Supporting the global profession
The last year saw a marked improvement in the quality of integrated reports, but there's scope for businesses to reap more benefits.
For two years, ACCA has worked with the IIRC to review samples of the corporate reports produced by participants in the <IR> Business Network, a forum for organisations committed to adopting the <IR> Framework.
Insights into integrated reporting: challenges and best practice responses found that while reports did well at explaining each organisation's strategy and the environment in which it operates, there were areas for improvement such as consistency and comparability, conciseness and articulating value creation.
Improvements one year on
Striking progress has been made, particularly in relation to the quality of the data. Reports were found to be more consistent: this was one of the lowest-rated areas in last year's review project, but became one of the strongest this year.
Reports were also judged to be more balanced, although more could be done to eliminate bias.
There are also signs of a focus on conciseness. The length of reports has reduced: just under half (49%) of reports reviewed contain 100 pages or fewer (compared with 29% last year) excluding the financial statements.
Despite improvements organisations still face challenges in their integrated reporting:
- linking strategy and performance through to the way the business uses and affects key resources and value creation over the short, medium and long term key resources
- the description of the board's role in enabling value creation;
- discussions about the organisation's outlook
- the application of materiality.
To solve these challenges, report preparers need to think beyond reporting, about organisational management.
Integrated thinking is crucial to reaping the full benefits of integrated reporting.
The most widely-reported benefits are internal: 95% <IR> Business Network participants surveyed say they have a better understanding of how their organisation creates value as a result of embarking on their integrated reporting journey; 70% have seen more connections between different departments, leading to a broadening of perspectives.
There are also strong external benefits, especially in terms of improved engagement with investors and other stakeholders. As the integrated report begins to reflect the joined-up forward thinking within the organisation, it becomes a means of building trust in the organisation’s management and prospects.