Integrated Reporting (<IR>) is being increasingly talked about as the future of corporate reporting.
The corporate landscape is changing and Integrated Reporting is an ideal tool with which to explore value creation. This direction of travel – which is voluntary – is focused on driving more authentic, comprehensive and meaningful information about all aspects of an organisation’s performance and value creation story, delivering benefits for both internal and external stakeholders. Quite simply, Integrated Reporting (<IR>) is considered by many to be the future of corporate reporting.
- What is integrated reporting?
- Watch full interview of Paul Druckman
- Watch Integrated Reporting - Reflections (extract)
- Watch full interview of Richard Howitt
- Watch IR - role of IR in building long-term value creation
There are increasing concerns that the assets covered by financial statements reflect a steadily diminishing component of shareholder value. Research in 2015* found that net assets of S&P 500 companies represented 16% of their market capitalisation, compared to 83% in 1975. In other words, intangible factors, including trust, reputation and long-term viability of the business model that are not necessarily captured by accounting records have become the material value drivers. Add to this the failure of current financial statements to capture the value of inputs from, or reliance on, natural capital and forms of capital other than financial capital, and the ground is ripe for new ideas. Integrated Reporting is at the forefront of these ideas.
*Annual Study of Intangible Asset Market Value 2015, Ocean Tomo
What is integrated reporting and what are the benefits?
Integrated Reporting brings together material information about an organisation's strategy, governance, performance and prospects in a way that reflects the commercial, social and environmental context within which it operates. It leads to a clear and concise articulation of your value creation story which is useful and relevant to all stakeholders. Aside from reporting, Integrated Reporting also encompasses Integrated Thinking. It is as much about how companies do business and how they create value over the short, medium and long term, as it is about how this value story is reported.
There are a multitude of benefits associated with Integrated Reporting, both within an organisation and from an external perspective. For one, it encourages your organisation to think in an integrated way and forms a clearer strategy and business model. It also provides a single, clear and concise report that is easy to access. Risks and opportunities can be better identified through Integrated Reporting, as well.
Moreover, Integrated Reporting helps to create value for stakeholders through identification and measurement of non-financial factors. It is also essential in linking non-financial performance more directly to the business. In addition, it improves internal processes which eventually leads to a better understanding of the business and an improved decision-making process.
“Integrated Reporting is not only about the final product; it’s about demonstrating the integrated thinking.”
“Being able to excel in telling your value creation story will be an increasing source of competitive advantage”
Paul Druckman, Former CEO, IIRC
Five years can bring about an immense amount of change. Paul Druckman has just stepped down as Chief Executive of the International Integrated Reporting council. In this interview he reflects on what has been achieved in that time under his leadership. Listen to a short extract of Paul Druckman, former CEO of the IIRC, talking to Deloitte about Integrated Reporting in the film below.
Richard Howitt outlines his vision for integrated reporting in the years ahead, talking here about companies using integrated reporting to manage business and create value. He has just taken over as Chief Executive of the International Integrated Reporting Council. In this video interview, he talks with Robert Bruce about maintaining the pace, building more global momentum, putting integrated reporting at the heart of corporate governance around the world, and influencing the concept of inclusive capitalism.
The adoption of Integrated Reporting is gaining momentum in ASEAN countries. Organisations are starting to realise its benefits, in enabling the management to better understand its use of capitals for value creation, and as a platform to communicate with their stakeholders about the organisations' value creation journey.
At Deloitte, we provide tailored services that meet the diverse needs of our clients on their adoption journey. We offer a team of multi-disciplinary skilled and experienced professionals to help you navigate the challenges of implementing integrated reporting.
Download the Integrated Reporting Support Services brochure here.