Question

Can u please discuss four drivers of Integrated Reporting

Answer 1

Integrated ireporting irefers ito irepresentation iof ithe ifinancial iand inon-financial iperformance iof ia icompany iin ia isingle ireport. iThis ihelps iin iproviding ia igreater icontext ito ithe inon-financial idata isuch ias ihow ithe icompany iperforms ion ienvironmental, isocial iand igovernance i(ESG) iparameters, ihow isustainability iis iembedded iin ithe icore ibusiness istrategy ietc. i

For imany iyears, iinvestors iand iother istakeholders ihave ifelt ithe ilimitations iin ithe icurrent iform iof iannual ireporting i– ias iindicated iby iSouth iAfrica’s iKing ireport iIII, ithe icurrent iform iof iannual ifinancial ireporting itakes ia ishort iterm iapproach iand iis iperceived ias iinadequate ito imeet ithe ineeds iof iinvestors iand iother istakeholders iwho iwould ilike ito ihave ia iholistic iview iof ithe icompany’s iperformance iand ithe iability ito iconnect ifinancial iand isustainability iperformance. iThe iprimary iobjective iof iintegrated ireporting iis ito ihelp istakeholders ianalyze iand iassess ithe icompany’s iability ito icreate iand isustain ivalue iin ithe imedium iand ilong iterm.

Releasing ione iintegrated ireport iwhich iillustrates ithe ifinancial ias iwell inon-financial iperformance iof ia icompany iis ibeneficial ias iit ican ihelp:

1. demonstrate ithat ithe icompany iis iserious iabout iincorporating isustainability iinto iits icore ibusiness

2. communicate ithe iimpact iof ia icompany’s ioperations ion ienvironment iand icommunity iand iillustrate ia icompany’s icommitment ito imitigating ithe ieffects

3. correctly iidentify iESG irelated irisks iand iopportunities iand ihelp iprovide ia icompetitive iedge iover iits ipeers iin ithe ilong iterm i– iin iseveral icases, ithis ican ihelp ilower ithe icost iof icapital

4. a icompany imake iinformed idecisions iand iimprove iits ioverall iperformance

5. identify icost isavings iby ianalyzing ifinancial iand inon-financial imetrics itogether

6. increase iinternal icollaboration ibetween idifferent idepartments iand icreate ia imore istreamlined iorganization

7. increase iengagement iwith iinternal iand iexternal istakeholders ithrough iconsistent iand ibalanced ireporting

8. address ireputational irisk ias iintegrated ireporting iprovides ia imedium ito icommunicate istrategy iand iidentify igaps, ithus ihelping ibuild itrust iamongst istakeholders

9. increase ibrand ivalue iand icustomer iloyalty

Investors iare ian iimportant istakeholder igroup iand idesire igreater itransparency iin idisclosure iby icompanies. iThere iis ian iincreasing igroup iof iinvestors iwho ibelieve ithat inon-financial imetrics isuch ias ithose irelated ito ienvironmental, isocial iand igovernance ihave ian iimpact ion ithe ieconomic ivalue iof ia icompany.

Drivers ifor iintegrated ireporting

Drivers ifor iadoption iof iintegrated ireporting icomprise iof iboth ipull iand ipush ifactors. iStakeholder igroups isuch ias iinvestors, icustomers ietc. ican idemand igreater ilevel iof idisclosure iand iencourage icompanies ito iadopt iintegrated ireporting. iOn ithe iother ihand, iregulations iand icompliance istandards isuch ias ithose iby istock iexchanges, igovernment iregulatory ibodies ietc. ican iact ias ianother idriver ifor iadoption iof iintegrating ireporting.

Considering ithe icurrent istate iof ifinancial iand isustainability ireporting, iit iis isaid ithat iintegrated ireporting iframework iis ibuilt ion ithe iconcept iof icapital istewardship. iHarvard iBusiness iSchool ipaper, i‘The ilandscape iof iIntegrated iReporting’ idefines icapital istewardship ias i“the ipreservation iand ienlargement iof imultiple iforms iof icapital, iall iof iwhich icontribute ito ilong-term ivalue icreation iby ithe ifirm.” iVarious iforms iof icapital iwould iinclude iintellectual, inatural, ifinancial, iorganizational iand isocial icapital.

1. Intellectual icapital i(patents, isoftware ietc.) iwould iinclude ireporting iissues isuch ias iexpenditures ion isustainability-related iR&D, imonitoring iof isustainability irelated itargets ietc.

2. Natural icapital i(clean iair, iland, iwater, iforests, ibiodiversity ietc.) iwould iinvolve ireporting iissues irelated ito icompany’s iunderstanding iof iscarcity iof ithese inatural iresources, iclimate ichange istrategy, icarbon iemission, iwater iconsumption iand irecycling ietc.

3. Financial icapital i(funds iowned ior iborrowed) iwould iconsist iof ireporting iissues ilike ifinancial irisks iand iliabilities iassociated iwith igovernment iregulations, istock imarkets ietc.

4. Organizational icapital i(systems iand iprocesses ithat ienable ismooth ioperations) iwould icomprise iof ireporting iissues isuch ias iexistence iand iperformance iof ioccupational ihealth iand isafety isystems, icompliance iwith iestablished inorms iand icode iof ioperation ietc.

5. Social icapital i(employees, icommunity, icustomers) iwould iinclude ireporting iissues irelated ito iemployee iwell-being isuch ias iadoption iand ienforcement iof ihuman iand ilabour irights, icommunity iengagement iprograms ietc.

6. Integrated ireporting iwill ihelp ianalyze icompany’s ilevel iof icontrol iand iinfluence ion ivarious iforms iof icapital iand iwhether iits iactivities iserve ito iincrease ior idecrease ithe istock iof ivarious iforms iof icapital.