This article first appeared on Towards Sustainable Business and is republished with permission. Carol Adams is a Director of Integrated Horizons.

It is no surprise that research just released by the International Integrated Reporting Council (IIRC)and Black Sun finds that the majority (92%) of IIRC pilot programme participants responding to a survey found that moving towards integrated reporting increased their understanding of how they create value.  They understand better how relationships, intellectual capital, the natural environment and other forms of capital contribute to value creation.  Suresh Gooneratne from DIMA, Asia Pacific is quoted in the report as saying: “Previously when we did sustainability reporting we primarily talked about stakeholders from a ‘licence to operate’ perspective.  That has changed.  Now stakeholders represent something much more integral to our business – a capital stock.”

It makes intuitive sense that the journey towards integrated reporting would result in internal benefits as a result of integrated thinking and the research confirms it with 96% of respondents saying there was internal change, particularly the breaking down of silos, greater collaboration including better understanding among finance teams of the financial impacts of non financial performance.  Other benefits reported from integrated thinking are improvements in decision making (79%) and better collaborative thinking by the board about goals and targets (78%).

Benefits not quite so widely experienced include those making moderate to significant changes in strategy and resource allocation (67%), those with a better understanding of risks and opportunities (68%) and those experiencing moderate to significant changes in their thinking about their business model (64%).  I would expect more companies to see these benefits as the International <IR> Framework released at the end of 2013 is more fully adhered to and as companies become more experienced integrated reporters.   Those already on on that journey are also benefiting from improved relationships with investors and better understanding by investors about their strategy.

Of particular note is that 54% of respondents came from sustainability/CR teams, 25% from finance and 21% from other areas of the business. Given that the reports states that 62% of respondents were report owners, 18% contributors and 5% editors, this appears to indicate that integrated reporting is predominantly led by sustainability/CR teams.  This suggests that professional accounting bodies, already behind <IR>, have work to do in engaging their members on it.

In my book Understanding integrated reporting: the concise guide to integrated thinking and the future of corporate reporting I argue that <IR> brings benefits through:

  • emphasising the need for long-term planning;
  • encouraging thinking about the business model in much broader terms than flows of money;
  • focusing on creating value across all six capitals;
  • developing a culture of collaboration, breaking down silos;
  • getting senior execs and the board involved in considering these issues.

The IIRC/Black Sun research shows that companies who are working towards integrated reporting are already realising these benefits – and more – with potential for deeper benefits as they progress.  The CEO and Chair in statements in the reports of companies such as Unilever and the RBS Group indicate that the influence of integrated reporting and integrated thinking , whether labelled that or not, will also bring benefits to society and the environment as companies see their success as dependent on it relationships and communities.  But that will require all of us as consumers, employees, etc to continue to hold companies to account on these matters.
For information on integrated reporting contact Integrated Horizons