by An integrated report is a concise communication about how an organization’s strategy, governance, performance, and prospects, in the context of its external environment, lead to the creation of value over the short, medium, and long term. The purpose and content of an integrated report are designed to provide a holistic view of the organization’s overall performance, as opposed to traditional financial reports that focus primarily on financial results. Integrated reporting is guided by the principles and content elements set out by the International Integrated Reporting Council (IIRC).
An integrated report aims to provide a more holistic view of an organization’s overall health and prospects than what is available through traditional financial reporting alone. By incorporating a range of factors – financial, environmental, social, and governance – into a cohesive narrative, an integrated report helps stakeholders understand how an organization is positioned to create sustainable value. As the business world becomes increasingly complex and interconnected, the role of integrated reporting in providing clear, comprehensive, and forward-looking information becomes ever more crucial.
Purpose of an Integrated Report
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Holistic View of Performance:
To provide a more comprehensive understanding of the organization’s performance than what traditional financial reports offer, including environmental, social, and governance (ESG) aspects.
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Value Creation:
To explain how the organization creates value over time, encompassing both financial and non-financial capital.
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Strategic Focus:
To communicate the organization’s strategy for achieving its objectives and the potential impact of its external environment and risks.
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Improved Stakeholder Relationships:
To enhance accountability and stewardship, thereby building trust with shareholders, investors, employees, customers, and other stakeholders.
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Long-Term Outlook:
To emphasize the organization’s long-term sustainability and its approach to managing short, medium, and long-term opportunities and challenges.
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Integrated Thinking:
To encourage integrated thinking within the organization, promoting a more cohesive approach to decision-making and reporting.
Content of an Integrated Report
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Organizational Overview and External Environment:
A description of the organization, its business model, the external environment in which it operates, and how these factors influence its strategy and decision-making.
- Governance:
Insight into the governance structure of the organization, highlighting how governance supports value creation and the organization’s ability to act in the best interests of its stakeholders.
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Opportunities and Risks:
An analysis of the key opportunities and risks facing the organization, including how these are being managed or mitigated.
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Strategy and Resource Allocation:
Information on the organization’s strategy, its objectives, and how it intends to achieve them. This includes how resources are allocated to support the strategy.
- Performance:
Detailed reporting on the organization’s performance against its strategy, including both financial and non-financial metrics. This could include information on operational, environmental, social, and governance performance.
- Outlook:
An outlook on the organization’s future performance, including challenges, uncertainties, and potential future developments that may impact value creation.
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Basis of Preparation and Presentation:
An explanation of how the report has been prepared, including the reporting frameworks and any materiality assessments used.
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Connectivity of Information:
Demonstrating the interconnections between the various components of the organization’s performance, such as how governance impacts strategy, how strategy impacts performance, and how all these elements contribute to value creation.
Principles Guiding an Integrated Report
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Strategic Focus and Future Orientation:
The report should be strategically oriented and future-focused, rather than only retrospective.
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Connectivity of Information:
It should show a holistic picture of the combination, interrelatedness, and dependencies between the factors that affect the organization’s ability to create value over time.
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Stakeholder Relationships:
The report should provide insight into the nature and quality of the organization’s relationships with its key stakeholders.
- Materiality:
The report should disclose information about matters that substantively affect the organization’s ability to create value over the short, medium, and long term.
- Conciseness:
The report should be concise and to the point.
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Reliability and Completeness:
Information should be reliable and complete, providing an unbiased picture of the organization’s performance.
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Consistency and Comparability:
The report should be consistent over time and enable comparison with other organizations to the extent it is material to the organization’s own ability to create value.
