's remarks indicate that the SEC is not convinced about the materiality of environmental and social issues that might be addressed in an integrated report and is likely to view integrated reporting with skepticism if it is seen as just arguing for more disclosure. The real crux of the matter here is "materiality," the subject of the next chapter.

While unlikely, a regulator could mandate integrated reporting and use the <IR> Framework as the basis of its regulation, including whatever monitoring and enforcement it deems necessary. Since every regulator exists in a web of previously established reporting requirements and guidelines, it would be hesitant to replace them, or even part of them, with integrated reporting because of the sheer cost burden this would place on the corporate community. Simply making integrated reporting an additional requirement would also add costs and potentially create confusion about how it exists with current required reports—contextual pitfalls of which the IIRC is well aware. Because listed companies have regulatory filing requirements, it recognizes that companies may face legal prohibitions to disclosing certain information.30

Any regulator supportive of integrated reporting would most likely incorporate its broad principles, even if not the term itself, into existing reporting regulations. Whether or not it drew from aspects of the <IR> Framework, if the regulator used the term, it would then be putting its own "meaning stamp" on integrated reporting. Such is the power of the State. Views will differ on the consequences of the State exercising it. For example, in the admittedly far-fetched scenario that the SEC were to issue a new regulation for an amended "Integrated Form 10-K" by stating that companies should use Sustainability Accounting Standards Board's (SASB) standards for guidance on materiality for nonfinancial information, some would see it as a major accelerator of the movement because the SEC does not lightly decide lightly to issue new reporting regulations. Others would consider it as a step backward for the movement—a misappropriation of the term that muddles its meaning in perhaps damaging ways. Another likely concern is that integrated reporting in the United States would become a compliance exercise and achieve none of the benefits of integrated thinking.

Whatever one's view, this scenario raises an interesting dilemma for the movement in terms of the costs and benefits of regulatory support. Those seeking regulatory backing must accept the fact that, in doing so, the regulator will impose its own meaning on "integrated reporting." Should this happen in many countries, it is likely that there would be many meanings, just as there were many country Generally Accepted Accounting Principles (GAAP) not so long ago.31 How similar or different these meanings turn out to be would be a function of when these regulations took effect and how widespread adoption already was by companies. If many companies in many countries were already practicing integrated reporting, more or less according to the <IR> Framework, these country-based meanings would be more similar than if regulation occurred before substantial adoption had already taken place.

This is a moot point today. Outside of South Africa, no legislation or regulation in any country mandates integrated reporting—even on a "comply or explain" basis. While the supporting organizations discussed above are, to varying degrees, seeking government support for what they are doing (some of this in the public domain and some not), acquiring overt support from the State is difficult and takes time and resources. It also inevitably involves lobbying, as the mere existence of an initiative guarantees the existence of those who oppose it. Because the impact of regulation is pervasive in that all companies must comply, the State is typically cautious in its decisions as it attempts to balance conflicting demands when issuing new regulations. The effectiveness with which companies comply is a function of the quality of the regulation, along with how effectively it is monitored and enforced.32

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