Integrated reporting combines traditional financial reporting with environmental, social and governance reporting into a single report. This provides a more comprehensive view of a company's performance and risks. There is growing demand from investors and other stakeholders for integrated reporting as it allows better evaluation of long-term sustainability. Producing integrated reports can help companies attract investors, safeguard reputation and mitigate risks. Collaboration software allows reporting teams to efficiently produce integrated reports by enabling real-time collaboration on a single document.
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Whitepaper integrated reporting in the Cloud
1. W H I TE PA PE R
Integrated Reporting:
A Means for Corporations to Become
Socially Responsible and Accountable.
By Liv Apneseth Watson, Director of Research & Development, AccountAbility and Executive Advisor, WebFilings
The recent BP oil spill that leaked more than 14 million barrels āTo make our economy sustainable we have
of oil into the Gulf of Mexico made it readily apparent that our
existing system for corporate reporting has failed shareholders to relearn everything we have learnt from
and stakeholders alike in evaluating a companyās risk. Traditional
the past. That means making more from less
reporting of company performance, which primarily consists
of balance sheets, income statements, and the accompanying and ensuring that governance, strategy and
directorsā report, is simply not measuring up. Some go so far
sustainability are inseparable. Integrated
as to say that the overconsumption of ļ¬nite natural resources,
the very real risk of catastrophic corporate accidents, and Reporting builds on the practice of Financial
the implications of climate change are possibly the greatest
challenges facing the world.
Reporting, and Environmental, Social and
In a āpost-BP crisisā world, companies ļ¬nd themselves in the
Governance ā or ESG ā Reporting (also
midst of rapid global transformation with increased demand to known as Corporate Social Responsibility ā
perform not only ļ¬nancially, but to also become good corporate
global citizens ā remaining accountable to their stakeholders. CSR), and equips companies to strategically
The concept of companies looking beyond proļ¬tability alone, manage their operations, brand and
engaging and focusing on their role in society, and reporting
on this activity to stakeholders is generally termed Corporate reputation to stakeholders and be better
Social Responsibility (CSR) reporting. Weaving the CSR report
prepared to manage any risk that may
together with the traditional ļ¬nancial performance report into
one document is referred to as āintegrated reportingā. That is, compromise the long-term sustainability of
integrated reporting refers to the combined representation of
a companyās performance in terms of both their ļ¬nancial and
the business.ā *
non-ļ¬nancial results. Today, many smart companies are now
providing integrated reports as a means to attract new business ā Prof. Mervyn King, Chairman of the Global
opportunities, safeguard their reputation, maximize competitive Reporting Initiative, (GRI)
advantages and mitigate operational risks.
Source: International Integrated Reporting Committee (IIRC)
2. According to Klaus Schwab, the Executive Chair of the World as well as provide operational guidance on sustainability
Economic Forum, ācorporate global citizenshipā means that assurance and stakeholder engagement. The AA1000
companies must not only be engaged with stakeholders but standards are designed for the amalgamated thinking
must be stakeholders themselves alongside governments and required by the low carbon and green economy, and they
civil society. His reasoning is that companies depend on global support integrated reporting and assurance.
development, which in turn relies on stability and increased
ā¢ The Global Reporting Initiative (GRI) ā Provides
prosperity; it is in their direct best interest to help improve
a framework for companies and organizations on
the state of the world. This thinking among global leaders
sustainability disclosure. Its vision is to realize a day
today is increasingly driving companies to produce Corporate
that disclosure on economic, environmental, and social
Social Responsibility reports ā mostly on an annual voluntary
performance becomes as commonplace and comparable
basis. Over the last few years, a select number of companies
as ļ¬nancial reporting and equally as important to
has started to integrate CSR reporting into their annual
organizational success. The GRI Consortium is a network-
reports. Integrated Reporting is part of the shift in business
based organization that has pioneered the development
responsibility driving companies to become corporate global
of the worldās most widely used sustainability reporting
citizens. Integrated reporting therefore provides greater context
framework and is committed to this frameworkās
for performance data, clariļ¬es how sustainability ļ¬ts into a
continuous improvement and application. More than
companyās DNA, and helps embed sustainability into company
1,000 organizations globally declare that they use the GRI
decision making processes.
Guidelines for their sustainability reporting, including
There is increasing demand from international investors, 3M, Cisco Systems, Citigroup, Dell, Eli Lilly, Intel, General
accounting bodies, governments and other stakeholders for Electric, Procter & Gamble, and United Technologies.
integrated reporting. The best illustration of this trend is the
ā¢ The Princeās Accounting for Sustainability Project (A4S)
growing number of organizations that make CSR reporting their
ā His Royal Highness the Prince of Wales himself leads
actual business. Some of those organizations include:
this important project. Accounting for Sustainability is a
ā¢ Principles for Responsible Investment (PRI) ā Represent project to bring organizations and other key stakeholders
signatories to the United Nationsā Principles for Responsible together for the purpose of developing practical tools
Investment Initiative (PRI). Launched in 2005, the PRI today that enable environmental and social performance to be
accounts for more than 560 global investment institutions better connected with strategy and ļ¬nancial performance
with more than $18 trillion in assets under management. and, thereby, embedded into day-to-day operations and
PRI signatories pledge to integrate consideration of CSR decision making.
issues into investment decisions and ownership practices.
They recognize that social and environmental issues can be
material to the ļ¬nancial outlook of a company and therefore
to shareholder value.
āThe case for globally consistent ļ¬nancial
ā¢ Ceres ā An Advocacy Non-Government Organization
(NGO), Ceres is on the green bandwagon and works with reporting standards is well understood and
investors worldwide to improve corporate and public policies
on climate change and other environmental, social, and
accepted. It is appropriate to apply the
corporate governance issues. As part of this mission, Ceres same global approach to other aspects
launched and coordinates the Investor Network on Climate
Risk (INCR), an alliance of more than 90 institutional investors of corporate reporting. This (International
and ļ¬nancial ļ¬rms that collectively manages nearly $10 trillion Integrated Reporting Committee ā IIRC)
in assets to inļ¬uence companies to issue CSR reports.
initiative represents an important step on
ā¢ AccountAbility ā This organization has developed the
AA1000 series of principles-based standards that are that journeyā. *
designed to help organizations become more accountable,
responsible and sustainable. They address issues affecting ā Sir David Tweedie, Chairman of the International
governance, business models and organizational strategy Accounting Standards Board
3. ā¢ International Integrated Reporting Committee āI believe we will look back on the creation
(IIRC) ā On August 2, 2010, The Princeās Accounting for
Sustainability Project and the Global Reporting Initiative of this Committee (International Integrated
announced the formation of the International Integrated
Reporting Committee ā IIRC) as a turning
Reporting Committee. The Committeeās bold vision is to
bring forward a comparable framework for CSR reporting. point in the development of corporate
They plan to present this global initiative to the G-20
Meeting in Paris in 2011.
reporting.ā *
The IIRC has been created to respond to the need for a ā Jane Diplock, Chairman of the New Zealand
concise, clear, comprehensive and comparable global Securities Commission and Executive Committee
Integrated reporting framework that is structured around
of the International Organization of Securities
an organizationās strategic objectives, its governance and
business model, and a framework that integrates both Commissions (IOSCO)
material ļ¬nancial and non-ļ¬nancial information.
the same way that ļ¬nancial reporting is a requirement for all
The objectives for an integrated reporting companies. At the 2010 UN Sustainable Stock Exchanges event
framework are to: in China, delegates focused on how stock exchanges and key
ā¢ Support the information needs of long-term investors stakeholders can improve CSR disclosure and performance
by showing the broader and longer-term consequences of listed companies, either through voluntary exchange-led
of decision making initiatives or regulation. The conclusion of the meeting was that
there is a strong business case for stock exchanges to strengthen
ā¢ Reļ¬ect the interconnections between environmental, CSR disclosure requirements. Starting on June 1, 2010, all 450
social, governance and ļ¬nancial factors in decisions that companies listed on the Johannesburg Stock Exchange are
affect long-term performance and condition, making required to publish an āintegrated reportā or explain why they
clear the link between sustainability and economic value are not doing so. Market evidence already exists that indicates
the value that investors, analysts and other stakeholders place
ā¢ Provide the necessary framework for environmental and
on important non-ļ¬nancial information (e.g., environmental,
social factors to be taken into account systematically in
social and governance or āESGā data) which gives a more
reporting and decision making
comprehensive view of an organizationās performance. Recently,
ā¢ Rebalance performance metrics away from an undue more than 250 of the worldās largest institutional investors,
emphasis on short-term ļ¬nancial performance representing more than $15 trillion in combined assets under
management, demonstrated their commitment through the PRI
ā¢ Bring reporting closer to the information used to invest in companies that follow good sustainability and ESG
by management to run the business on a practices. As we can see, these are several of the many reasons
day-to-day basis for companies to āgo greenā and produce integrated reports
with the ultimate goal of becoming socially responsible and
Source: International Integrated Reporting Committee (IIRC) accountable to all stakeholders.
Integrated Reporting Meets Collaboration
All these organizations collectively have a huge inļ¬uence on One of the questions facing companies who decide to take on
corporate behavior and policy makers. From Southwest Airlines integrated reporting is āwho is and how are we going to do the
to Walmart, companies of all types and sizes are voluntarily additional work required to produce these reports?ā Existing
communicating integrated information to stakeholders about external reporting teams for most major companies are already
their businessā impact on the environment. Stock exchanges stretched thin simply meeting their existing compliance reporting
are starting to incorporate mandatory CSR disclosure standards requirements. The CSR reporting process brings with it many new