The development of Integrated Reporting is designed to enhance and consolidate existing reporting practices, to move towards a reporting framework that provides the information needed to assess organizational value in the 21st century. The traditional reporting model was developed for an industrial world. Although it continues to play a valuable role with respect to stewardship of financial capital, it nonetheless focuses on a relatively narrow account of historical financial performance of the value-creation process. As business has become more complex and gaps in traditional reporting has become prominent, new reporting requirements have been added through a patchwork of laws, regulations, standards, codes, guidance and stock exchange listing requirements. Since the current business reporting model was designed, there have been major changes in the way business is conducted, how business creates value and the context in which business operates. The type of information that is needed to assess the past and current performance of organizations and their future resilience is much wider than is provided for by the existing business reporting model. While there has been an increase in the information provided, key disclosure gaps remain. Reports are already too long and are getting longer. But, because reporting has evolved in separate, disconnected strands, critical interdependencies between strategy, governance, operations and financial and non-financial performance are not made clear. To provide for the growing demand for a broad information set for markets, regulators and civil society, a framework is needed that can support the future development of reporting, reflecting this growing complexity. Such a framework needs to bring together the diverse but currently disconnected strands of reporting into a coherent, integrated whole, and demonstrate an organization’s ability to create value now and in the future. Keeping this in mind, the IIRC is developing an International Integrated Reporting Framework, the core objective of which is to guide organizations on communicating the broad set of information needed by investors and other stakeholders to assess the organization’s long-term prospects in a clear, concise, connected and comparable format. The main output of Integrated Reporting is an Integrated Report: a single report that the IIRC anticipates will become an organization’s primary report, replacing rather than adding to existing requirements. An integrated report tells the overall story of the organization. It is a report to stakeholders on the strategy, performance and activities of the organization in a manner that allows stakeholders to assess the ability of the organization to create and sustain value over the short, medium and long-term. An effective integrated report reflects an appreciation that the organization’s ability to create and sustain value is based on financial, social, economic and environmental systems and by the quality of its relationships with its stakeholders.
Integrated Report Defined:
The King Report on Governance for South Africa 2009 (King III) defines integrated reporting as “a holistic and integrated representation of the company’s performance in terms of both its finance and its sustainability.” (Framework for Integrated Reporting and the Integrated Report, Discussion Paper, 25 January, 2011) Integrated Reporting brings together the material information about an organization’s strategy, governance, performance and prospects in a way that reflects the commercial, social and environmental context within which it operates. It provides a clear and concise representation of how an organization demonstrates stewardship and how it creates value, now and in the future. Integrated Reporting combines the most material elements of information currently reported in separate reporting strands (financial, management commentary,...