Integrated Reporting (<IR>) is a process founded on integrated thinking that results in a periodic integrated report by an organisation about value creation over time and related communications regarding aspects of value creation.

The outcome of this process, an integrated report, is a concise communication about how an organisation’s strategy, governance, performance and future prospects, in the context of its external environment, lead to the creation of value in the short, medium and long term.

Objectives of <IR>

• Improve the quality of information available to providers of financial capital to enable a more efficient and productive allocation of capital
• Promote a more cohesive and efficient approach to corporate reporting that draws on different reporting strands and communicates the full range of factors that materially affect the ability of an organisation to create value over time
• Enhance accountability and stewardship for the broad base of capitals (financial, manufactured, intellectual, human, social and relationship, and natural) and promote understanding of their interdependencies
• To foster appreciation, both within the organisation and among its stakeholders, of the extent to which the organisation's ability to create and sustain value is based on financial, social, economic and environmental systems and by the quality of its relationships with its stakeholders

Need for <IR>

Increasingly, businesses are expected to report not just on profit but on their impact on the wider economy, society and the environment. It is imperative to look at sustainability issues and how they relate to success of business. However, there is still a huge gap in understanding how they affect business risks, business planning, and identifying growth opportunities. Companies continue to be valued on their financial health.

Creating value from a range of inputs or ‘capitals’ available to an organisation is fundamental to its success. Understanding and communicating this is a key element of corporate reporting. The companies that have started with ecological or social valuations struggle to make financial connect and integrate into the overall valuation of business.

Due to the increasing complexity of factors that a business must acknowledge, existing forms of corporate reporting are ineffective in supporting organisations to comprehend and portray an accurate nature of their operations.

Integrated Reporting is a new corporate reporting model designed to address this gap by supporting a more resilient business environment through a shift in the way organisations understand their business, and enable better decision making by providers of financial capital.

Integrated Reporting tries to link sustainability strategy to business strategy and has three fundamental key concepts.

1. Value creation for the organisation and others,
2. The capitals,
3. The value creation process.

Integrated thinking deals with value creation over short, medium and long term, and the integrated report tells the story of the journey that an organisation has embarked on to create value, in a clear and concise manner.

The primary purpose of an integrated report is to explain to providers of financial capital and stakeholders such as employees, customers, suppliers, business partners, local communities, legislators, regulators and policymakers, how an organisation creates value over time.