Integrated Reporting: What It Means for the Australian Business Landscape
The corporate landscape is evolving. Integrated Reporting (IR) occupies significant space in this process as an ideal tool to consider value creation. It is centred on more veritable, detailed and impactful information about an organisation’s performance. IR provides investors with the necessary information for more effective decision-making to better facilitate returns on long-term investments.
A survey by KPMG was published in light of the impact of the COVID-19 pandemic and the accelerated demand from regulators and investors for enhanced reporting on climate and pre/ non-financial risks. It revealed that a significant amount of Australia’s largest listed companies on the ASX200 and ASX50 have incorporated IR principles when drafting their annual reports. The survey details how IR has allowed organisations to improve the quality of disclosures across a broad range of sectors.
Overall, the survey further revealed that 79% of ASX200 companies and over 90% of ASX50 companies have centred their reporting around long-term value creation for their investors and stakeholders, and not short-term financial earnings. These findings confirm the drastic pivot in companies towards IR and it potential to generate more meaningful, qualitative reports.
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What is Integrated Reporting?
IR presents material information about an organisation’s strategy, governance and performance to reflect its mainstream, social and ecological context. This leads to a clear and concise summation of the company’s value creation story that holds usefulness and currency among all stakeholders.
IR does not end with reporting – it also incorporates Integrated Thinking (IT). It is not solely based on how an organisation’s value story is reported but includes how it conducts business and creates value over periods.
The benefits of Integrated Reporting
There are many benefits of IR, both internal and external to an organisation. Below are a few:
- Enhanced identification of risk and opportunities
- Your organisation can think in an integrated way
- Clearer delivery of business strategy and model
- Value creation for stakeholders
- Improved internal processes that create a better understanding of, and decision-making for your business
The key to successful IR within an organisation is its ability to achieve integrated thinking and integrated management. This outcome requires the collaboration of different departments within the organisation to especially deconstruct the silos that predominate. For Australia, IR represents a journey towards more meaningful reporting that can be vital in its organisations. The current momentum behind IR presents dawning opportunities for guide the future of reporting in Australia.
