Integrated reporting takes a broader view of the interests of a company’s stakeholders and its value creation potential. Over the last decade, this approach has increasingly moved into the corporate reporting mainstream.
Integrated reporting is underpinned by integrated thinking. This inclusive process of decision-making, management and reporting is based on the interdependencies of a range of factors that affect an organisation’s ability to create value over time.
Academic research and professional bodies have devoted increased attention to the implementation of integrated thinking and reporting practices by companies, specifically looking at both the drivers and the consequences of its adoption.
The Association of Certified Professional Accountants is a strong advocate of integrated reporting and thinking. We have undertaken a number of research projects examining the drivers, challenges and benefits of both integrated reporting and integrated thinking.
CIMA recently commissioned the University of Roehampton to research the role of corporate culture in an organisation’s decision to prepare an integrated report. In this study, corporate culture was defined as the ‘collective values, beliefs and assumptions that influence organisational, group and individual behaviour’.
The research classified corporate culture using a competing values framework that assesses.the degree of flexibility versus controlling behaviour and internal focus versus external orientation.
The study analysed the integrated reports of 81 companies and interviews with 11 individuals from seven organisations across a range of sectors, including banking, insurance, aviation, energy and project management. The result? Evidence that corporate culture is a key driver of corporate reporting choices and an essential ingredient of the reporting journey.
This means that when an organisation is preparing to introduce a new reporting tool, such as integrated reporting, it must consider non-observable factors such as corporate culture in addition to observable characteristics such as size, profitability, governance and industry.
The research also found that an organisational culture with high levels of collaboration, teamwork, talent management, empowerment and interpersonal relationships can lead to a more integrated decision-making process.
Additionally, the study highlighted a number of benefits that preparers enjoyed during the integrated reporting journey. They found that integrated reporting:
- Helps them understand what is going well
- Boosts collaboration
- Enhances awareness of the business model
- Builds reputation
- Allows the breaking down of silos
- Makes the business more resilient and long-term thinking
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