Creating an integrated report enables companies to communicate an holistic picture of their prospects, one that is broader than offered by traditional financial reports. Integrated reports cover strategy, governance, performance and forecasts. A new framework for ‘Integrated Reporting’ (IR) has been created to help organizations bring these elements together. Integrated reports benefit both external stakeholders and leaders within the organization.
As our perception of corporate governance has evolved, the need for a new and comprehensive way to report on an organization’s performance and sustainability has become apparent. One that takes account not only of financial performance and compliance issues, but one that also looks at an organization's strategy, overall governance, performance and commercial outlook – the factors that lead to the creation of value in the short, medium and long term.
The International Integrated Reporting Council (IIRC) a global coalition of regulators, investors, companies, standard setters, NGOs and the accounting profession, was established in 2009 to promote ‘value creation’ as the next step in the evolution of corporate reporting and to help companies both to create value and to tell their story in an all-inclusive way.
The IIRC’s core mission was to create a globally accepted International IR Framework that would enable organizations to communicate information about their strategy, business model, governance, performance and prospects in a clear, concise and comparable format. The Framework, which was published in 2013, aims to underpin and accelerate the evolution of corporate reporting, reflecting developments in financial governance, management commentary and sustainability reporting.
The IR Framework proposes these ‘Guiding Principles’ and ‘Content Elements’ to underpin and be included in an integrated report. (It does not set benchmarks for such things as the quality of an organization’s strategy or the level of its performance). The Guiding Principles include the following:
The Content Elements are the following:
The purpose of an accurate and well-presented integrated report may be first and foremost to communicate to investors and external stakeholders, but it can also play an important role within the organization by enhancing the way leaders think, plan and communicate a clear narrative explaining how all of their resources are creating value.
IR can help business leaders think in a complete rounded way about their strategy and plans, make informed decisions, and manage key risks. IR can also enable better internal communication of strategy leading to greater employee engagement and improved future performance; all of which adds to building investor and stakeholder confidence.
International Integrated Reporting Framework. International Integrated Reporting Council (2013).
Tomorrow’s Business Success: Using Integrated Reporting to Help Create Value and Effectively Tell the Full Story. A Guide for Chairmen, CEOs and CFOs. CIMA, Tomorrow’s Company, and International Integrated Reporting Council (October 2014).
Creating Value Series. International Integrated Reporting Council (2014).
Directors’ Guide to Integrated Reporting. Deloitte (March 2015).
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