It has been said by some that integrated reporting is becoming ‘the norm’. This is far from the case but it’s clear that it is an influence which will only grow over the next decade or so. Adrian Parker discusses the developments which are shaping legislation.

Currently the International Integrated Reporting Committee (IIRC) is running a two year pilot programme with a view to defining a tried and tested set of standards that can eventually be introduced into legislation around the world.

There are just four UK plc's taking part; ARM holdings, HSBC, Marks & Spencer and one of our clients; J Sainsbury. Most of the genuine examples of integrated reporting in action right now are non-UK companies, including the likes of Philips, Novo Nordisk, American Electric Power, Pfizer and United Technologies Corporation. 

The IIRC says that an integrated report should:

• Convey a company's strategic focus
• Provide information that 'connects the dots' across all types of risk they face from financial to environmental and social
• Describe the company's future 'orientation' or business path
• Be responsive and inclusive to stakeholders and their concerns
• Contain concise, reliable and material information.

We believe there is an opportunity for UK companies to be in the vanguard of integrated reporters by following some simple principles:

• Identifying which socio-economic trends will affect the business over the next ten years: demographics, emerging economies, talent shortages, urbanisation, climate change, etc...
• Identifying the most material sustainability / intangible asset issues and start collecting appropriate metrics. Considering this from both a risk and opportunity perspective.
• Explaining how sustainability interacts with, and is integral to, the company's commercial strategy. (This doesn't mean simply having a bullet point that states it does interact and it is integral!)

We believe once these building blocks are in place businesses will be able to produce a single report that genuinely brings together financial, environmental, social and governance information in a single, comprehensive and authoritative reporting format.

It is also worth noting, integrated reporting is not simply about combining your Corporate Responsibility (CR) Report and Annual Report together in one wrapper. Before a company can deliver an integrated report, CR must be truly integrated into the fabric of the business. The same processes and rigour that are currently applied to collecting data for financial performance must be applied to collecting data on material CR impacts too.

Finally, company boards will need to change their mind set, make the decision for CR performance to sit side by side with company financial performance and accept that it will be judged equally when analysts and investors are making investment decisions.

Only then can companies say they are reporting in a truly integrated way.

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