CorpComms Magazine

Corporate reporting gurus have long contended that the future is integrated - the disagreements have centred on how best to achieve integration. A recent discussion paper launched by the International Integrated Reporting Committee (IIRC) hopes to address this. The IIRC produced its initial discussion paper in September and is seeking views on ways to develop a new international reporting framework. Interested parties have until 14 December to offer their views.

Alan Hines, managing director, Luminous

With the rumours of a second recession just around the corner, concerns arise about how corporate reporting let the system down. How for example did the banks hide their huge failings?

In response, regulators have pushed for greater disclosure and if anything, we are seeing longer and longer reports. The need for a more transparent and 'integrated' approach is currently being championed by a cross-section of leaders that have come together to form the International Integrated Reporting Committee (IIRC).

Its recently published framework document 'Towards Integrated Reporting' suggests a new direction with a view to international adoption.

It essentially recommends that strategy, risks, governance, operations and financial and non-financial performance of a company should all be linked together to provide a more concise report. Clarity and materiality is key, which means focusing in on those elements that will inform stakeholders about current and future performance and not hiding behind compliance driven content.

The development of Integrated Reporting is designed to enhance and consolidate existing reporting practices, to promote a focused approach so that financial and performance risks are linked to the company's strategy. It also recommends placing short, medium and long-term considerations into context, de-cluttering the report to be more concise and to encourage integrated thinking.

For us, as a communications specialist, it's a great opportunity to help clients clearly and concisely tell the story of their business in an intelligent joined-up way which, for some of us is something we have been doing with our most enlightened clients for quite a while.

The big difference in what the IIRC is doing is considering the audience for the report beyond the legislators and that's to be applauded. The change won't happen immediately but the ultimate pay off will be worth it; stakeholders that understand the company and more importantly believe and trust in it.

Sally Pilot, director of research and strategy, Black Sun

The IIRC's integrated reporting pilot and consultation arrives at a time when many corporates are already some way along the road to integrated disclosure in their annual report.

At Black Sun, we have been tracking corporate reporting trends in annual reports for the past six years, and this year we found 56 per cent of FTSE 100 companies detailed corporate responsibility (CR) within their group strategy, up from 36 per cent last year.

We also reviewed the Annual Reports of over 100 companies in seven G20 nations and found signs of companies beginning to integrate their reporting, with 43 per cent of those analysed meeting what is considered current integrated reporting 'good practice'. Integrated reporting should 'demonstrate the linkages between an organisation's strategy, governance and financial performance and the social, environmental and economic context within which it operates.'

However, in the face of mounting regulation from government and industry bodies, many companies struggle to deliver an annual report that clearly threads these elements together. Add to this the logistical challenge of capturing CR data in the first place and it is clear that the IIRC framework is a starting point for most businesses, not a final solution.

Those companies who are best at integrated disclosure see this as a journey, not as a single step that can be achieved in one year. The starting point is to think of all narrative reporting as a story, with a clear structure, where all points are inter-linked.

For those companies who have started on the journey towards integration, the benefits are coming to light in the guise of increased stakeholder trust and confidence, however moving beyond compliance to CR as a corporate imperative is a journey which needs to be taken one step at a time.

Al Loehnis, business development director, Investis

It's hard to argue with the broad aims of the IIRC's discussion paper - its principles and key content elements are actually fairly indistinguishable from other current initiatives aimed at improving reporting. The difference is that the IIRC has provided a useful framework for actual implementation.

I dare say a company following this framework would produce a very good report. I also dare say that very few will. As the report points out, integrated reporting reflects integrated thinking and few companies are truly run like this.

Those that are, generally recognise the difference between good reporting and good communications. The latter is rarely achieved by the once a year production of an annual report.

Firstly, few people actually read them. We have found that on average you only get about two per cent of corporate website traffic visiting online annual report microsites. More fundamentally the annual report is not fit for the purpose to which the IIRC is trying to turn it. You just can't be that forward looking when you're talking about last year.

And what happens when the shoots of recovery you talked about nine months ago turn to straw and you need to communicate a change of priorities, perhaps even of strategy? To communicate effectively you need a more dynamic, responsive model: the focal point should be a website which does all the things embodied in the IIRC framework, updated as and when it changes.

The direction of travel is set out in detail there, while the annual report provides an account of the journey last year. The two of course should be joined up and the consistency and integrity of message is hugely reinforced by embedding the annual report within the navigation of the website, not leaving it stranded as an island that nobody visits - that is integrated reporting. In deed, not just in word.

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