Enhancing Stakeholders’ Insight and Long-Term Value Creation in Corporate Reporting
Integrated reporting (IR) represents a holistic approach to corporate reporting, aiming to enhance the quality of information provided to financial capital providers for more effective capital distribution. It is designed to communicate how an organization generates, maintains, or diminishes value over time, addressing the interests of a broad range of stakeholders, including employees, customers, suppliers, business partners, local communities, and regulatory bodies.
The guiding principles of integrated reporting are:
- Strategic Focus and Future Orientation: Offering insights into the organization’s strategy and its capacity for value creation in the short, medium, and long term.
- Connectivity of Information: Presenting a comprehensive view of the factors influencing the organization’s ability to create value over time.
- Stakeholder Relationships: Detailing the quality and dynamics of the organization’s interactions with its key stakeholders.
- Materiality: Disclosing information significantly impacts the organization’s value-creation capacity.
- Conciseness: Ensuring the report is succinct and to the point.
- Reliability and Completeness: Providing a balanced account of all material matters, positive and negative, without significant errors.
- Consistency and Comparability: Maintaining a consistent presentation over time and allowing for comparison with other organizations where it is material to the organization’s value creation.
The content elements of integrated reporting include:
- Organizational Overview and External Environment: Describing the organization and the context within which it operates.
- Governance: Outlining the structure and processes for directing and controlling the organization.
- Business Model: Explaining how the organization creates, delivers, and captures value.
- Risks and Opportunities: Identifying potential challenges and advantages that could impact the organization’s future performance.
- Strategy and Resource Allocation: Detailing the organization’s objectives and how it allocates resources to achieve them.
- Performance: Reporting on the organization’s outcomes and measures against its goals.
- Business Outlook: Considering its current trajectory and external factors, providing a perspective on the organization’s future.
- Basis of Preparation and Presentation: Explaining the methodologies used in preparing and presenting the report.
Integrated reporting thus serves as a comprehensive framework that informs financial capital providers and supports the broader stakeholder community in understanding an organization’s long-term value-creation journey.