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Is Integrated Reporting Becoming Mainstream ?

Posted on February 15, 2017 at 3:05 PM

The short answer to the question is - not yet - but it is certainly catching on around the world as a business choice for better demonstration of value creation. Regulation is being seen as a key driver of progress, and South Africa, the UK and Europe are leading the way in adopting the concept.


In the last few years, following increasing coverage of integrated reporting (IR) - including by me here on Forbes in late 2013: 'If I Had More Time I Would Have Written A Shorter Letter: Integrated Reporting'   (19,100 views as of now) - there has been much more discussion, both in public forums and in private meetings about its worth. Today a snapshot taken of 50 organisations from around the world who have embraced IR finds that 88% of them explain their commitment as being in terms of value creation.


There are big names on this list, including Aegon, AstraZeneca, Eni, Fujitsu, Takeda, CLP, National Australia Bank and Marks & Spencer. The stakeholder communications company Black Sun, which compiled the research, finds that while there is no uniform approach in the way in which businesses are adopting IR, "there is no doubt that integrated reporting is having an impact and becoming the iinternational best practice approach."


It is gathering pace rapidly in Asia/Oceania and Japan, says its report just out. It finds that organisations are using the IR framework to provide their stakeholders "with a more complete and longer-term perspective on strategy, performance and value creation."


A clearer purpose, moving beyond just financial value, recognition of the importance of stakeholder relationships, an increased focus on materiality and connectivity of information were just some of the reccurring themes, says the research. Its key findings include:

– 90% of organisations clearly identify stakeholders

– 76% of organisations clearly identify material issues

– 94% of organisations link resources and relationships with either the business model or strategy

 

Last month The International Federation of Accountants (IFAC) released a paper stating that "Integrated Reporting is the way to achieve a more coherent corporate reporting system, fulfilling the need for a single report that provides a fuller picture of organisation’s ability to create value over time." (my emphasis)


At the end of last year, the joint International Integrated Reporting Council (IIRC)  and International Corporate Governance Network (ICGN) conference in London encouraged the adoption of integrated reporting as information architecture that helps to underpin investor stewardship and good corporate governance.


Black Sun's own recent survey, conducted alongside AICPA, CIMA and the IIRC found "widespread desire among C-suite executives to deliver purpose beyond profit (89%), as well as acknowledging of the benefits of integrated reporting and integrated thinking."


Changes in corporate reporting should be seen as part of business innovation. At a time when climate risk is high on the agenda for businesses and investors, integrated reporting becomes an even more compelling proposition.


And 'purpose beyond profit' may well be a budding theme of 2017. Certainly, if the younger generation is to be considered for its views, it wil be. Later this month I am delighted to attend again the Doing Good, Doing Well conference organised by the MBA students at IESE Business School, in Barcelona.


It dates back to 2001 when a group of students in the Responsible Business Club at IESE wanted to go beyond the classroom and beyond the case studies by inviting leading professionals and thought leaders to campus to engage with students. Now it has become an annual tradition and they say it is the largest student-run conference in Europe.


Purpose beyond profit' is its mantra - and among other things, we will be talking about 'Shared Value.' Stay tuned.


To request a copy of the Black Sun research please contact Sarah Myles at [email protected]

 


 


Categories: Investors, Reporting, Scrutiny