In the interconnected world of the 21st century, businesses are rapidly coming to terms with the evolution of their corporate citizenship goals. Being a good corporate citizen is no longer understood as an
Being a good corporate citizen makes business sense
As more and more companies embrace the meaningful role they can play in the societies where they operate, and embed associated activities in their business strategy, corporate reporting provides an opportunity to elevate this position in a manner that is transparent and inclusive.
Integrated reporting aims to improve accountability, stewardship and trust by providing investors and other stakeholders with information to improve their decision-making processes. The <IR> Framework articulates this vision to align capital allocation and corporate behaviour to wider goals of financial stability and sustainable development.
The central concept is integrated thinking
Rather than the siloed approach, integrated thinking drives greater collaboration between departments and cross-functional cooperation between members from diverse backgrounds. An essential idea in integrated thinking is the value creation process, suggesting that companies should expand their concept of value beyond their financial resources to include all the resources they use as inputs for business activities. These are the six capitals, and include financial; manufactured; human; social and relationship; intellectual and natural capital. By connecting internal knowledge with external information, focused on the themes of the capitals, organisations can identify issues that are material to value creation over the short, medium and long term.
It’s about sustainable value creation
Applied effectively, integrated thinking creates the potential to significantly alter investor and company mindsets on how they operate. This shifts the focus from meeting short-term financial goals to developing a long-term business strategy while embedding social and environmental issues to meet the needs of society.
And it’s no longer merely a nice-to-have
Today, investors are demanding more non-financial data to inform decision-making about a company’s performance. And for good reason.
While traditional financial reporting has a specific focus on financial performance, and ESG reporting is focused on social, environmental and governance issues, the integrated report provides an opportunity to disclose the interconnected nature of the afore-mentioned, and demonstrate how this affects the overall performance of the organisation.
Thinking about publishing an integrated report? Or improving your current integrated report?
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