Global principles are needed for investor relations practice. More effort is needed right now
Gaining agreement on global principles takes time. Those involved in such discussions try and warn us mere mortals of the complicated nature of the task. And still these informed pessimists are hopelessly optimistic as to the likely timeline.
If the International Accounting Standards Committee is anything to go by, the equation for producing globally accepted principles should involve thinking of a sensible number of years, tripling it and then adding a whole lot more just for good measure. The IASC was founded in 1973 with the objective of harmonizing accounting standards on a global basis, and we are still waiting for it to come up trumps.
Back in 1995 the IASC came to an agreement with another grand talking shop, the International Organisation of Securities Commissions - Iosco, as it likes to be known. The much-lauded accord decreed that by Easter 1998 the IASC would produce workable standards that Iosco would recommend to its members. It would mean that all regulators and exchanges would be able to accept the accounts of all companies adhering to international standards.
Where are we now? A little teeny-weeny bit further on, that's all. The IASC has just appointed a new board that it hopes 'will allow technical expertise to outweigh national differences in a bid to speed the development of common global standards.'
Whether we will get to see global standards in any of our careers remains a moot point. The news that the US SEC contributed $7.5m to IASC funding in early February is a positive sign. The US regulator has been a major stumbling block in the advance of global principles, but the influence of former federal reserve head turned IASC chairman Paul Volcker seems to be beneficial.
Globally accepted accounting standards would make the jobs of the market - and IROs - a darn sight easier. We are not talking about lowest common denominator rules; nor should any market think it has found the only way and stick so determinedly to its views that others suffer.
The IR community has a lot to learn from the experiences of the IASC. There are obvious parallels. Globally accepted principles on investor relations would be a real aid to many companies. Indeed, a few tentative discussions have taken place in the higher echelons of the International Investor Relations Federation (IIRF) but such principles are not viewed as being of pressing need - yet.
The IIRF has long been seen as a weak umbrella group compared to one of its members - the National Investor Relations Federation (Niri). Under-funded, under-resourced and lacking in direction, the IIRF has stumbled while Niri pounds on in the US - lobbying government, developing best practice codes and educating members.
It is hardly surprising. Niri has cash, a full-time administration and a real focus from its membership. The IIRF lacks all of these, despite the admirable efforts of its various volunteer board members over the years. Like any supranational body, national interests make it all the more difficult to reach agreement. One source privy to IIRF board meetings suggests that they have been a bit like the worst excesses of the EU and UN rolled into one.
Nicole Michelletti, the current head of the IIRF, knows that global principles are important but does not believe they are a pressing issue. She argues that the massive discrepancies between, for example, IR in the US and in France make it an incredibly difficult job.
She is right - and that is what makes her wrong. It is exactly these discrepancies that make it a pressing task. Companies are crossing borders with their investor relations every day, yet there are massive variations in best practice. Global IIRF guidelines would ease some of that pain, giving the IIRF newfound impetus, and it would focus the minds of its national association membership.
What are lacking are cash and full-time resources. Perhaps the lesson of the SEC helping fund the IASC is one the IR community needs to take to heart. The better-resourced national associations - particularly the US, UK and Canada - should take the lead and stump up funding for an IIRF global principles project. It would be in the interests of their keenest national members and a true recognition that investor relations does not stop at national borders.
Don't hold your breath. Gaining agreement on funding to get such a project underway may take some time.