Towards Integrated Reporting

By Helen Brand, chief executive, ACCA

They run into the hundreds of pages, they take months to prepare, and they are required by law, but are corporate reports actually of any value to businesses and those that use them?

Well, yes, is the short answer, but there’s certainly a case to be made that they aren’t valuable enough.

The information contained within corporate reports is there in response to some kind of stakeholder demand, while the information also helps businesses assess their own performance, so there’s some value there.

However, in today’s corporate world, where we have so many inter-connected risks and opportunities, and so many different reports to tell us about them, something seems to be missing. What we don’t have to match the inter-connected corporate world, is an inter-connected corporate report.

If we look at just two types of corporate report – the Corporate and Social Responsibility (CSR) report, and the annual report and accounts – it’s clear why this matters.

Given the increasing pressure on natural resources and given our increasingly changeable climate, the natural world will have a significant impact on any business. However, most business’ mechanism for reporting on climate risks, the CSR report, is published as a stand-alone report. Some companies don’t even publish the CSR report and the financial statements, or the annual report, at the same time.

Presenting the information separately, in silos, makes it difficult to build up an overall picture of a business’ long-term value. Each report only takes one set of factors into account, meaning it could well have different conclusions to those that could have been made if the information in other reports was built into that report’s assumptions.

To take all the necessary factors into account when presenting information, to put the finances in the context of sustainability, long-term objectives, and the business model, needs a new approach to reporting. We need an integrated approach to reporting.

This is easier said than done, but this week has seen some significant steps towards the arrival of integrated reporting, with the launch of the International Integrated Reporting Committee (IIRC) discussion paper. The IIRC brings together all the key players needed to make such a complex and far-reaching project work, from global business, to investor groups, and accountancy bodies.

The IIRC has a long way to go before it can achieve even a small part of what it has set out to do: Integrated Reporting needs to result in reports that are of increased relevance to their users, and it needs to embed sustainability at the heart of corporate reporting.

Despite these challenges, Integrated Reporting remains a great opportunity to help us make a fully-informed assessment of the long-term value of any business.