Inevitable integration: one step closer to an integrated reporting framework.

• Position: IIRCupdates

Integrated reporting, defined by the International Integrated Reporting Council as "a new approach to corporate reporting that demonstrates the linkages between an organization's strategy, governance and financial performance and the social, environmental and economic context within which it operates," has taken a strong foothold, as evidenced by the companies and investors engaged in the IIRC pilot program.

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Integrated reporting has been referred to as the next stage in the evolution of corporate reporting and is not intended to make companies disclose more about their organizations. Rather, it's intended to help companies disclose meaningful, relevant and material information to investors, analysts, regulators, local communities, non-governmental organizations, staff; supply-chain partners and more.

Information disclosed in an integrated report gets to the heart of a company's strategies to be a sustainable, viable organization that seeks to build future value.

Related, but Different

This is not about stapling an annual report to a corporate social responsibility report or a sustainability report and calling them "integrated." Yes, each of these reports serves important purposes, and companies already recognize some value in producing and sharing these reports.

However, sustainability reports and their closely related brethren are not the same animal as an integrated report. Don't simply take my word for it; look to the IIRC and the work it is undertaking to define integrated reporting and educate the world about its benefits, value and differences from traditional corporate reporting.

The IIRC goes on to say, 'An integrated report should be a single report which is the organization's primary report--in most jurisdictions the Annual Report or equivalent. Central to integrated reporting is the challenge facing organizations to create and sustain value in the short, medium and longer term. Each element of an integrated report should provide insights into an organization's current and future performance."

Casual Sloppiness?

Integrated reporting takes a broader view one that is not yet well understood by much of the marketplace. All one need do is poll a small group of business executives, investors, legislators and regulators about integrated reporting and you're likely to receive responses that talk about sustainability reporting, environmental reporting, Global Reporting Initiative or Carbon Disclosure Project reports, corporate social responsibility reports--and even environmental, social and governance reports. In some ways, we've become casual--dare I say sloppy in how we lump these concepts into one group, using their monikers interchangeably ... yet incorrectly.

One Step at a Time ...

The IIRC's efforts to define integrated reporting and educate companies, investors and other stakeholders about what it is--and isn't--will certainly be a challenge. Sure, there will be objections, roadblocks and obstacles to overcome along the way by those who see these efforts as simply increased burdens on company executives to disclose even more information than they previously had (SOX 10.1 and XBRL come to mind when thinking about efforts designed to enhance corporate disclosure that were met with significant resistance in the boardroom or C-suite).

However, I anticipate that, out of the results of the IIRC pilot program, there will be evidence that integrated reporting is achievable, effective and valuable to companies and their stakeholders.

... But Quick Steps

I applauded the formation of the IIRC at a time when we...