Integrated Reporting is about better communication between companies and the investment community. We believe it signals the transition to “better business reporting” because it:
- offers an opportunity for reporting to be centred on business strategy, the business model and how value is created now and in the future
- provides a clear and balanced view of the organisation rather than a fragmented, one-dimensional view
- helps readers look beyond short-term, historical financial performance, forming a clearer picture of the business value drivers and future challenges.
The world in which companies operate is changing. Financial resources are no longer the only capital constraint faced by businesses.
Business models now have to reflect limitations or impacts in terms of the natural, human or social capital on which all businesses depend. Increasingly, Boards have extended responsibilities to ensure all capital requirements are managed in a sustainable manner.
In order to demonstrate effective governance in today’s complex business environment, the information requirements of stakeholders is increasing. Integrated Reporting provides a framework for organisations to more clearly explain their value creation story.
What is Integrated Reporting?
Integrated Reporting is built around the organisation’s business model and capital dependencies to provide a more complete picture of what impacts business value.
It provides a focus on issues that matter to stakeholders explaining the businesses risks and opportunities within the wider business environment. Investors want to know the story of a business and what drives value and future cash flows. The Integrated Reporting framework can help provide this.
Integrated Reporting is an emerging area and we believes it signals the future of business reporting. It is early days, but the area is evolving rapidly. A draft framework has been issued. South Africa already requires JSX listed entities to “report or explain” on an Integrated Reporting basis.
Investigating the potential of Integrated Reporting now should be seen as an opportunity – not just in broadening the understanding of business value but in helping to focus on areas which will impact the organisation over the coming years.