Integrated Reporting

In 2013, the International Integrated Reporting Council (IIRC) issued the Integrated Reporting (IR) Framework to improve corporate reporting. The purpose of IR is to integrate financial and non-financial information to explain how the organisation creates value and improves firm performance over time. Since the introduction of IR, a company weighs the benefits over the costs of changing to IR. Recent trends in IR have heightened the need to examine the actual contents of IR. The objective of this study was to find the relationship between preparing a high-quality IR and corporate reputation. Corporate reputation is one of the main objectives for the preparation of IR, and preparing a high-quality IR can positively impact corporate reputation. Data was collected from a sample of 120 companies from the IIRC websites for three years (360 firm-year observations) to examine the quality of following the 2013 Framework. An index was developed, and the corporate reputation score was collected from the RepTrak websites. The finding showed that companies preparing high-quality IR reports had a significant positive relationship with corporate reputation. Preparing a high-quality IR sends a signal to users of annual reports as a connotation of the company (good product or services, ethical management reporting), which will help build trust towards the company and improve its reputation. This study contributes by providing empirical evidence for a company, which is uncertain about the benefits of IR. The IR disclosure score can be used as a reference by IIRC and policymakers to prepare the IR. Keywords: integrated reporting, disclosure quality, corporate reputation

The aim of this chapter is to provide a discussion of the business case of Enel, which is an International Integrated Reporting Council (IIRC) pilot program company currently evolving its corporate disclosure towards Integrated Reporting (IR). The relevance of pilot company business cases has been recognized by the IIRC, which defined their experience as “invaluable”. On the one hand, Enel did modify its corporate reporting system coherently with the IIRC guiding principles by including considerable non-financial information in its annual report, reducing the length of its sustainability report and improving its materiality determination process and business model analysis. On the other hand, it will be interesting to see how the company applies other aspects of the IIRC framework, such as the six-capital structure and the way in which reporting boundaries are defined. The analysis done in this chapter may be of interest to companies, standard setters and scholars wishing to enhance their knowledge on how companies are currently evolving their corporate disclosure systems towards IR.

This study reviews the diffusion of integrated reporting (IR) research. The systematic literature review method is used to review the effects of IR at the organisational level, determinants of IR adoption and integrated report quality (IRQ), assurance on IR, economic consequences of IR/IRQ, and research design issues to set agendas for future research. The review covers 119 peer‐reviewed IR articles published in 36 journals between 2012 and 2021. It finds that the IR literature is dominated by organisational‐level studies, but there is limited research on the economic consequences of IR/IRQ, and the findings are inconclusive to date. Further, the factors that determine IR adoption/IRQ are not conclusive, and there is scarce research on IR assurance. This review contributes to the emerging IR literature and provides valuable insights to the International Integrated Reporting Council (IIRC) in establishing the IR framework as a global reporting norm in practice.

PurposeThis paper aims to discuss the most critical aspects relative to the “usability” of the International Integrated Reporting Council (IIRC) Framework faced by small and medium-sized enterprises (SMEs) in releasing the integrated report and adapting the Integrated Reporting (IR) principles (i.e. materiality, integrated thinking and connectivity) to their needs and features. Only recently the relevance of IR for SMEs has been internationally acknowledged.Design/methodology/approachThe study is based on both a deductive and inductive approach. The first one is founded on a literature and technical review aimed at tracing the theoretical background and the framework on integrating reporting in SMEs. The second one is empirically constructed and follows the action research approach because it involves the analysis of a single case-study relative to a company – Costa Edutainment Spa that released its pioneering integrated report in 2014 – belonging to the Italian Network on Business Reporting, a working group which has been involved in the pivotal drafting process of a Guidance for IR in SMEs.FindingsResults emphasise the main criticalities faced by an SME in the IR process, namely, the need for the following: clearly defining the relationship between sustainability and integrated reporting; adapting the main IR concepts (such us materiality, integrated thinking and connectivity) and fully understanding the benefits deriving from the implementation of IR. Moreover, results shed light on the usefulness of a simplified and operative guidance for releasing the integrated report within SMEs the effectiveness deriving from the direct involvement in the NIBR working group and the provision of practical examples and suggestions.Research limitations/implicationsThe main limitations are due to the fact that the empirical analysis is related to a single case study, and it is explorative in nature. Consequently, results are not generalisable. However, the work contributes to nourish the debate on the benefits and critical issues relative to the diffusion of IR among SMEs in a research field which has not been adequately investigated and to develop reflections on the benefits of the diffusion of the IR among SMEs, pointing out the opportunity to follow an evolutionary path which drives the evolution of the entrepreneurial and organisational culture towards monitoring, assessing and reporting the company’s value process creation.Practical implicationsThe work contributes to triggering the debate on the diffusion of IR among SMEs which represents a research field that remains still under investigated. It points out a fundamental gap on how to implement IR in SMEs and operationalise the IIRC concepts and principles. It develops reflections on the critical issues and benefits of the diffusion of the IR among SMEs. Drawing from a pioneering experience, the work contributes to supporting entrepreneurs by emphasising the possible benefits deriving from the implementation of the IR process. It suggests an evolutionary path through different steps (starting from the business model definition) which are necessary to drive the entrepreneurial and organisational culture towards monitoring, assessing and reporting the SMEs’ value process creation.Originality/valueThe work contributes to devoting the attention of both scholars and practitioners to an underestimated research field – the “feasibility of IR in the SMEs context – which has not been yet adequately investigated. Moreover, being empirically based, it helps in supporting the diffusion of the IR framework among SMEs, practitioners and consultants by providing insights aimed to improve the IR Guidance for SMEs and sensitise entrepreneurs by emphasising that a possible step-by-step “IR journey” is possible.

Purpose – Intellectual capital (IC) is fundamental to understanding how firms create value; however, current IC disclosure (ICD) has been described as inadequate due to the lack of an established IC framework and companies’ actual commitment to report IC information. The International Integrated Reporting Council aims to foster ICD by means of integrated reporting (IR); such a report should display how IC and other forms of capital (e.g. financial) contribute to value creation over time. Drawing on impression management (IM) studies, the purpose of this paper is to assess the quality of ICD offered in IR. Design/methodology/approach – A manual content analysis of all the reports available in the International Integrated Reporting Council web site is run considering both the content of ICD and specific linguistic attributes (evidence, time orientation and tone). In addition, the study tests the relationship between the positive ICD tone and specific characteristics that may incentive managers to manipulate their disclosure to determine whether firms use ICD to manage public perceptions of corporate behaviour. Findings – The results of the content analysis show that majority of ICD is focused on relational capital, with limited quantitative and forward-looking information. Additionally, compared to non-ICD, ICD is significantly more optimistic. Furthermore, the positive tone of ICD is significantly associated with declining performance, bigger size and higher level of intangibles supporting the use of ICD as an IM strategy. Originality/value – The research contributes to the literature offering evidence of the quality of the ICD offered in the IR and demonstrating that ICD offered in the IR is used by managers opportunistically to advance their image.

Integrated reporting (IR) is a new communication tool that is gaining increasing attention among scholars, practitioners, and standard setters in both the private and public sectors. Therefore, it is important to discuss the suitability of the framework proposed by the International Integrated Reporting Council (IIRC). This paper offers some reflections based on case studies of public entities that differ in terms of legal structures, locations, and business models to demonstrate—despite legal and cultural requirements—that some common features exist. The primary aim is to discuss whether IR represents a new challenge for public sector organisations, specifically regarding their stakeholder engagement and their pursuit of greater accountability. In doing so, the selected case studies are examined through a theoretical framework based on the growing IR literature and specific objectives recognised by the <IR> Framework. The results that emerge from this study can be beneficial for both scholars and practitioners, enabling the identification of new paths towards improving reporting in public entities to achieve high stakeholder engagement and overcome the possible limitations of the IR model that has been proposed thus far. Key words: Integrated reporting, integrated reporting framework, stakeholder engagement, public sector entities, accountability, state-owned enterprises.

This chapter provides a comprehensive discussion of materiality and assurance in the context of Integrated Reporting (IR). On the one hand, materiality has gained much importance following the introduction of IR, since one of the main objectives of this innovative form of reporting is to reach conciseness. On the other hand, assurance may play a crucial role in conferring reliability to the materiality determination process proposed by the International Integrated Reporting Council (IIRC) and to the whole process of IR. This chapter provides a discussion of the state of the art of materiality and assurance in the context of non-financial information and, more specifically, IR. It also points out some of the main challenges the IIRC materiality determination process will have to face in order for companies to implement it correctly. Finally, drawing on the peculiarities of IR, the chapter points out some issues that will have to be discussed regarding assurance and its effectiveness. Some insights for future development of the debate are also proposed.

Integrated reporting (IR), which aims to overcome the limitations of both tradi-tional financial and stand-alone non-financial reports, has gained momentum as a single comprehensive tool merging financial and non-financial information. Initially conceived for private sector entities, IR is also establishing itself in the public sector context as a vehicle for transparency and accountability. This research offers an empirical investigation of IR practices in the State-Owned Enterprises (SOEs) context. More specifically, the paper investigates the levels of disclosure provided through IR by a sample of 34 European SOEs and explores the effects of potential explanatory factors. The results indicate a fair level of IR disclosure and a trend of reporting information already requested under international accounting standards. The findings also highlight that industry (basic materials and financials) and size positively influence the level of IR disclosure in a particularly strong way, while governance features (board size and board gender diversity) and the provision of external assurance do not exert any impact.

PurposeThe purpose of this paper is to evaluate the implementation of the integrated reporting (IR) framework in a group of Colombian enterprises.Design/methodology/approachThis is a multiple-case study in six enterprises that use the IR framework. The selected enterprises, all of which were located in either Bogota or Medellin, were Argos, EEB, EPM, ISA, Nutresa and Ocensa. The authors conducted individual interviews of reporters and performed a documentary analysis.FindingsThe few Colombian firms that use the IR framework all have ambitious expansion goals in the medium term. The main reason for the adoption of the IR framework in these firms is that it facilitates access to resources from new foreign investors.Research limitations/implicationsSince the framework was published recently, only a few Colombian firms follow it, and several of them do not apply all of its components. In the future, there will be more reports and a higher level of framework application.Practical implicationsIn the firms studied, the IR framework is an important tool to support the search strategies of new sources of financial capital.Social implicationsIf the use of the International Integrated Reporting Council (IIRC) framework were to diminish the application of the GRI, firms would be less likely to evaluate the impact of their activities on numerous stakeholders (other than shareholders).Originality/valueThis is the first Colombian study of IR to include both documentary analysis and personal interviews.

PurposeThe purpose of this paper is to link the fields of research on strategic decision (SD) making and integrated reporting (IR) and advances knowledge of the concept of integrated thinking by describing how financial information and non-financial environmental, social and governance (ESG) information are used in different phases of the strategic decision-making process (SDMP).Design/methodology/approachIn total, 15 senior executives from twelve different industries were asked about the importance of different types of information within SDMPs. The data were analyzed by means of content analysis.FindingsThe authors derive a four-phase model and explicate the utilization of financial information and non-financial ESG information within each phase. The findings show that both types of information affect SDMPs, but the importance of each type differs among the phases.Practical implicationsThis study offers practitioners a yardstick against which to compare how they use different types of information throughout the SDMP.Originality/valueThis paper provides a conceptual model of integrated thinking in SD making by connecting two separate fields of research. This connection will permit deeper study of the field of information and its implications for SD making. The present investigation shows that IR can promote integrated thinking in companies, as the broader range of information at hand allows companies to form a holistic picture of internal management questions and incorporate information that has not been previously prepared or associated with existing information.

This study aims to understand the meaning created by Itaú Unibanco’s internal actors in the Integrated Reporting (IR) processes. An interpretative approach based on Karl Weick’s sensemaking perspective is adopted. A case study methodology was adopted for undertaking the empirical work. The results show that IR identity in the institution is related to three issues: synergy processes between sectors; integration for the production of other reports; and development of an integrated thinking chain for the entire business. We present perceptions on benefits and difficulties in the process of preparing the integrated report. Although the practices and processes established did not change the characteristics of the bank, the perspective of the social actors seems to have changed from a sectoral view to a multidimensional view. In addition, the conclusions suggest that it is not difficult to understand that separating ‘thinking’ from ‘doing’, attributing to the individual the role of mere operationalization is tantamount to ignore the meaning attributed to the organization’s journey towards the creation of a process, namely the IR one. The study’s contribution lies in pointing out that the IR process is directly related to the integrated thinking process. This could be the most significant differential of IR as a form of corporate communication as it amounts to a new reporting framework that proposes integrating social, environmental, and governance disclosures (non-financial information) with financial disclosures in a single report.

Corporate reporting in recent times faces a series of challenges as companies are expected to reassess their strategy for information disclosure. Within a global economic environment that is continuously evolving, there is a strong need for an internationally coordinated action as the financial and non-financial information disclosed by a company influences its strategic decisions. The topic of the current paper outlines the issue of integrated reporting as the interconnection between financial, social and environmental information. We intend to investigate the influence of financial performance on social and environmental disclosure and measure the integration level of corporations that claim to publish integrated reports. The main stages of the research involve the determination of financial ratios and disclosure index levels for environmental and social information. For the purpose of establishing the disclosure index we consider the referential of GRI G3 international standards, while compliance with the standard would be the prerequisite for integrated reports, by contributing to an increase in non-financial disclosure, in addition to the mandatory financial one. Our sample comprises 16 Asian-Pacific companies that participate in the pilot program initiated by the International Integrated Reporting Committee according to which organizations are encouraged to integrate their non-financial information - social and environmental disclosure - within annual reports, along with financial data. The research methodology assumes computation of a disclosure index for social and environmental information, and determination of financial ratios for establishing the influence of financial performance on socio-environmental disclosure and the actual level of integration in specific integrated reports. Our findings suggest the financial ratios can be directly, indirectly, and non- correlated with non-financial information, while the integration process is attained at high, medium, or low levels, according to the aggregation of financial, social, and environmental information.

PurposeThe International Integrated Reporting Council claims that integrated reporting (IR) can enhance corporate accountability, yet critical and interpretative studies have contested this outcome. Insufficient empirical research details how preparers experience accountability while constructing IR; to fill this gap, the purpose of this paper is to analyse how the preparers’ mode of cognition influences the patterns of accountability associated with IR.Design/methodology/approachA functionalist approach to narratives helps elucidate the role that the IR preparers’ narrative mode of cognition plays on accountability towards stakeholders. The empirical analysis particularly benefits from in-depth interviews with the IR preparers of a global insurer that has used IR since 2013.FindingsThe preparers’ narrative mode of cognition facilitates dialogue with IR users. It addresses accountability tensions by revealing the company’s value creation process. Preparers’ efforts to establish a meaningful dialogue with a growing variety of stakeholders through broader and plainer messages reveals the potential of IR as a narrative source of a socializing form of accountability. However, financial stakeholders remain the primary addressees of the reports.Research limitations/implicationsThis paper focusses on preparers’ views; further research should integrate users’ accountability expectations.Originality/valueThis paper offers new insights for dealing with corporate reporting and accountability in a novel IR setting.

The global financial crisis and its negative effects on the economy increased the demand for transparency in corporate reporting. Integrated Reporting (IR) is a method that combines financial and non-financial information into a single, clear report. It explains how an organization creates value over time. This method goes beyond traditional financial reporting by including environmental, social, governance, and other factors like human, intellectual, and natural resources that affect sustainable value creation. The purpose of this paper is to present an overview of the origins, development, and recent trends in integrated reporting. It also looks at the spread of its innovative theoretical foundations, including institutional theory, legitimacy theory, stakeholder theory, and shareholder theory. Over the past ten years, researchers have studied the growth of integrated reporting through published works, sharing their views and insights. These contributions can help future researchers develop a clear understanding of integrated reporting. This study summarizes various researchers' viewpoints and contributions to the growth of integrated reporting in an organized way.

Annual reports of most companies quoted on the Nigerian Stock Exchange (NSE) have been found to be deficient, because they lack vital financial and non-financial information that would enable stakeholders make informed decisions. The aim of this study was to investigate the environmental, social and governance (ESG) practices of Nigerian quoted companies and discuss the need for integrated reporting (IR). A checklist was developed to capture the ESG disclosures from the annual reports of 40 companies listed on the Nigerian Stock Exchange over a two-year period from 2013 to 2014. The ESG determinants were proxied by company size, profitability and auditor type. Company size was measured by total assets, profitability was measured by return on equity (ROE), and auditor type was measured by a dummy variable, ‘1‘ for Big 4 and ’0‘ for otherwise. The data obtained were analysed using descriptive statistics, correlation and regression. The findings revealed that, the level of ESG disclosure was 53%, this was made up environmental scores (7%), social scores (66%) and governance scores (81%). This showed that governance information was the most disclosed while environmental information was the least disclosed. Findings also revealed that ESG disclosure practice was influenced by auditor type; but not by company size and profitability. The current trend of integrated reporting worldwide calls for Nigerian companies to be proactive. There is a need to improve on ESG practices by integrating the financial and ESG elements to generate a single integrated report, which allows both the company and its stakeholders to make better-informed decisions.