Until recently, it was relatively difficult to imagine how non-financial performance could be reported as thoroughly as the financial numbers that are meant to illuminate part of a company's overall health. As sustainability issues continue to influence activities in organizations of all sizes, it becomes even more important to accurately communicate the value stemming from this work. This is where integrated reporting enters the picture.
According to the International Integrated Reporting Commission, integrated reporting is a method to demonstrate the links between an organization's strategy, governance and financial performance, and the social, environmental and economic context in which it operates. An integrated report - sometimes referred to as a "One Report" - is designed to show the relationship between financial and non-financial performance, and how strong performance in environmental and social areas contributes to good financial performance. It may also include facts regarding potential trade-offs that might occur across financial and non-financial performance. For instance, in addition to reporting recent operating expenses and financial forecasts and outlooks, a One Report would also include information regarding a company's supplier diversity initiatives, environmental impact of operations and more.
Integrated reporting is currently a voluntary practice in most countries, but this is poised to change. South Africa now requires all companies listed on the Johannesburg Stock Exchange to provide integrated reports, or explain why they are not doing so. France passed a similar law in 2010 for companies with 500 or more employees to include a section in their annual reports regarding environmental and social consequences of their actions.
Read Full Article
Enjoy curated articles directly to your inbox.