Integrated Reporting & Integrated Thinking
01-12-2016

In the natural world, animals and plants must adapt to ensure their long-term success in a harsh and ever-changing environment. In many ways, the business world is a bit like a jungle - a harsh environment in which only the strong can adapt and survive.

Fundamental changes, such as globalisation, technological development and rapid population growth, have meant that organisations have had to modify their thinking and behaviour.

Traditional financial reporting has had to change, so that organisations and investors can achieve long-term success in this evolving and demanding environment. These days, reporting needs to provide broader information which is more interconnected and more forward-looking than traditional financial analysis.

What is integrated reporting?

In a nutshell, integrated reporting (<IR>) brings together key information about an organisation’s strategy, governance, performance and prospects, in a way that mirrors the commercial, social and environmental context in which it operates.

Integrated reporting provides a clear, concise statement of how sustainability is achieved, and how the organisation creates value. By embracing integrated reporting practices, all those involved with an organisation will develop a deeper understanding of the business, the business environment and how to create value.

Integrated reporting promotes a more holistic approach to the way investors and those within the organisation think, and takes into account a comprehensive range of factors which are important in long-term value creation. Thus, integrated reporting goes hand-in-hand with integrated thinking.

What is integrated thinking?

Integrated thinking is the ability to establish a link between the financial, social and environmental performance of an organisation. Effective integrated thinking requires commitment and transparency, as well as a good understanding of what makes the organisation sustainable. The long-term success of the organisation is dependent on the interrelationships between the organisation, the stakeholders and the operating environment.

The latest guidelines on Corporate Governance in South Africa place greater emphasis on integrated thinking and integrated reporting. It is important to come to grips with these concepts to be successful out there in today’s challenging business jungle.