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Because the balance between experimentation and codification must be well managed before market and regulatory forces can be properly addressed, this strategic issue is of primary importance. In Chapter 2, we described how integrated reporting emerged through company practice, after which it was studied and codified, most recently in the "International <IR> Framework" (<IR> Framework). We also described how attempts at codification continue to be informed by practice, such as in the IIRC's "Pilot Programme Business Network," which in May of 2014 had expanded to over 100 companies.8 Early efforts at codification should be tested in practice so that these frameworks can be improved, but eventually standards must be set in order to move from codification to institutionalization, the fourth and final stage of meaning-making.

This sensible symbiotic relationship masks an underlying tension between standardization and customization. For the audience of corporate reports, "standards beneficiaries," frameworks (like the <IR> Framework or SEC guidance on the structure of Form 10-K), and standards (for both accounting and sustainability information) have clear benefits. Standardization makes it possible to compare one company's performance to another's—an attribute of interest to shareholders, stakeholders, and even the company itself, enabling it to benchmark itself against its competitors. Standards are useful for regulators because they make it easier for them to determine if regulations are being followed; they inform decision-making. As sociologist Lawrence Busch puts it in his book standards: recipes for reality, "While standards and choices clearly involve different forms of action, the one virtually unconscious and automated, the other conscious and goal-oriented, both are implicated in all situations."9

While standards necessarily have their detractors, most commonly among those to whom the standards apply (the "standards-users"), the process by which they are created is ultimately a political negotiation. This is a common trope in the history of corporate reporting, starting with the first attempt in the United States to establish a set of accounting standards, which all companies and auditors would have to use.10 On one side of the trade-off between comparability and a more accurate, entity-specific measure, companies tend to argue that a set of standards is a "one-size-fits-all" model that fails to consider their unique circumstances. Determining entity-specific accuracy is complicated, however, when those measurements cannot be compared across companies. In the absence of standards, companies find it easier to choose a methodology that makes their performance look as strong as possible—a problem when the interests of the standards-users must ultimately be balanced with those of the standards-beneficiaries. Standards-users will attempt to influence the standards in ways that benefit them—typically by seeking less transparency and more degrees of freedom for customization. Standards-beneficiaries favor greater transparency and comparability. That said, standards vary in terms of prescriptiveness. Corporate reporting observers commonly distinguish between "rules-based" (as many claim U.S. Generally Accepted Account Principles (GAAP) to be) and "principles-based" (as many claim International Financial Reporting Standards (IFRS) to be) standards. The more rules-based the standard, the fewer degrees of freedom a company (and its auditor) have in using their judgment on how best to report on an issue.

When standard setting occurs in a non-State context, as with the NGOs discussed in this book, the perceived validity and utility of the standard will be a function of how effectively the standard-setter manages the politics of the standard-setting process. Since companies adopt these standards on a voluntary basis, it is natural for these NGOs to use the number of companies that have adopted their standard or framework as a metric of their effectiveness. While sensible, these organizations run the risk of seeing the standard (framework) become an end in itself rather than a means to an end—the crux of the dilemma.

Being too doctrinaire too early, as by insisting that a company can only call its report an integrated report if it is substantially based on the <IR> Framework, for example, can raise the bar too high and discourage adoption. Is it better for companies to call a combined report an integrated report in order to start them on the journey, to gain their intellectual and emotional commitment to the movement? Doing so risks clouding the term's meaning, whose codification and institutionalization is important to the movement's success. Conversely, attempting to draw a hard line raises questions of whether the NGO has the necessary resources to monitor what companies are doing, let alone the enforcement mechanisms to ensure compliance. NGOs have neither the State's resources to do the former nor its authority to do the latter. This does not mean they are completely impotent, however. Mechanisms can be created for companies to submit their report to be reviewed and, if approved, put on an official list of approved adopters. Trademark protection can also be used to limit careless claims about adoption.

Recommendation Number One: The International Integrated Reporting Council should establish a process for companies to get voluntary certification of whether their integrated report and website qualify as "integrated reporting" under the brand of the IIRC.

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