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Integrated Reporting starts its slow climb to acceptance

The release of the International Integrated Reporting <IR> Framework recently, follows a three-month global consultation led by the International Integrated Reporting Council (IIRC) – a global coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs. Together, this coalition shares the view that communication about businesses’ value creation should be the next step in the evolution of corporate reporting.

One of the fundamental concepts of Integrated Reporting is the “capitals”. The Framework identifies six capitals – financial, manufactured, intellectual, human, social and relationship, and natural. The purpose of the capitals is to encourage a business to think more broadly and to consider all potential sources of value in the course of explaining how it is creating value over the short, medium and long term.

Supporters of say that the application of its principles and concepts should bring greater cohesion and efficiency to the reporting process, and that adopting “integrated thinking” is a useful way of breaking down internal silos and reducing duplication as well as improving the quality of information available to capital markets.

It is a bold initiative but the key question is; do businesses have the systems and processes to implement <IR>? 2014 will be an important year.