- Basically integrated reporting is a mixture of a company’s external environment that in turns affects strategy, governance, performance and its prospects. This leads to a value adding of a company in the short, medium or long term (IIRC 2013).
The difference between integrated reporting and traditional reporting is that integrated reporting provides a wider explanation. It makes visible an organizations use of and dependence on different resources and relationships or capital comprising of financial, manufactured, human, intellectual, natural and social and the organizations access to and impact on them (IIRC 2013). The table below further differentiates traditional reporting with integrated reporting:
Traditional Reporting | Integrated Reporting | |
Thinking | Isolated thinking | Integrated thinking such as monitoring, managing and communicating the full complexity of the value creating process. |
Stewardship | Displays in terms of financial capital | Displays not only financial capital but also other aspects that comprise capital such as manufactured, human, intellectual, natural and social. |
Focus | Past financial performance and financial risks | Takes into consideration of past as well as other reports to connect and link it with the company’s strategic objectives |
Timeframe | Short term considerations | Short, medium as well as long term considerations |
Trust | Disclosures are narrow | Provides for more transparency |
Adaptive | Compliance orientated | Principles based approach |
Concise | Reports are long and complex | Reports are concise and material |
Technology enabled | Paper based | Technology enabled |
- I would agree to a certain extend. Firstly, it is good that the integrated reporting process is intended to be applied continuously to all relevant reports and communications, which give users of this report an overall perspective. However, not having to duplicate content will be a challenge as information has to be concise yet represents everything that requires to be covered.
My stand is similar to the Dutch Accounting Standards Board (DASB), as companies are already providing financial information, which are based on frameworks such as the IFRS and non-financial frameworks like the UN Guiding Principles on Business and Human Rights. By preparing a stand-alone integrated report on top the statutory financial reporting will only make business feel that there is excessive regulations and on the investors perspective, they would have an information overload therefore it would be double-edged in the end (DASB 2013).
With regards to integrated reporting not to develop duplicating content would be a challenge because an integrated report aims to put together all information into a single report. However, there are many stakeholders and they might not be interest in the idea as they might be interested in one particular aspect and the information provided in the integrated report might be insufficient due to it being short and concise. FlughafenMünchen GmbH - Munich Airport, point is similar to what I mentioned. They refer to the integrated report as a master report that includes all material aspects and should be linked to other media as well to provide a more detailed information. Therefore duplication of information is inevitable (FlughafenMünchen GmbH - Munich Airport 2013).
The interaction with other reports and communication is important in today’s society, as everything is technology driven. As for reports, there are references to other websites and reports to substantiate the information iterated. This in turns interacts with other reports.
- The integrated report describes the six categories of capital namely financial, manufactured, intellectual, human, social & relationship and natural as benchmark to ensure organizations consider all forms of capital. I would agree with PWC’s stand that the concept of capitals is fundamental to the notion of value creation and to the reach of integrated reporting beyond the emphasis on traditional financial reporting provided by many companies today (PWC 2013).
However, using benchmark in this instance I feel would make it look very regulative. Therefore, I feel that it should be used as a guideline instead. In addition, as some companies may choose to merge intellectual, human and social capitals together or have a different categorization (Eurosif 2013) we should not make them feel it is a regulation.