As Corporate Reporting is getting more popular, questions of how to do it right are also on the rise. What should companies report? What are the types of capital that an organization uses and affects? To whom are organizations accountable? Can we currently measure, manage and communicate social and environmental impact? Is it really possible to capture and represent how value is created and sustained over time? The answers to these questions are almost certainly bedeviling a substantial number of interested managers, executives, consultants, academics, regulators and additional stakeholders everywhere around the world.
Integrated Reporting (IR) gives answers to most of these questions as it is making the leap from a promising concept to a powerful practice. IR is a process founded on integrated thinking, and results in a periodic and concise integrated report about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value in the short, medium and long term. IR is currently being developed and promoted by the International Integrated Reporting Council (IIRC), a global coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs. In December 2013, the IIRC released the first version of its IR Framework. This Framework is currently inspiring a large number of organizations (among which Unilever, Danone, Eni, Coca Cola, Volvo, Basf, HSBC, Eskom, Natura, SAP, Repsol, Telefonica, to name a few) as they pioneer the adoption of IR. Ultimately, IR promises to offer an answer (and a practical solution) to the questions that have been featuring the world of accounting and corporate reporting over the last few years.
IR is a process that results in communicating – through the annual integrated report – value creation over time. Although providers of financial capital are the primary intended IR users, an integrated report should be designed to benefit all stakeholders – including employees, customers, suppliers, business partners, local communities, regulators, and policy makers – interested in an organization’s ability to create value over time. The key objective of IR is to enhance accountability and stewardship with respect to the broad base of six kinds of capital, or “capitals” (financial, manufactured, intellectual, human, social and relationship, and natural), and promote understanding of their inter dependencies. In doing this, IR is designed to support integrated thinking, decision making, and actions that focus on sustainable value creation for stakeholders.
Thus, watch out! Integrated Thinking and Reporting is coming as a leading practice for wise strategic management, governance and performance measurement.