Sustainability

The Emergence of Integrated Reporting

 

 

If you want to learn more about Integrated Reporting and how it can help your company, I think you will like this post.

On October 15, 2019, the Integrated Reporting <IR> U.S. Community hosted a webinar featuring John Wilcox, Chairman of Morrow Sodali, and Bob Laux, U.S. Lead for the International Integrated Reporting Council.

They presented an overview of The Emergence of Integrated Reporting, a paper by the Integrated Reporting Working Group at the Conference Board.

Why is Integrated Reporting important?

Using the Integrated Reporting <IR> Framework is important for all companies because it represents the next step for companies interested in enhancing their corporate reporting. Financial statements provide only a piece of the information necessary to understand the value of a company.

Over the past three decades, tangible assets have become a smaller portion of a company’s total value. In a recent study of the components of the S&P 500 Market Value, Ocean Tomo reported that in 2015 only 16% of the companies’ market value represented tangible assets.

 

 

Companies need to report on a variety of factors that affect their value but are not captured in financial statements. The <IR> framework provides a comprehensive approach to explaining from management’s perspective how value is created in the short, medium, and long term. In addition, this framework provides an opportunity for internal management to focus on issues that are material to creating value for the company.

Integrated reporting supports integrated thinking. This allows for the integration of the company’s components that are critical to its long term success. For example, in a technological services company information about its management of intellectual property and human resources is essential for creating long term value. The <IR> framework is designed for reporting on these critical issues as they interact with the company’s strategy, risks and opportunities as well as its governance structure.

As part of the webinar presentation, Bob Laux discussed The Integrated Reporting Process to illustrate how an organization creates value over time. The following graphic shows the six capitals (financial, manufactured, intellectual, human, social and relationship, and natural) of the <IR> framework and their contribution to an organization’s current and potential value.

 

I recommend that you read this interesting report and watch the recorded webinar here.

Integrated Reporting <IR> U.S. Community is a great resource for those interested in the integrated reporting movement in the U.S. This community provides live presentations on a variety integrated reporting topics that range from actual company reports to issues about assurance on integrated reports.