When it comes to corporate reporting, integrated reporting is one that has developed rapidly in recent years, with more and more businesses waking up to its benefits.
In short, this important publication merges details on a company’s financial performance with non-financial information. The reason? To show that sustainabilityis at the core of the business strategy.
Although integrated reportingis optional in the UK, the fact that so many businesses are adopting it shows that clear benefits exist. Here are just five of the advantages you’ll enjoy if you get on the integrated reporting bandwagon.
1) You’ll meet shareholder and stakeholder demands
The fallout from the latest financial crisis caused many people to look upon governments, financial institutions and big businesses with distrust, as they were seen to be irresponsible. It wasn’t just these corporations and institutions that were affected however, but the everyman too as unemployment rose and public spending was slashed.
To win back this trust, organisations realised they had to communicate with transparency and demonstrate that lessons had been learned. Responsibility and sustainability became key elements of business strategy, and now shareholders and stakeholders expect such activities from the firms they have a vested interest in. Failing to meet these expectations suggests a business that is out of touch, unwilling to change, and potentially a poor investment.
2) It improves cross-departmental collaboration
Producing an integrated report requires every department of the business to work closely together to establish how their activities impact on each other and ultimately the bottom line. This process not only helps each department to better understand the function of all others, but strengthens the relationship between key decision makers. By carefully managing this collaboration your team is better placed to achieve shared objectives which ultimately add up to increased revenue.
3) It helps you plan ahead
While an annual report focuses on a firm’s previous financial performance, an integrated report looks at current operations, their future impact and any threats that a company may face. This knowledge can then be used to develop a detailed plan for the future that enables you to manage risk, put in place more responsible practices and gain a clearer picture of the business’s overall health. With careful planning that considers the business’s wider activities and impact, you’ll be better placed to deliver sustained value over a longer period of time.
4) Value is created
Value is everything to a shareholder. They need to be confident that they will get the best return possible from their investment before they choose to invest. But it isn’t just shareholders who are affected by a rise or fall in value. Stakeholders – the people who are touched by your activities – also feel the impact through the social and environmental changes that occur.
The process of developing an integrated report shines the spotlight into every area of your business to expose those practices that are damaging or need improvement. By highlighting these weaknesses and taking positive action, you can create better or more value for all.
5) It strengthens the brand
Ultimately, by reporting on both financial and non-financial information with complete transparency and demonstrating that sustainability underpins the business’s operations, you can work towards strengthening the brand. An integrated report should serve as a clear promise that the business will act responsibly in the best interests of not only its shareholders but all stakeholders too. By staying true to this promise and the commitments contained within the report, you’ll only enhance the brand’s reputation.
What other benefits does integrated reporting bring? Share your thoughts in the comments below or tweet us @strattoncraig.