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Introduction to Integrated Reporting - YouTube
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integrated reporting this is a topic
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that's becoming more and more relevant
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and more and more important
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as not only are more companies started
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to move in towards this area of
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integrated reporting
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but more and more users of financial
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statements more and more stakeholders
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are interested in seeing a little bit
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more than just
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the financial information of a company
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so what we're talking about
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with integrated reporting is not only
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the financial statements but a report
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that incorporates
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non-financial information as well as
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the financial information that's
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provided in our normal
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standard financial reports that we're
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used to and so by getting this
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non-financial information the users of
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those financial reports the companies
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are preparing and using
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more information to make their decisions
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it's not just
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what was the profit or loss for this
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period it's not just
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what is the carrying value of our fixed
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assets but as we see we're going to be
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looking at what are the capitals the
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different types of capitals
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that a company uses what is it that
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they're doing with those capitals how
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are they using them what's their
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business process their business model
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and how is that hopefully increasing the
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amount of capital that the company has
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and also what are they doing that is
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going to allow them to continue to do
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this
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to continue to be successful not only
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now
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but in the short in the medium and in
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the long term as well what is the
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company
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doing not just about its financial
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statements but kind of its overall
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reporting
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financial and non-financial as well how
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it's operating its business
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and how that's going to work going
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forward
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for the company now this whole issue of
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non-financial information this whole
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idea to
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look outside of just the financial
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statements well this is kind of
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connected to
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corporate social responsibility and
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sustainable development
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and as these terms and these ideas have
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become more important
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to more and more stakeholders investors
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and customers and suppliers
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there's a greater need for information
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that addresses this
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there's more need for the information
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that's outside the scope
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of the financial statements and so
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that's what we're looking at with
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integrated reporting is providing more
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information
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than just what it is that is in the
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financial statements now if we kind of
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look at how this developed
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iso 26000 guidance on social
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responsibility
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this helps organizations structure
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evaluate
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and improve their responsibility their
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their social responsibility
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but it doesn't give that guidance for
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reporting for it and so according to iso
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26000 the social responsibility this
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definition of it is
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social responsibility is an
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organization's responsibility
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for the impacts of its decisions and
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activities on society
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and the environment through transparent
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and ethical behavior that
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contributes to sustainable development
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including the health
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and welfare of society takes into
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account
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the expectations of stakeholders
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complies with applicable law and is
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consistent with international norms of
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behavior
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and is integrated throughout the
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organization and is practiced in its
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relationships it's not just something
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that
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one or two people do but it's throughout
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the organization it's connected in all
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those relationships that the business
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has
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with people inside and outside the
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business
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now as i said iso 26000 gives guidance
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on how a company can
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be socially responsible but it doesn't
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provide that framework for reporting
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on its social responsibility to
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communicate how it is that it's doing
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that and so
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there was a need therefore to come up
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with some reporting frameworks for this
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the earliest framework for reporting on
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social responsibility and sustainable
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development
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was introduced by the global reporting
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initiative or gri
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their first reporting guidelines called
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sustainability reporting guidelines on
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economic environmental and social
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performance
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were launched in 2000 and it's been
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updated several times
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since then and this gri framework has
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become kind of that international
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standard
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for reporting on environmental and
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social responsibility
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sustainability and economic performance
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now
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the united states as a country does not
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have mandatory
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non-financial reporting requirements but
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a lot of companies and growing number of
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companies
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are preparing this information
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voluntarily
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and some countries do have requirements
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and those those national reporting
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requirements led ultimately to the
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development of the international
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integrated reporting council okay the
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iirc the
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international integrated reporting
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council and their purpose is to create a
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globally accepted framework for a
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process that results in communications
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by an organization
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about value creation over time
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okay value creation over time and the
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international
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integrated reporting framework was
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published in december of 2013.
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now we've got just kind of some
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background here about the iirc we'll
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look here at their
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mission their vision and their objective
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and i think this kind of
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sets the foundation for what it is that
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we're looking at here so their mission
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is to establish
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integrated reporting and thinking within
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mainstream business practice as the norm
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in the public and private sectors okay
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their mission is for this to be
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normal now it's not
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okay now this is kind of unusual wow
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look at this report
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but the goal the mission here is for
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this to become
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the norm their vision is to align
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capital allocation and corporate
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behavior to wider goals of financial
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stability
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and sustainable development through the
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cycle of
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integrated reporting and thinking
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okay put this all together integrated
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reporting
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integrated thinking and we'll look at
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those definitions here in a little bit
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their objective is to change the
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corporate reporting system
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so that integrated reporting becomes the
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global norm
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which means at some point in the future
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instead of getting the financial
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statements that only has the balance
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sheet the income statement and statement
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of cash flows
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that normal reporting process is going
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to include
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non-financial information as well it's
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going to look at different aspects of
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all of this how it is that the company
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is operating
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okay but this is what they're trying to
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do they're trying for this to become
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normal okay this thought process
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thinking about it is normal
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and the reporting for it is normal as
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well
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now that international integrated
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reporting framework introduces the
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concept of reporting
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non-financial information as an integral
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part of the annual report
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that can be read by all stakeholders
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okay so again
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putting this into that annual report
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that the company issues
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this is going to be part of it now
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there's a specific definition of
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stakeholders that the iirc
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uses and we'll read that right now
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stakeholders are
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those groups or individuals that can
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reasonably be expected to be
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significantly affected by an
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organization's business activities
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outputs or outcomes
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or whose actions can reasonably be
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expected to significantly affect
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the ability of the organization to
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create value over time
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stakeholders may include providers of
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financial capital
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employees customers suppliers business
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partners
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local communities ngos environmental
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groups legislators regulators
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and policy makers that's a lot of
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a lot of different stakeholders a broad
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definition
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of who a stakeholder is okay it's not
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only those who are affected by
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the organization but who are going to
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affect the organization the ability of
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the organization to create
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value over time so it's not only going
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outward
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but it's coming back into the
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organization stakeholders are anyone
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who's in a position to affect
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the ability of the organization to
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create value over time and what we'll
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kind of wrap up our introduction here
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with are just
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three definitions just kind of as again
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a foundation to what it is that we're
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looking at
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integrated report definition a concise
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communication
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about how an organization strategy
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governance performance and prospects
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in the context of its external
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environment lead to the creation of
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value over the short
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medium and long term okay short term
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medium term and long term
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creating value okay
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strategy governance performance and
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prospects create
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value okay see these terms we're going
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to come back and see these terms a
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little bit later as well
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the definition of integrated reporting a
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process
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founded on integrated thinking that
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results in a periodic integrated report
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by
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an organization about value creation
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over time
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and related communications regarding
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aspects
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of value creation and that's that
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reporting value creation
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okay how that is being done now
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integrated thinking
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the active consideration by an
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organization of the relationships
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between its various
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operating and functional units and the
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capitals and we're going to talk about
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capitals
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that the organization uses or affects
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integrated thinking leads to integrated
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decision making and actions that
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consider
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the creation of value over the short
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medium and long term
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so how many times have we seen it here
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now creation of value over the short
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medium and long term
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okay so that should be in your mind now
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as something that's kind of a key
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element to this
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what we're looking at in terms of
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creating value over the short
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the medium and the long term and we're
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trying for this
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concept to be part of how it is
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that a company operates it's part of
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their culture
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it's part of who they are it's not
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something that's done you know the first
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tuesday of the month or something like
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that
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but it's naturally incorporated into
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what it is that the company is doing
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if we get this non-financial information
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as part of the decision-making process
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we'll get
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better decision making okay we're going
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to have better decisions we're going to
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have
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more successful companies by looking at
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more than just
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that financial information of the
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company so this is this whole idea of
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integrated reporting
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we've kind of laid the foundation and
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what we're going to look at next is
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we'll turn our attention
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to the different types of of capital
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that a company has
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and kind of that value creation process
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that a company has which clearly we've
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seen it a number of times here and so
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that
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value creation is what's important and
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that's what we'll look at next
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