Publications
Publications
- Journal of Applied Corporate Finance
Models of Best Practice in Integrated Reporting 2015
By: Robert G. Eccles, Michael P. Krzus and Sydney Ribot
Abstract
In March of 2015, the authors reviewed the integrated reports of 25 multinational companies that participated in the International Integrated Reporting Council's (IIRC's) Pilot Programme Business Network. Because it was not until December 2013 that companies had any form of guidance for how to prepare an integrated report (from the International Integrated Reporting Framework), 2014 was the first reporting year in which this framework could be applied. The authors undertook this review using early reports available in the first quarter of 2015 by companies from a variety of countries and sectors. This article provides a brief summary of the approaches and quality of this first batch of reports, as well as a sampling of best practices.
The authors assumed that there are three main distinguishing features of a truly integrated report—that is, a report that makes ESG considerations an integral part of corporate strategy and performance: (1) an explanation of a company's value creation strategy and how it uses and affects the IIRC's concept of "six capitals" (Financial, Manufactured, Intellectual, Human, Social and relationship, and Natural); (2) a clear and detailed explanation of the relationships between financial and nonfinancial performance; and (3) identification and effective presentation of the material ESG risks and opportunities facing the company. If clarifying the link between corporate strategy and ESG risks is a hallmark of the best integrated reports, the holy grail is "Connectivity of information"—the extent to which a report succeeds in quantifying the relationship between a company's ESG performance, its profitability, and its value proposition.
The authors assumed that there are three main distinguishing features of a truly integrated report—that is, a report that makes ESG considerations an integral part of corporate strategy and performance: (1) an explanation of a company's value creation strategy and how it uses and affects the IIRC's concept of "six capitals" (Financial, Manufactured, Intellectual, Human, Social and relationship, and Natural); (2) a clear and detailed explanation of the relationships between financial and nonfinancial performance; and (3) identification and effective presentation of the material ESG risks and opportunities facing the company. If clarifying the link between corporate strategy and ESG risks is a hallmark of the best integrated reports, the holy grail is "Connectivity of information"—the extent to which a report succeeds in quantifying the relationship between a company's ESG performance, its profitability, and its value proposition.
Keywords
Citation
Eccles, Robert G., Michael P. Krzus, and Sydney Ribot. "Models of Best Practice in Integrated Reporting 2015." Journal of Applied Corporate Finance 27, no. 2 (Spring 2015): 103–115.