Intro to the Integrated Reporting Movement for U.S. Companies

IIRC Multi-Capital Value Creation Model

General Electric recently released a new report for its shareholders called an “Integrated Summary Report.” It provides a high-level strategic summary of the contents of their annual, sustainability and proxy reports. GE is the latest in a handful of U.S. companies and hundreds around the world that have begun issuing integrated reports.

This post will give you context on the integrated reporting movement and some thoughts on if/how you might want to start considering this approach to measuring, managing and reporting about your business.

The Integrated Reporting Movement

The movement traces its roots to 1994 when Nelson Mandela asked Mervyn King to help build the foundations for corporate governance in post-apartheid South Africa. The King Commission continues its work and recently issued a Draft King IV Report. This work drew notice around the world, especially for the connections it made between traditional financial, intangible, social and natural assets. (For a detailed history check out Bob Massie’s article in Investor Relations, Welcome to the ESG Evolution.

Through the efforts of many including the UN, the World Bank, the big four accounting firms and the Prince of Wales among many others, a number of meetings were held that lead to the initial formation of the International Integrated Reporting Council (IIRC) in 2010 as a global coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs. Their mission is to “establish integrated reporting and thinking within mainstream business practice as the norm in the public and private sectors.”

The Framework

The IIRC published The International <IR> Framework in late 2013. It includes seven Guiding Principles: Strategic focus and future orientation, Connectivity of information, Stakeholder relationships, Materiality, Conciseness, Reliability and completeness, Consistency and comparability. It also suggests eight key Content Elements: Organizational overview and external environment, Governance, Business model, Risks and opportunities, Strategy and resource allocation, Performance, Outlook, Basis of presentation.

These concepts represent strong ideals for corporate reporting. But they don’t really tell you what’s unique about integrated reporting.  What’s unique about the model is the concept of sustainable value creation using multiple capitals which is suggested in their capitals graphic.

Individual companies implement these ideas in diverse ways. The IIRC has done a good job of supplementing the guidelines with a website that includes examples of integrated reports published by companies from around the world. This site is a great place to start to stimulate your thinking about what kind of information and presentations would work for your company’s case.

Integrated Reporting in the U.S.

The integrated reporting movement is in its infancy in the U.S. But it already has some impressive advocates. Southwest has been issuing a “One Report” for six years. As mentioned above, GE issued its first integrated report this year. In a recent Forbes article, Harvard Professor Bob Eccles called the GE report A Powerful Statement and advised:

It is time for the rest of America, and the rest of the world, to follow GE’s example. The company has a history of being a leader and it is leading again. It’s time for others to follow.

What’s Right for Your Company?

Integrated Reporting will take a unique course in the U.S given the already strong reporting culture and regulations here. But it’s helpful (and smart) to learn from U.S. and international practice.Does it make sense for your company to follow the example of GE and other leaders in this movement? My advice is to:

  • Learn from the IIRC guidelines
  • Check out what other companies are doing
  • Chart your own course

For thoughts on how to chart your own course, check out our new paper The Three Big Ideas behind Integrated Thinking and Reporting