'Integrated Reporting Highlights Important Non-Financial Information, Such as Social Impact and Environmental Costs. Investors Need This Data, but Is That the Limit to the Benefits of IR, or Will the Companies Themselves Gain an Advantage?

Financial Management (UK), December 2012 | Go to article overview
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'Integrated Reporting Highlights Important Non-Financial Information, Such as Social Impact and Environmental Costs. Investors Need This Data, but Is That the Limit to the Benefits of IR, or Will the Companies Themselves Gain an Advantage?


CIMA versus Jess Sansom

A. CIMA

Integrated reporting (IR) is still in its infancy. Many companies have embarked on the journey and have a belief in the benefits of IR, but to most they remain longterm gains rather than short-term wins. But where should these long-term benefits accrue?

More integrated external reporting should lead to better IR and an improved understanding of the business fundamentals. That, in turn, will drive the adoption of more effective strategies for long-term value creation.

The IR spotlight on long-term sustainable business success should encourage more organisations to identify their main value drivers. Understanding them should help to align internal reporting with the achievement of strategic objectives, while the IR focus on explaining the most material matters in a clear and concise way should further help to improve management information.

The IR framework encourages organisations to consider all of the resources needed to service a business model. Historically, this focus would almost exclusively have been on financial resources--does the organisation have sufficient working capital to operate for the foreseeable future?

More recently, this approach has developed to include building long-term supplier relationships and natural resource management, but IR is driving further developments--extending time horizons and broadening the range of key inputs considered to include wider social and environmental issues.

ER is aimed at the needs of investors, but organisations that adopt more integrated thinking, and decision-making focused on the creation of value in the short, medium and long term, will also share in the benefits and gain competitive advantage.

A. Jess

Innocent Drinks is a nontraditional reporter when it comes to sustainability. We don't produce a glossy CSR report for the investment community or other stakeholders, nor do we label our products according to their environmental credentials for consumers.

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'Integrated Reporting Highlights Important Non-Financial Information, Such as Social Impact and Environmental Costs. Investors Need This Data, but Is That the Limit to the Benefits of IR, or Will the Companies Themselves Gain an Advantage?
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