The release of the definitive International Integrated Reporting <IR> Framework in December 2013 has cleared the confusion about what an integrated report actually is and how companies should implement it.
Until now many ‘integrated reports’ were anything but except in title, with one survey concluding that only 30% of so-called integrated reports truly made the grade. A particular sticking point for South African companies was how to prepare concise integrated reports that would meet all JSE requirements, yet avoid duplication or unwanted bulk. The International Integrated Reporting Council (IIRC) offers explanations in its ‘Basis for conclusions’ document issued alongside the <IR> Framework. In its point 1.13 it explains: “An integrated report is intended to be more than a summary of information in other communications … rather, it makes explicit the connectivity of information to communicate how value is created over time.” Recognising that regulatory authorities may require their own information, it goes on to explain that “… the report can still be considered an integrated report if that other information does not obscure the concise information required by this Framework”.
JSE-listed companies’ reporting options are wide open. They can choose to bundle their integrated reports with abridged or full financial statements, issue them alongside sustainability and financial reports, or prepare these as ’entry-point’ documents linking to hard copy documents, CDs, web-based information, or any combination.
With the nature of integrated reports now clarified, how should companies go about preparing these? In a farsighted article published in the Guardian newspaper in December 2013, reporting expert Dr Carol Adams offered “Ten practical steps to integrated reporting”. In summary, Dr Adams recommends that:
- The buy-in of the board and senior management is crucial to integrating the information for an authentic integrated report.
- Ensure that stakeholder engagement processes are up to the task, or prioritise getting them there.
- Decide on to what extent you are able to implement the <IR> Framework. Understand that integrated thinking is an iterative process that you may not get right first time, but the gaps will appear for resolving in the next round.
- Develop your value creation story (in terms of the six capitals) and connect it to your business model. Accept that not everything of value to your company is financially measurable.
- Communicate your strategy so that it links to your value creation
- For credibility, ensure that your information connects throughout.
Yet Dr Adams is a realist, concluding that: “Unfortunately there is a predominance of leaders who lack a moral compass and hence authenticity … you may well have bigger issues … than fixing gaps in integrated thinking.”
Author: Clive Lotter is an integrated reporting consultant and writer of annual reports