“The business case for integrated reporting is growing

stronger as CEOs acknowledge its benefits.”

Mark O’Sullivan, UK Corporate Reporting Leader

Learning from early adopters

of integrated reporting
Five themes to drive improvement

Setting the scene Our findings

Integrated reporting continues to gain These organisations are making
traction and is becoming embedded as encouraging progress in including the
corporate reporting practice in more basic framework content elements in their
than 25 capital markets across the reporting and starting to tell their value
globe. The business case for integrated creation story by connecting their business
reporting (<IR>) is growing stronger model to their strategy, KPIs, risks and
as CEOs acknowledge that integrated opportunities. For example, 64%
reporting facilitates cooperation between integrated discussions of their business
departments, leads to more effective model with other aspects of their reporting.
internal processes and allows them to
better articulate their strategy and business Even though progress has been made and
model. In parallel, we hear a simple reporting continues to evolve, opportunities
message from investors on what they want for real improvement remain. We explore
from reporting: be clear, be specific and link some of these opportunities further below,
related information. with five key themes emerging.

• Conciseness paradox
Our research
• Telling an authentic story
We completed a review of the 2013/14 • Broadening horizon
reports of organisations in the • Rethinking performance
International Integrated Reporting
• Creating connections
Council’s (IIRC) Pilot Programme to
explore current and emerging practices in
Some of these opportunities may represent
integrated reporting globally. Our criteria
quick wins – enhancing what is already
were based on the content elements of the
reported, or reporting readily available
IIRC’s International <IR> Framework. We
information. But our engagement with
also focused on quality and integration
organisations globally suggests others
to assess if the reported information
may require more fundamental changes
provided a holistic picture. In particular,
to internal structures, thinking, processes
we looked for organisations that create
and information, getting to the heart of the
clear connections between various
underlying concepts and guiding principles
elements in their report and tell an
of integrated reporting.
authentic story of how their business
creates value.

www.pwc.com
 Five themes to drive improvement
Conciseness paradox Broadening horizons
Most organisations find it challenging to strike a Integrated reporting challenges organisations to
balance between reporting concisely while retaining think about communicating not only an account
key elements and messages of integrated reporting. of what happened in the past, but a story about its
ability to create value in the future.
This year we saw many organisations make
significant progress in streamlining their reporting Our research shows that organisations’ reporting
by removing immaterial information or moving tended to focus on results for the year, priorities for
sections of detail to the organisation’s website. the immediate year ahead and their own operations
Yet we felt that some reports had gone too far and (employees, operations, R&D and the like).
resembled marketing brochures rather than an
in-depth articulation of how the business really Rarely are the International <IR> Framework’s
plans to create value. Others, again, still included so principles of future orientation, stakeholder
much detail that the key messages were lost. relationships and materiality applied to describe
expected market trends, opportunities and risks,
Integrated reporting will not always mean less insights into medium- and long-term strategic
information; rather, it requires a focus on the right priorities and discussion around key dependencies
information for the right audience, providing on resources and relationships (capitals) and how
insights into the value creation story and the they’re managed.
sustainability of a organisation’s business model.
What is encouraging, though, is that we did see
The key to successfully achieving conciseness is a small, but growing, number of organisations
to focus integrated reporting on the outcome of making progress – for example, reporting on
a organisation-specific materiality determination the trade-off between their resources and
process. relationships, or exploring and reporting on the
impact their activities have on the key resources and
relationships (e.g. environment or society) outside
Telling an authentic story their own operations.

A significant opportunity exists for organisations to It is this broader consideration of an organisation’s

tell their authentic story, which is crucial in building value chain and looking beyond existing reporting
trust with stakeholders. Yet too often a compliance boundaries that represents a real shift in mindset
mindset and “spin” on messages prevent true towards integrated reporting and arguably the
authenticity in reporting. biggest opportunity/challenge.

It’s understandable that, in the year of its

publication and with adoption at such an early

49%
stage, many organisations felt the need to replicate
the International <IR> Framework terminology in
their reporting. In some cases we felt the outcome
was that reporting appeared more like a compliance discuss current
exercise than a compelling and authentic story and historic market

39%
that covers the content elements and adopts the trends
principles in their own words, in a way that is easily
understood.
discuss the
future market
The other side of the authenticity coin is telling a trends
balanced story without “spin” – the current and

36%
future challenges as well as the good news. For
example, we would encourage organisations to
consider the way results are highlighted, case
studies are used, progress is reported against targets discuss the
future viability of
and adjusting items are explained.
resources
29%
explain how
they differentiate
themselves

2 Learning from early adopters of integrated reporting

Rethinking performance Creating connections
Reporting on performance in the traditional At the heart of integrated reporting is the desire to
financial sense is naturally in a more mature phase communicate clear connections between the critical
than many other elements of reporting. But by content elements of the framework.
focusing on the business model and considering
broadening horizons, integrated reporting This is clearly a challenge, with some reports still
encourages companies to focus on measuring what appearing disjointed and containing different
really drives their business. Such non-financial/ and sometimes conflicting messages, key themes
operational KPIs often act as lead indicators of remaining undeveloped or the connection
future financial performance, so it is encouraging between key activities or measures being poorly
that 74% reported performance on non-financial demonstrated. This can give the impression of
measures. siloed management or limited strategic thinking,
or can result in key messages/developments being
But are they the right measures to report? Or missed.
just the easiest to capture reliable data on? Do
they reflect the organisation’s business model, For example, in our sample, only 36% of companies
strategy, risks and incentive structures? Often, the clearly aligned KPIs with their stated strategy, and
reporting around a organisation’s non-financial 35% used their strategy to underpin their reporting.
‘capitals’ was high-level and qualitative, which, to What does that say about the relevance of the
an external observer, can make communication KPIs reported? And how does it help the reader to
appear more superficial and prone to ‘marketing’ quickly form a view of strategic progress?
rather than reflecting priorities and performance
embedded into the organisation and monitored by Yet there is encouraging news here too – a few years
management. back these statistics used to be in single figures,
showing that connectivity is certainly an area of
A true commitment to this wider reporting agenda focus for many.
can often be seen when key performance indicators
are linked to the remuneration of organisation
leaders; yet, as the stats below show, there was

71%
rarely a clear alignment between strategy, KPIs and
incentive schemes.

provide in-depth
insight into business

64%
model

81% integrate business

model into other
explicitly identify reporting

74%
KPIs

report
36%
align KPIs with
non-financial KPIs
strategy

35%
45%discuss
include non-financial
capitals in strategic
priorities
non-financial
capitals
17% 35%
base report on
align KPIs with strategy themes
remuneration

PwC 3
Moving forward Of further interest
Where are your reporting gaps?
PwC investor view publication
Our benchmarking assessments can help you identify gaps
Corporate performance: What do investors want to
in your reporting and explore reasons for them. We can
know?
work with you to map out on a page your business model
http://www.pwc.com/gx/audit-services/corporate-
with your strategy, risks, KPIs and remuneration – looking
reporting/publications/investor-view/investor-survey-
at whether this presents a coherent and integrated picture.
edition.jhtml
What are your reporting ambitions?
Corporate reporting blog
PwC facilitated workshops can help you engage senior
Bringing fresh insights and challenges to the
management and other stakeholders to shape your
corporate reporting agenda.
reporting vision and value creation story, as well as
http://pwc.blogs.com/corporatereporting/
exploring the benefits of integrated reporting*. Our work
with clients across the world shows leadership buy-in is
vital for moving towards truly integrated reporting.
World Watch online
News and views on reporting, assurance and governance.
Can you make better use of what you already www.pwc.com/worldwatch
report?
*IIRC and Black Sun publication
Armed with these insights into your current reporting and
your vision for the future as well as a coordinated team, Realising the benefits - The impact of Integrated
real progress can be made in the integration of existing Reporting
information. Focus on conciseness, authenticity and http://www.theiirc.org/resources-2/
connections across your reporting. Be inspired by our good
practice examples available online and through our global
network.

How can you achieve your reporting vision?

Our specialists can work with you to develop a blueprint for
your future reporting, focusing on where gaps in reporting
may indicate constraints on availability or reliability of
information internally, as well as supporting on defining
and embedding more integrated thinking, including
governance structures, behavioural change needs, impact
measurement and information availability and reliability.

How can we help you?

Our specialists can help you at each step on the way towards integrated reporting.
To discuss benchmarking and reporting insights for your organisation please speak to
your usual PwC contact or email us at [email protected]

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