The Truth About Integrated Reporting

Many people think integrated reporting means bolting together your financial and sustainability reports.  It’s about so much more than that.

Alice Allegrini is sales director at Tagetik UK

Alice Allegrini

The business landscape has changed, but the information needed to evaluate performance hasn’t changed with it. In 2015, simply looking at past financial results and future outlook won’t tell an investor or stakeholder enough about a company’s ability to respond to today’s challenges, much less explain how it actually creates value.

In the information age, up to 80 per cent of a company’s value can be held in intangible assets, so demonstrating value means looking beyond pure financials. Investors and other stakeholders are increasingly seeking information about pre­financial performance, but whilst reporting has expanded to meet investor demand, it hasn’t necessarily become clearer or more streamlined.

By combining all reporting in one place, companies can tell a more logical, meaningful and connected story. That’s where integrated reporting <IR> comes in. It allows an organisation to tell investors, customers and others how it creates value for them and how it impacts society overall.

Building strong relationships with stakeholders, building a loyal customer base, developing intellectual capital and managing environmental concerns, are all priorities that can be set to one side when company executives are focused on short-term challenges.  Integrated reporting keeps everyone focused on the long term: the corporate strategy, the context in which it will delivered; and how the company has created — and will create — value.

That increased transparency can help senior executives mitigate business risks like natural disasters, exposure to economic downturn, ability to keep and attract talent, or the harm resulting from reputational damage. It can also help build internal and external accountability.

Getting started

If an integrated report is going to facilitate this new way of thinking, it has to consider the connections between financial performance and the management of both natural and human resources. It needs to demonstrate how actions in one area impact another. Easy enough to say, but how do you get there practically?

Some companies take their first steps towards integrated reporting by having finance, HR and sustainability teams work together in a task force setting.  This sets the stage for success later as finance comes to better understand the company’s human and environmental risks, and their impact on reputation and the bottom line; whilst sustainability teams improve their ability to make a solid business case for their initiatives.

But the integrated thinking that goes behind integrated reporting needs to involve all senior executives and arguably needs a board-level sponsor. It also needs the right processes and technologies to bring together so many different streams of information.

Corporate performance management (CPM) technology can overcome the challenges of <IR> implementation and greatly simplify <IR> projects.  You can begin the transition to integrated reporting quickly, and start showing results that demonstrate the business value.

The right platform shouldn’t require major technology investments or significant process redesign as you should be able to easily map it into your existing IT architecture, and should enable finance – still the natural internal owner of integrated reporting in my view — to manage the process from start to finish. That means:

• Incorporating pre-financial data and metrics that contribute to business value
• Building in narrative and calculations necessary to communicate future value
• Assigning accountability and establishing collaboration across many departments
• Producing trusted and vetted; approved and auditable; financial reports
• Defining a complete workflow and status for all report generation
• Producing financial, management, compliance, disclosure, and <IR> reports from one place

With CPM as the enabling technology, some global corporates are transforming their reporting systems from a compliance approach to more integrated thinking that helps the entire business better understand and communicate value.

Integrated reporting may never replace dedicated financial and sustainability reports and there is still the challenge of how to consume all the information within an integrated report, but starting to think about the connections between your financials, your people, your relationships with key stakeholders and how the company approaches sustainability, is a step in the right direction.

Alice Allegrini

Sales Director

https://uk.linkedin.com/in/aliceallegrini

With more than 17yrs experience in Information Technology built through thought leadership. My professional experiences started in Management Consulting and SAP implementation projects. Strong customer relationships and emotional intelligence brought my carrier to sales in SAP Italy, where I was responsible for Large Enterprise customers.

I then decided to move to Tagetik, one of the fastest growing providers in the CPM space, a company built on strong relationships and centred on client needs. I currently look after the UK branch of Tagetik where our reputation is driven by the satisfaction and success of our customers.