The corporate landscape is evolving. Integrated Reporting (IR) occupies significant space in this process as an ideal tool to consider value creation. It is centred on more veritable, detailed and impactful information about an organisation’s performance. IR provides investors with the necessary information for more effective decision-making to better facilitate returns on long-term investments.
Not many countries can declare that IR is a common practice among local companies. South Africa, however, boasts several listed and public organisations that have produced integrated reports for over five years. The advent of IR as a primary form of corporate reporting in the country has introduced a significant amount of internal and external organisational benefits. A standout is enhancing internal integration and management – companies that can better understand value drivers, improve strategic plans, perform a more thorough risk analysis, and reduce functional isolation.
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What is Integrated Reporting?
IR presents material information about an organisation’s strategy, governance and performance to reflect its mainstream, social and ecological context. This leads to a clear and concise summation of the company’s value creation story that holds usefulness and currency among all stakeholders.
IR does not end with reporting – it also incorporates Integrated Thinking (IT). It is not solely based on how an organisation’s value story is reported but includes how it conducts business and creates value over periods.
The inception of IR in South Africa is founded on a principle of the King Code of Governance for South Africa 2009 that states, “the board should appreciate that strategy, risk, performance and sustainability are inseparable.” It recommends that organisations should prepare IR to reflect this.
The benefits of Integrated Reporting
There are many benefits of IR, both internal and external to an organisation. Below are a few:
- Enhanced identification of risk and opportunities
- Your organisation can think in an integrated way
- Clearer delivery of business strategy and model
- Value creation for stakeholders
- Improved internal processes that create a better understanding of, and decision-making for your business
The key to successful IR within an organisation is its ability to achieve integrated thinking and integrated management. This outcome requires the collaboration of different departments within the organisation to especially deconstruct the silos that predominate. The South African corporate community has done well in responding to a change that has been a long time coming. For most businesses, it is a refreshing perspective of business management and reporting.