Where next for Integrated Reporting?
Posted by Fiona Robertson
Earlier this year, we were delighted to welcome Professor David Welbourn, an associate of our Centre for Governance, Leadership and Global Responsibility and to hear his analysis, thoughts and insights on the future effects of population growth, climate change and urbanisation. He warned us that his statistics would be alarming and he wasn’t wrong! Human population growth is perhaps the most significant cause of the complex problems the world faces together with climate change, poverty and resource scarcity. The United Nations estimates that by 2050, the world’s population will have grown by 2.7 billion to 9.7 billion with most of this increase being in Asia and Africa. Research published by the Organisation for Economic Cooperation and Development suggests that sustained population growth, aggressive economic competition and increased consumption will result in intensive exploitation and pressure on resources. Most people will live in cities and by 2035, 60 percent of the world population will live in urban areas. As David demonstrated, those cities where the highest growth is projected don’t look like London. Many are slums where young people are sent out to the local rubbish tips to search for resources to support their families. In particular, urban growth will be highest in Africa, where there are already problems with drought, famine, poverty and corruption. This will become a serious global problem as those who need access to basic needs will attempt to migrate or become so desperate (and angry) that they may resort to violent action.
It is not just the growth in numbers that present a challenge but also the significant ageing of the population. This issue is more prevalent in developed countries where one third of the developing country population will be aged over 60 by 2050 and nearly 80 percent of older people will live in developing countries facilitated by greater access to health care, higher GPD and better standards of living which increase life expectancy. Some developing regions and countries, on the other hand, will witness an increasingly young population. Both trends will mean a shrinking working population, significantly altering the balance between economically-active and -inactive members. The number of people living outside their country of origin is likely to grow to 230 million from the current 175 million and migration will mostly occur between developing countries and will increase in response to environmental pressures, extreme poverty and natural disasters. These factors will be aggravated by the consequences of climate change, environmental changes, uneven distribution of wealth, the effects of disease and the inability of authorities to respond. The availability and flow of energy, food and water will be critical and resource challenges will intensify in areas where population expansion has the greatest impact, relative to local resources and economic growth.
While IR won’t address all potential global problems, it provides an opportunity for businesses to realign resource allocation and corporate behaviour to consider not only financial, but also environmental and social issues. IR adoption continues to grow globally with current developments taking place in Malaysia, Thailand and Africa to increase its uptake by the business community. A publication by the Association of Chartered Certified Accountants earlier this year highlights the concrete benefits and challenges that early adopters of IR have experienced, and gives practical recommendations to guide adoption by more organisations.
However a change of mind-set is required to drive IR forward. This should not only be at current Board level but also in developing the mind-sets of our future board executives. This thinking is currently informing the development of innovative modules at Leeds Business School to consider IR, ethics, governance and responsibility that aim to encourage integrated thinking and awareness of how business leaders will need to adapt and respond to the rapidly changing environment.
Dr Fiona Robertson is a member of the ICAS Corporate Reporting Committee and has held several senior finance positions in business. She has recently completed a PhD in Integrated Reporting at Leeds Beckett University and convenes the research group in Leeds Business School.