The SASB and IIRC: A merger or an acquisition?

The SASB and IIRC: A merger or an acquisition?DR JOHN DUMAY, PROFESSOR OF ACCOUNTING & FINANCE

16TH EIASM INTERDISCIPLINARY CONFERENCE ON INTANGIBLES AND INTELLECTUAL CAPITAL - SUSTAINABILITY AND INTEGRATED REPORTING, GOVERNANCE AND VALUE CREATION 23 Sep. 2021

Integrated Reporting or Reporting Integration?

https://www.slideshare.net/MAWallace/guidance-for-investor-relations-officers-on-managing-esg-demand

Competition for the IIRCKey markets Competing Frameworks <IR> Take Up

Australia Operating & Financial ReviewCorporate Governance Guidelines

Low and growing?

United Kingdom Strategic Report Low and growing

Europe EU Directive Low and growing

Japan Corporate Governance Guidelines Medium and stabilising

India Global Reporting Initiative Low and growing

South Africa Global Reporting Initiative Medium and declining

United States 10-K ReportSarbanes Oxley Act 2002SASB

Low and stable?

China Global Reporting Initiative Almost non-existent

Internationally Global Reporting InitiativeUN Sustainable Development GoalsIFRS Management CommentaryTCFDUN Global CompactIFRS Sustainability Standards

Low and growing

If the IIRC were a company would I invest?

My recommendation in September 10 2020 = 3.5

Declining support for the IIRC: Income

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

2012 2013 2014 2015 2016 2017 2018 2019 2020

Network Contributions Grants and other contributions Other Income / Training & Events

Integrated Reporting Foundation

International Integrated Reporting Council

International Integrated Reporting Foundation

The Fortune TrustAngela Samuel

(Mrs Angela Druckman 2017)Coutts & Co

Nat Simons & Laura Baxter-SimonsMichael Bloomberg

£200k (2017)£200k (2018)

The Better Alignment Project £776k (2018)£323k (2019)

International Integrated Reporting Council

International Integrated Reporting Foundation

The Fortune TrustAngela Samuel

(Mrs Angela Druckman 2017)Coutts & Co

Nat Simons & Laura Baxter-SimonsMichael Bloomberg

£200k (2017)£200k (2018)

The Better Alignment Project £776k (2018)£323k (2019)

Declining support for the IIRC: Pro bono staff and increasing staff costs

1918

12

9.5

7.8

5.64.4

2.6 2.3

676,235

1,597,000

0

2

4

6

8

10

12

14

16

18

20

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2012 2013 2014 2015 2016 2017 2018 2019 2020

Pro bono Staff Staff costs

Merger or acquisition?

SASB vs IIRC: Liabilities and Net Assets 2019 ($US)

6,109,457

1,032,236

4,532,250

987,118

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

SASB IIRC

Liabilities Net Assets

SASB vs IIRC Income 2019 ($US)

6,902,403

3,685,971

2,471,367

263,870

01,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,0008,000,0009,000,000

10,000,000

SASB IIRC

Grants & donations Earned & other income

IR vs SASB take-up 2012 - 2020

53 91197 240 283 260 267 270 2393

2290

210307

442586

749 8481139

559

0

200

400

600

800

1000

1200

1400

1600

1800

0

200

400

600

800

1000

1200

2012 2013 2014 2015 2016 2017 2018 2019 2020

IIRC Level I IIRC Level II SASB Mentions SASB Used

The IIRC lost the quest for <IR> to be the “corporate reporting norm” and is being usurped by the SASB Standards

Competing philosophies

• Integrated reporting – Shareholder capitalism• To provide information to the “providers of capital” and to promote “financial

stability and sustainability”.

• Versus

• Sustainability Accounting Standards Board – Stakeholder Capitalism• Insight into the subset of sustainability issues that are most closely tied to an

organization’s ability to create long-term value for investors.

Value Reporting Foundation: Council Members’ Nationality 2021

16

1

17

1

4

51

7

8

0

5

10

15

20

25

30

35

SASB IIRC Total

US UK Non-US

The Bloomberg Influence

Conclusion

• SASB is the more powerful participant in the joining of the two entities – thus and acquisition, not a merger

• Stakeholder capitalism as espoused by Michael Bloomberg and US (western) corporations is becoming the dominant driver of sustainability

• The IIRC has been captured by stakeholder capitalism• A single framework to emerge? – Watch this space!