Since the IIRC was founded in 2010, its aims for Integrated Reporting have shifted from providing a report to a broad range of stakeholders offering an integrated holistic understanding of an entity’s social, environmental and economic sustainability, to a report providing financial investors with an understanding of the medium- and long-term economic sustainability of the entity. In this paper we refer to this shift as the economic turn in the IIRC’s version of, and vison for, Integrated Reporting (IR). Through the theory and methods of Critical Discourse Analysis applied to a sample of IRs from UK companies, this paper assesses the extent to which the economic turn in the IIRC’s policies is reflected in an economic and shareholder focus in UK IR practice. Our analysis concentrates on the two key concepts from the IIRC’s 2013 International Integrated Reporting Framework: Value and Capital. We find, consistent with the notion of an economic turn in IR policies, that discourses about value and capital are predominately related to economic conceptions of both value and capital from the perspective of shareholders. However, perhaps inconsistent with the notion of an economic turn in the IIRC’s vision for IR, we found that some discourses constructed value along contradictory macro narratives of sustainability and responsibility on the one hand and growth and performance on the other. We found the most conspicuous divergence in the use of the term value when comparing discourses between the financial statement and strategic review sections of IRs. Our analysis also found that discourses of capital other than financial capital (and its increase and decrease) were notably absent from, or marginal in, the IRs of most companies. Only the small number of public service entities in our sample engaged in discussion of broader, non-financial, forms of capital. While the relatively small incidence of discourses of value and capital that were not directly economic and shareholder focused in nature might be taken as evidence against the universality of a claimed economic turn in IIRC IR in practice, caution needs to be exercised in reaching such an interpretation. The IIRC Framework makes clear that providing some forms of value to stakeholders other than investors, and managing some forms of capital other than financial capital, can and do have an impact on the value of financial capital for shareholders. A further study would be necessary to ascertain whether, and/or to what extent, any non-economic IR discourses of value and capital of the type we found signpost any impact upon financial capital for investors – consistent with an economic turn in IR.

1. School of
Management
Defining Value & Capital: An economic
turn in Integrated Reporting disclosures?
Seminar at:
University of South Australia,
School of Commerce
6 December 2016
Jeffrey Unerman
Franco Zappettini

2. School of
Management
Aim of the paper
v To ascertain whether and how the economic turn in the IIRC’s
policies (as demonstrated in the emerging academic literature
on <IR>) has been reflected in subsequent discourses of <IR>
practice.
q Focus on the key IIRC concepts of value and capital

3. School of
Management
Outline of seminar presentation
1. Importance of value and capital in the IIRC’s Integrated
Reporting policy
2. Critical Discourse Analysis as a theoretical and analytical
approach used in this study
3. Empirical data analysis
4. Conclusions
3

4. School of
Management
Importance of value and capital in the IIRC’s Integrated
Reporting policy framework
v Genesis of IIRC’s Integrated Reporting and subsequent economic turn
q Role of Technical Collaboration Groups
q Paul Druckman November 2016 acknowledgement of economic turn
v IIRC’s 2013 International Framework set out three fundamental
concepts
q Value creation for the organization and for others
q The capitals
o 6 capitals were suggested: financial, manufactured, intellectual, human, social and
relationship, and natural
q The value creation process
v Hence our focus in this study is on discourses of value and capital
4

5. School of
Management
Critical Discourse Analysis (CDA) as a theoretical and
analytical approach used in this study
v CDA as an umbrella of theories and methodologies
q Common view of language and society as mutually constitutive
q Texts encode and drive social dynamics
q Critical approach to texts and their deconstruction for emancipatory agenda
v Different foci
q Macro-meso-micro
v Different analytical tools
q Borrowing from linguistics & other disciplines
5

6. School of
Management
Critical Discourse Analysis (CDA) as a theoretical and
analytical approach used in this study
v CDA methods used in this study
q Lexical-semantic level
q Rhetoric-discursive level
v Our data
q a corpus of 32 UK <IR>s from 2014 and/or 2015 from IIRC website
q Vast majority were Annual reports
o Typically 3 sections: Financial Statements, Governance Review, Strategic Review
6

7. School of
Management
Lexical-semantic level
v We looked at systematic patterns of word collocation/ co-
occurrence
q Identified the most common 1 and 3 word collocates for value and capital
o Excluding grammatical items (of, in, the etc)
q Examined co-occurrence of value and creat* within 5 words of each other
q Examined co-occurrence of capital and increas* decreas* destr* within 5
words of each other
q Keywords interpreted in the context of a full sentence or macro proposition
7

8. School of
Management
Lexical data analysis – collocations for value
8
Rank 1L Collocate 1R
3L Collocate 3R
1 2211 fair 23 2250 fair 100
2 303 carrying 6 288 net 90
3 239 present 0 312 carrying 25
4 143 book 2 84 assets 204
5 126 market 5 240 present 9
6 102 nominal 0 109 m(illion) 189
7 92 shareholder 0 24 use 144
8 0 less 83 146 market 14
9 82 create 0 151 book 9
10 80 face 1 64 shares 90
11 0 chain 79 124 create 10

9. School of
Management
Lexical data analysis – collocations for capital
9
Rank 1L Collocate 1R
3L Collocate 3R
1 457 share 50 501 share 112
2 9 expenditure 376 29 expenditure 404
3 130 working 1 79 capital 79
4 2 employed 85 131 return 16
5 0 investment 72 134 working 4
6 11 account 61 115 issued 14
7 65 invested 6 95 total 33
8 0 structure 63 57 group 54
9 52 total 3 12 investment 95
10 44 regulatory 3 82 ordinary 24
11 0 markets 43 21 account 85

10. School of
Management
Lexical-Semantic analysis
v Initial collocation analysis suggests:
q The overall use of value occurred primarily in technical terms (see
collocates fair value, book value)
q Was oriented towards the meaning of commensurable financial value for
shareholders (market value, nominal value)
q Co-occurrence of value and creat* primarily discussed in relation to the
organisation’s business model. Typical propositions primarily oriented
towards ‘profit for shareholders’ although there were a few examples of
wider inclusions of beneficiaries
10

11. School of
Management
Lexical data analysis – collocations for capital
v Similarly, the analysis of collocates for capital suggests that, by
and large, capital was inferable in a financial sense, being most
frequently associated with:
q Expenditure,
q Invested (exclusively used in the expression “return on invested capital”),
q Share capital, and so on.
q Very few collocates of natural, human, intellectual etc. capitals
q increase*, decreas*, destr* and capital almost exclusively discussed in a
financial context
11

12. School of
Management
Rhetorical-discursive analysis
v Wodak et al.’s (2009) multilevel model focusing on discourses
driven by keywords value and capital
q epistemic orientation of statements,
q argumentation schemes or frames,
q linguistic strategies (e.g. justification)
q topoi i.e. implicit/explicit assumptions or premises that warrant an
argument and which “represent the common-sense reasoning typical for
specific issues” (van Dijk, 2000, p.98).
12

13. School of
Management
Rhetorical-discursive analysis
Section
Strategic orientation of
discourses of value
Implicit or explicit argumentative schemes
(template)
Financial
report &
governance
Validating the organisation’s
competitiveness and
profitability
The greater the financial returns that the
company creates for its shareholders, the
more value it has generated
Legitimizing Directors’
remuneration and incentive
schemes
Directors’ remuneration is a direct result of
financial value created for shareholders
Strategic
Review
Explaining how value is created
by the organisation
Value is the output of an organisational
process for the benefits of shareholders,
suppliers, stakeholders
Variations in value are measurable against
certain benchmarks (e.g. KPIs)
Value relates to the development of
products/services
Value relates to cost and revenue
management
Sustainable practices contribute to/drive the
creation of value 13

14. School of
Management
Discursive data analysis – overview of key insights
v Contradictory representations of value across the reports’ three main
sections
q Value refers almost exclusively to shareholders’ return in Financial and
Governance sections whilst mixed representations of beneficiaries of value are
constructed in the Strategic Reports.
v Mixed narratives of value creation:
q Some value creation narratives were driven by discourses of growth; of
output/delivery of products/services; and of performance, benchmarking,
measurement (eg: KPIs). Value was often treated as a reified and
commensurable entity.
q Frequent interdiscursivity/conflation of ‘value creation’ and ‘sustainability/
responsibility’ discourses
v In most reports, absent or limited discussion of non-financial capitals
and their increase/decrease
14

15. School of
Management
Discursive data analysis -some examples
v Value consistent with an economic turn, for example:
q Used to legitimize director’s remuneration and incentives
o The principal measures of annual bonus will be based on value creation and may
include financial measures … performance against each of these measures was
designed to be aligned with group strategy, future direction and creation of
shareholder value. BP Governance Section, pp. 73 & 79
q Used to legitimize increasing shareholder financial returns
o we expect ARM’s revenues and profits to grow as our Partners design our
technology into a broader range of end markets … the more profits we earn, the
more cash we generate. ARM intends to return cash to shareholders over time
through a growing dividend and buying back shares.” ARM, Strategic Review, p.
21
15

16. School of
Management
Discursive data analysis -some examples
v Contradictory narratives of value creation :
q Growth and performance
o The Group operates an integrated global supply chain focused on the effective and
efficient delivery of market-leading products and innovations to our markets to
satisfy consumers, drive share growth and create value for our business partners.
BAT, p. 22,
q Sustainability and responsibility
o Sustainability is a key pillar of our strategy. It is about creating shared value for
both our shareholders and our stakeholders in wider society. ….Our sustainable
approach to sourcing, production and distribution helps us to create value for a
wide group of stakeholders from crop to consumer. …..Our business operates on a
set of core strengths and qualities that makes us unique and ensures we can
generate value over the long term. BAT, pp. 5, 16-17
16

17. School of
Management
Discursive data analysis -some examples
v Absence or limited discussion of non-financial capitals
q Most <IR>s only discussed financial capital
q However among the small number of public service entities there was
some mention of human and social capitals, eg:
o Social Capital works through the value cycle to unlock and maximise the value
from other capitals. S1 and S2 are inputs in our value creation, while S3 an S4 are
outputs. Currently we are only able to assign a value to S2.CIPR, p.15
q Limited discourse around natural capital, eg:
o Environmental Capital underpins and enables what we do. We recognise that our
activities deplete environmental capital but do not currently have an agreed
approach to mitigating this. CIPR, p. 16
q One example of comprehensive capitals was M&S’ <IR> which referred to
the six capitals in the discussion of their business model
17

18. School of
Management
Conclusions
v The vast majority of <IR> discourses were consistent with the
economic turn in IIRC’s policy direction
v Value and capital in:
q Financial Statement and Governance sections were entirely inferable as
financial / economic in nature
q Strategic Review sections was largely economic in nature
o However there was some contradictory narratives addressing a broader range
of stakeholders and non-financial value and capital
v Most <IR> discourse was therefore consistent with the
economic turn in <IR> / IIRC policy
q The apparently ‘inconsistent’ discourses need to be interpreted with
caution
18

19. School of
Management
Conclusions
v Duality of discourses about financial and non-financial (i.e.
social) value appears to be driven by different functions of
distinct <IR> sections (compliance with financial regulations and
marketing functions)
v This tension could reflect a failure to integrate organically social,
environmental and economic accounting practices, and
reproduces the silo thinking that the IIRC’s framework was
supposed to help organisations move away from.
19