Contents

Introduction...........................................................................................................................................1
Background........................................................................................................................................1
Scope of the White Paper:.................................................................................................................1
Key principles and concepts of integrated reporting.............................................................................2
Integrated reporting benefits and challenges........................................................................................3
Reporting Current Trend........................................................................................................................3
Overview of IFRS................................................................................................................................4
The Confluence of Financial and Non-Financial Realities.......................................................................5
Steps for developing integrated reporting:............................................................................................6
Comparison of GRI and the Integrated Reporting Framework...............................................................7
Real-world Case Studies........................................................................................................................7
Reference:.............................................................................................................................................9

Introduction
Background

In today's rapidly evolving business landscape, organizations worldwide are embracing a new
approach to corporate reporting that goes beyond conventional financial statements. Integrated
reporting, as defined by the International Integrated Reporting Framework (<IR> Framework), has
gained prominence as a comprehensive and streamlined method to communicate an organization's
value in all aspects. The continuum of integrated reporting and thinking, leading to effective and
efficient capital allocation, will serve as a driving factor for both financial stability and sustainable
development. By embedding integrated thinking into the organization's reporting cycles, operational
activities, and strategic planning, originations experience reduced silos, improved decision-making,
and a more holistic approach to communication.

Scope of the White Paper:

In this white paper, we delve into the essence of integrated reporting and its pivotal role in modern
corporate reporting practices. Our focus is on exploring the relationship between integrated
reporting and the International Financial Reporting Standards (IFRS). Additionally, we aim to
benchmark integrated reporting against the ESG formworks such as the Global Reporting Initiative
(GRI) to understand the similarities and the added value of each framework. Furthermore, we will
analyze real-world case studies to highlight successful implementations of integrated reporting and
draw insights from lessons learned and best practices.

Key principles and concepts of integrated reporting

In the realm of corporate transparency and accountability, the practice of reporting has evolved
beyond traditional financial statements. While financial performance remains a critical gauge of an
organization's health, it is merely one facet of a multi-dimensional narrative. Financial reports have
long been the bedrock of assessing a company's fiscal prowess. However, these figures often provide
a limited glimpse into the complexities of modern businesses. Integrated reporting extends the
canvas, allowing stakeholders to explore a broader tapestry of information that shapes the
organization's identity and purpose.

The fundamental principles and concepts that underlie the process of integrated reporting
encompass:

a) Strategic Emphasis and Forward-looking Perspective: Integrated reports ought to offer insights into
an organization's strategy, its vision for value creation in the future, and how it navigates potential
risks and opportunities.

b) Interconnected Information: Integrated reports should visually depict the interrelation between
financial and non-financial facets, showcasing how diverse forms of capital intertwine and contribute
to the generation of value.

c) Stakeholder Engagement: Integrated reports should cater to the information requirements of

various stakeholders, ensuring that the content is pertinent, trustworthy, and credible.

d) Significance: Integrated reports should centre on pertinent information, providing a balanced and
succinct overview of the most crucial factors that impact the organization's capacity to generate
value.

e) Brevity: Integrated reports should be lucid, succinct, and easily comprehensible, presenting
essential details without unnecessary intricacies.

f) Dependability and Exhaustiveness: Integrated reports should rest upon precise and exhaustive
data, empowering users to rely on the information for informed decision-making.
g) Uniformity and Comparability: Integrated reports should facilitate users in gauging the
organization's performance over time and against other entities, fostering transparency and
simplifying benchmarking efforts.

2.3 Benefits and Challenges of Adopting Integrated Reporting:

Integrated reporting benefits and challenges

Organizations that embrace integrated reporting can realize numerous benefits, including:

a) Enhanced Communication: Integrated reports provide a more comprehensive view of an

organization's value creation, enabling better communication with stakeholders, including investors,
customers, employees, and regulators.

b) Improved Decision-making: Integrated reporting facilitates a deeper understanding of the

organization's performance and risks, leading to more informed decision-making by management
and the board.

c) Long-term Value Creation: By considering the broader impact of their activities on various capitals,
organizations can adopt sustainable practices that contribute to long-term value creation.

d) Transparent Sustainability Reporting: Integrated reporting promotes transparency and

accountability in an organization's sustainability efforts, fostering trust among stakeholders.

Despite these benefits, adopting integrated reporting may present certain challenges, such as:

a) Data Collection and Integration: Integrating financial and non-financial data can be complex,
requiring organizations to establish robust systems for data collection and analysis.

b) Cultural Shift: Integrated reporting may require a cultural shift within organizations to embrace a
more holistic view of value creation and consider a broader range of stakeholders.

c) Materiality Determination: Identifying and prioritizing material information can be challenging, as

it requires a thorough understanding of the organization's value drivers and stakeholder concerns.

Reporting Current Trend:

The adoption of integrated reporting is gaining momentum globally, with a growing number of
companies recognizing its value in enhancing transparency and stakeholder engagement. Regulatory
bodies and stock exchanges in several countries are also encouraging or mandating integrated
reporting, further fuelling its implementation.

Moreover, investors and other stakeholders increasingly demand information beyond traditional
financial metrics. They seek a more comprehensive understanding of an organization's performance,
strategy, and societal impact. Integrated reporting fulfills this need by providing a cohesive and
forward-looking narrative that addresses both financial and non-financial aspects. In response to the
increasing interest in sustainability and environmental, social, and governance (ESG) matters,
integrated reporting has become a powerful tool for companies to demonstrate their commitment to
responsible business practices and sustainable value creation.

As organizations recognize the value of integrated reporting in fostering long-term success and
fulfilling stakeholder expectations, its incorporation into mainstream reporting practices is expected
to continue growing. Over the last decade, Global frameworks and standards have been working to
guide the process of reporting organizations' performance to stakeholders.

Overview of IFRS
The International Financial Reporting Standards (IFRS) is a globally accepted set of accounting
standards developed by the International Accounting Standards Board (IASB) and designed to
provide a common language for financial reporting across different countries and industries. The IFRS
aims to enhance transparency, comparability, and consistency in financial reporting, facilitating
better decision-making for investors, stakeholders, and regulators. During the 2021 COP26 event of
the United Nations Framework Convention on Climate Change held in Glasgow, the IFRS Foundation
unveiled the establishment of the International Sustainability Standards Board (ISSB) to support the
development of global sustainability reporting standards. The key global reporting frameworks are
consolidated into the ISSB, such as the Climate Disclosure Standards Board (CDSB), and Value
Reporting Foundation (VRF), merging the SASB Foundation, and th International Integrated Reporting
Council (IIRC). The CDSB Framework guide organizations to communicate their environmental and
social performance to investors and other stakeholders through integrated reports. Additionally,
SASB sets standards for 77 industries related to ESG issues relevant to financial reporting. Whereas
IAt the same time,ed Reporting Framework assists enterprises in consolidating essential information
concerning an organization's strategy, governance, performance, and future prospects. The ISSB
under IFRS recommends that companies and investors continue to rely on the SASB Standards for
sustainability reporting until the ISSB's own standards are finalized and implemented.
In 2023 ISSB released two Sustainability Disclosure Standards covering the General Requirements for
Sustainability Reporting and Climate-related Disclosure, and more disclosure standards are under the
board review and expected to be released by the end of the year. ISSB publishes the updates on
standards release via this page: https://www.ifrs.org/news-and-events/updates/issb/.

In the subsequent section, we will explore the steps involved in developing an integrated report,
including data collection and analysis, and examine the key components of an integrated report.

The Confluence of Financial and Non-Financial Realities

Integrated reporting isn't just about presenting two separate dimensions side by side; it's about
showcasing how these dimensions interact, influence, and amplify each other. While financial data
unveils the tangible results of strategies and operations, non-financial information reveals the
intangible yet invaluable elements that define an organization's social, environmental, and ethical
fabric.

Reporting on Financial and Non-Financial Insights through Integrated Reporting

Integrated reporting isn't just about presenting two separate dimensions side by side; it's about
showcasing how these dimensions interact, influence, and amplify each other. While financial data
unveils the tangible results of strategies and operations, non-financial information reveals the
intangible yet invaluable elements that define an organization's social, environmental, and ethical
fabric. This reporting approach encapsulates a journey that traverses a multitude of dimension,s
includin.g

 Stakeholder Engagement and Collaboration

 Environmental Responsibility and Sustainability
 Social Impact and Empowerment
 Ethics and Governance
 Market presence and financial insights

Part of the report is to showcase how an organization's strategies and decisions are shaped by
meaningful interactions with stakeholders, ensuring that their needs and concerns are addressed.
Through integrated reporting, the environmental footprint of an organization is laid bare. Metrics
related to resource consumption, emissions, waste management, and sustainable practices provide a
comprehensive view of its commitment to a greener future. Non-financial insights reveal the
organization's contributions to society, from social programs and community engagement to diversity
and inclusion initiatives. This dimension highlights the extent to which the organization enriches lives
beyond its financial growth. Beyond profits, integrated reporting delves into the principles and
practices that uphold an organization's ethical foundation and governance structure. It demonstrates
how ethical considerations are integrated into the decision-making process. Integrated reporting
encapsulates an organization's financial health, growth, and strategy. It interlaces quantitative data
with qualitative narratives, offering a deeper understanding of how financial decisions and market
dynamics drive an organization's progress. Integrated reporting also provides a window into the
market presence dimension, encompassing market trends, competitive stance, and market share.
Through this lens, the report offers insights into how the organization adeptly navigates the ever-
evolving market landscape. This context is crucial in understanding the organization's performance
within its larger economic ecosystem.

Steps for developing integrated reporting

To effectively transition towards integrated reporting, a logical sequence of steps can be followed.
Initially, securing top-level support is crucial to establish a clear catalyst for this approach. This
support must then be translated into practical terms for the individuals responsible for preparing and
utilizing the organization's disclosures. Addressing the diverse reactions that may arise is essential, as
while some may readily embrace the changes, others might find them uncomfortable or resistive.
Encouraging constructive dialogue to address concerns can pave the way for a smoother integration.

As the process unfolds, the integration of reporting principles should permeate the organization's
operations, activities, and interactions. This begins with the formation of an integrated reporting
team and the development of key resources. The team will handle the reporting process and manage
the allocated resources for reporting. With the groundwork in place, the process moves into distinct
stages. It begins by establishing responsibility for integrated reporting and determining the reporting
team's composition. This is followed by an examininge organization's reporting boundary and existing
reporting practices to identify gaps. Next, the focus shifts toward identifying information needs for
reporting. It involves outlining the required sources of information and understanding material
matters that hold significance for the organization. As the reporting process gains momentum,
assessing systems and controls becomes imperative. This involves reviewing stakeholder engagement
mechanisms, evaluating information systems and internal controls, and considering audit and
assurance activities to ensure reliability. The subsequent steps center around preparing report
content. This encompasses drafting contextual information, updating preliminary reports with year-
end results, and refining content through a systematic review. Designing and implementing a
feedback mechanism allows for continuous enhancement while identifying challenges and solutions
ensures adaptability. Monitoring progress and embedding successful practices completes the
integrated reporting journey:

The development of the report includes the establishment of key elements presented below:

 Organizational overview and external environment: the organizational overview and external
environment provide crucial context for understanding the ownership structure, operational
setup, principal activities, market position, and competitive landscape of the organization
external factors include legal, commercial, social, environmental, and political
considerations.
 Governance entails the frameworks and procedures that underpin strategy formulation and
risk mitigation in the organization. Integrated reports thus explain how leadership
configuration, governance body expertise, diversity, and other elements contribute to
sustained value generation while preventing or minimizing potential value decline.
 Business model: the business model section of integrated reports aims to provide users with
a deeper understanding of how the organization's inputs, business activities, and outputs—
the essential mechanics of its operations—set it apart from others and drive its enduring
achievements.
 Risks and opportunities: Risks and opportunities constitute fundamental aspects in
evaluating an organization's prospects. These encompass potential challenges, particularly
concerning the ongoing ESG material topics and cost-effectiveness of essential resources and
relationships. The integrated report should elaborate on strategies aimed at mitigating
adverse effects or capitalizing on advantageous situations, as appropriate.
 Strategy and resource allocation: the report shall present the strategic goals along with
corresponding actions and timelines for accomplishment. It outlines the methods employed
to attain these goals and details the allocation of resources to support them.
 Performance Those who utilize integrated reports are keen on understanding the
organization's performance within the timeframe in relation to its strategic aims and defined
benchmarks. The performance data should be comprehensive, offering sufficient insights to
facilitate decision-making and, importantly, encompassing both favorable and adverse
outcomes.
  Outlook The outlook conversation delves into potential hurdles and uncertainties, examining
how they might impact the organization's business model, strategy, and forthcoming
performance.
 Stakeholder engagements: An integrated report should offer an understanding of the
character and caliber of the organization's interactions with its primary stakeholders. This
includes detailing how the organization comprehends, incorporates, and addresses its valid
needs and interests.
 Initiatives and partnerships: The report should also encompass a dedicated section
highlighting the various initiatives and partnerships the organization has engaged in. This
indicates the proactive steps taken to enhance sustainability and achieve shared objectives.
These collaborations are anticipated to yield a huge multitude such as amplified resource
efficiency, expanded market reach, and heightened social impact. Moreover, the report must
transparently present the outcomes and results stemming from these partnerships and
initiatives.

Comparison of GRI and the Integrated Reporting Framework

While both approaches aim to provide a comprehensive view of an organization's performance and
impact, they exhibit distinct characteristics and methodologies. Integrated Reporting centers on
conveying a holistic description that interweaves financial, manufactural, intellectual, human, and
social relationships and environmental assets. While GRI guides organizations in disclosing their
economic, environmental, social, and governance performance, focusing on the impacts of their
activities on various stakeholders and the environment. The scope of integrated reporting process
provides a broader canvas by encapsulating financial and non-financial aspects, such as market
presence, alongside other dimensions like environmental and social impact. GRI Reporting primarily
centers on sustainability and is often more expansive in scope. Both reporting target a wide spectrum
audience, including shareholders, investors, analysts, regulators, employees, customers, and
communities. While Integrated Reporting and GRI Reporting have distinct focuses, there are areas of
alignment and synergy. Organizations can leverage the GRI framework to inform the non-financial
dimensions of an Integrated Report, ensuring a more comprehensive disclosure that resonates with
stakeholders seeking a holistic perspective. While certain topics may overlap between the reports,
the material subjects and the accompanying information within these areas might exhibit slight
variations.
Real-world Case Studies
Case Study 1: Natura & Co. - Holistic Value Creation

Natura & Co., a global cosmetics conglomerate, embarked on an integrated reporting journey to
showcase how their commitment to sustainability drives business success. By intertwining financial
performance with environmental and social metrics, Natura & Co. portrayed how their products'
ecological footprint, community engagement, and employee well-being all contribute to their
bottom line. The result was a comprehensive narrative that resonated with investors seeking more
than just financial returns.

Key Insights:

Authentic Alignment: Natura & Co.'s success was rooted in their authentic alignment of purpose and
practice. By integrating sustainability into their reporting, they showcased how their business model
inherently creates value for various stakeholders.

Inclusive Metrics: Their integrated report featured a range of metrics, from carbon emissions
reduction to fair trade partnerships, demonstrating how their commitment to social and
environmental responsibility enhances their overall performance.

Case Study 2: Unilever - Embedding Sustainability

Unilever, a consumer goods giant, recognized that embedding sustainability into its business model
required a transformation in reporting. Through integrated reporting, they wove together their
financial performance, market presence, and sustainability initiatives, presenting a coherent
narrative of their progress. This approach not only demonstrated Unilever's commitment to
sustainable growth but also showcased how this commitment translates into financial success.

Key Insights:

Strategic Storytelling: Unilever's integrated report eloquently narrated its sustainability journey. By
highlighting initiatives like the Sustainable Living Plan, they conveyed how sustainability goals are
interwoven with long-term financial strategies.
Investor Appeal: Unilever's approach attracted responsible investors looking for companies aligning
profits with societal and environmental well-being. Their integrated report served as a
comprehensive resource for these stakeholders.

Case Study 3: Siemens - Transparency and Transformation

A global engineering powerhouse, Siemens embraced integrated reporting to exemplify their

commitment to transparency and transformation. By merging financial insights with environmental,
social, and governance aspects, Siemens provided a holistic view of their value creation. They
illustrated how technological innovations, efficient operations, and sustainable practices converge to
drive both financial growth and societal progress.

Key Insights:

Strategic Indicators: Siemens strategically integrated key performance indicators (KPIs) that
illustrated their progress towards sustainability goals. This transparent tracking of initiatives, such as
energy-efficient products, reinforced their dedication to sustainable innovation.

Stakeholder Engagement: Siemens' integrated reporting approach engaged diverse stakeholders,

from investors to employees, fostering a shared understanding of their role in shaping a more
sustainable future.

Reference:

IFRS Foundation. "Consolidated Organisations." [Online] Available at: https://www.ifrs.org/about-

us/consolidated-organisations/

Natura & Co. "Sustainability Updates." [Online] Available at:

https://ri.naturaeco.com/en/esg/sustainability-updates/

Unilever. "Sustainability Reporting Centre: Our Sustainability Governance." [Online] Available at:
https://www.unilever.com/planet-and-society/sustainability-reporting-centre/our-sustainability-
governance/

Siemens AG. "Sustainability." [Online] Available at:

https://www.siemens.com/global/en/company/sustainability.html
International Integrated Reporting Council (IIRC). "Transition to Integrated Reporting: A Guide to
Getting Started." [Online] Available at: https://www.integratedreporting.org/news/transition-to-
integrated-reporting-a-guide-to-getting-started/

International Integrated Reporting Council (IIRC). "INTERNATIONAL <IR> FRAMEWORK." [Online]

Available at: https://www.integratedreporting.org/resource/international-ir-framework/