International Integrated Reporting Council (IIRC)

The International Integrated Reporting Council (IIRC) was a global coalition of regulators, investors, companies, and accounting professionals. Its grand mission was to establish Integrated Reporting (<IR>) as the new global standard for how companies communicate with their stakeholders. Think of it as an ambitious project to upgrade corporate storytelling from a black-and-white financial ledger to a full-color movie about how a business truly creates value. The IIRC argued that traditional annual reports, with their laser focus on financial numbers, were giving investors an incomplete and often misleading picture. In 2021, the IIRC merged with the Sustainability Accounting Standards Board (SASB) to form the Value Reporting Foundation (VRF), which was then consolidated into the IFRS Foundation in 2022. While the IIRC as a standalone name is now part of history, its DNA is shaping the future of corporate disclosure.

The IIRC’s central idea was simple but revolutionary: a company’s value doesn’t just come from its bank account. It draws from and impacts a wider pool of resources, or “capitals,” to create value over time. An investor who only looks at the financial numbers is like a doctor trying to diagnose a patient just by taking their temperature—they're missing most of the story. The IIRC's framework encouraged companies to report on their stewardship of six interrelated capitals:

• Financial Capital: The familiar pool of funds obtained through financing or generated by operations. This is the traditional focus of accounting.
• Manufactured Capital: Physical objects available for production, like buildings, equipment, and infrastructure.
• Intellectual Capital: The intangible, knowledge-based assets, including patents, copyrights, software, and, critically, a company's Brand and reputation.
• Human Capital: The competencies, capabilities, and experience of the people in the organization. A strong Corporate Culture and a motivated workforce are huge assets.
• Social and Relationship Capital: The institutions and relationships a company has with its communities, customers, and suppliers. Think of it as the value of a company’s network and its “social license to operate.”
• Natural Capital: All renewable and non-renewable environmental resources and processes (like air, water, land, minerals, and forests) that provide goods or services supporting a company’s prosperity.

A truly great company, in the IIRC’s view, doesn't just grow its financial capital; it enhances all six, creating a more resilient and sustainable business.

For a value investor, the IIRC's framework is a goldmine. The goal of value investing is to understand a business so thoroughly that you can confidently estimate its intrinsic worth. The IIRC’s approach provides a powerful lens for doing just that.

A company’s true economic moat—its sustainable competitive advantage—is rarely found on the Balance Sheet alone. An Integrated Report, by design, helps you see these hidden strengths. Is the company investing in its people (Human Capital)? Does it have a fanatically loyal customer base (Social and Relationship Capital)? Is it innovating new technologies (Intellectual Capital)? These are the sources of long-term, compounding value that a traditional report can obscure.

Conversely, the framework helps you spot risks that don't yet have a dollar sign attached. A company might look profitable, but an Integrated Report could reveal it's burning through its Natural Capital, setting itself up for future regulatory fines, or suffering from high employee turnover, eroding its Human Capital. These are red flags for any long-term investor.

So, where did all this great work go? It didn’t disappear; it evolved. The merger of the IIRC and SASB into the IFRS Foundation was a landmark moment, bringing sustainability and integrated thinking into the heart of mainstream global accounting standard-setting. The IFRS Foundation has since launched the International Sustainability Standards Board (ISSB) to develop a global baseline of sustainability disclosure standards for the capital markets. The ISSB's first standards, IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures), are built directly upon the foundation laid by the IIRC. In essence, the IIRC won the intellectual argument. Its revolutionary idea—that a company’s value is a rich tapestry woven from many different threads—is now becoming the global norm. For investors, this means the future of corporate reporting will be less about looking in the rearview mirror at past profits and more about having a clear dashboard to see the road ahead.