The Value of Integrated Reporting
How can Integrated Reporting (IR) reach its potential? Nick Shepherd, a Council member at the UK based Maturity Institute where he leads their work on Integrated Reporting, explores this question in an article on Economia this week. IR is a fast-growing field, with increasing numbers of organisations choosing to voluntarily disclose broader metrics. But is this extra reporting adding value?
Shepherd highlights how corporate value is changing – where 80% of shareholder value used to be financial capital, today it accounts for approximately only 30% of value. How do we measure the non-financial value of asset-light organisations? He argues that IR could offer a greater understanding of organisational health. The International Integrated Reporting Committee (IIRC) suggests six “capitals” that should be measured: financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital, and natural capital.
However, the current state of too many IR reports focus more on Corporate Social Responsibility (CSR) metrics, and Shepherd thinks these kinds of reports are ‘woefully short’ of what is needed to assess risk.
A thought provoking read – encouraging companies to embrace the full vision of Integrated Reporting. The full article is here.