The move to integrated reports, in Europe at least, is gaining ground. A quick analysis of the FTSEurofirst 80 Index shows four of the continent’s largest companies publishing integrated reports for the first time in 2013, meaning that more than 20 of Europe’s leading public companies now do so.
Bayer, Generali, Iberdrola and Siemens all recently published their inaugural integrated reports, increasing the pressure for their peers to follow suit and to adopt this advanced form of reporting.
So, why aren’t more companies doing so? Because switching to integrated reporting is a big exercise that involves far more than just communication and writing. It extends to establishing new reporting systems, governance tools and management performance targets.
Unlike annual reports, which focus primarily on a single year, integrated reports merge annual and sustainability reports to give a more complete picture of how companies create lasting value over the long term.
“An integrated report is a concise communication about how an organisation’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation value in the short, medium and long term,” in the words of the International Integrated Reporting Council (IIRC).
This global coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs is championing the merging of financial, social and environmental reporting.
Momentum for change is mounting. Investors, for example, are increasingly seeking information that’s not currently reported. Auditors see growing demand for details about order books, research and development, skills etc that are not in annual reports and accounts.
As writers of company reports, we see management’s resistance to making the switch to integrated reporting. As already mentioned, this isn’t just a matter of communications.
But as more leading companies publish integrated reports, so others are likely to follow.