The International Integrated Reporting Council: A story of failure

This paper traces the history of the International Integrated Reporting Council (IIRC) over the four years since its formation in 2010. The paper demonstrates that, on its foundation, the IIRC's principal objective was the promotion of sustainability accounting. The IIRC's current approach to sustainability is analyzed on the basis of the Framework which it issued in December 2013. The paper argues that, in the Framework, the IIRC has abandoned sustainability accounting. It bases this conclusion on two considerations: that the IIRC's concept of value is ‘value for investors’ and not ‘value for society’; and that the IIRC places no obligation on firms to report harm inflicted on entities outside the firm (such as the environment) where there is no subsequent impact on the firm. The paper also concludes that the IIRC's proposals will have little impact on corporate reporting practice, because of their lack of force. The paper attributes the IIRC's abandoning of sustainability accounting to the composition of the IIRC's governing council, which is dominated by the accountancy profession and multinational enterprises, which are determined to control an initiative that threatened their established position. In effect, the IIRC has been the victim of ‘regulatory capture’.