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This book focuses on Integrated Reporting as a contemporary social and managerial innovation where a number of initiatives, organizations and individuals began to converge in response to the need for a consistent, collaborative and internationally accepted approach to redesign corporate reporting. Integrated Reporting is a process that results in communication of the annual “integrated report” which describes value creation over time. An integrated report is a concise communication about how an organization’s strategy, governance, performance and prospects lead to the creation of value over the short, medium and long term. This book offers a fresh perspective with expert contributions focusing on both the theoretical underpinnings and the practical challenges for the future of corporate reporting.





1. Towards Integrated Reporting: Concepts, Elements and Principles

Integrated Reporting is a process that results in communicating—through the annual

integrated report

—value creation over time. The purpose of this chapter is to introduce the idea and the logic underpinning Integrated Reporting, shed light on the reasons that enabled the debate on Integrated Reporting to gain relevance over the recent years, and illustrate the features of the Consultation Draft released by the International Integrated Reporting Council on April 2013. In doing so, we focus our attention on a brief review of the fundamental concepts, content elements and guiding principles proposed within the Consultation Draft. We end the chapter with some reflections on the challenges ahead for Integrated Reporting, and on the potential impact of its adoption on the role of the management accounting function.

Cristiano Busco, Mark L. Frigo, Paolo Quattrone, Angelo Riccaboni

Review of Key Principles, Concepts and Elements for Integrated Reporting


2. What Is Sustainability? A Review of the Concept and Its Applications

Whereas the concept of sustainability is broadly acknowledged as being multidimensional, its various dimensions have brought to light different discourses over time and have often been treated separately. In some cases, this separation has limited the actual implementation of sustainability to its mere rhetoric. By relying upon a review of the relevant literature which addresses the notion of sustainability (or of sustainable development), the present chapter aims to explore this notion by identifying its key dimensions and the intertwining relationships between them. In so doing, the challenges and opportunities brought out by an integrated approach towards sustainability are also emphasised, together with the role played by governance structures, business models, management, measurement and reporting systems in implementing ‘integrated sustainability’ within organizations. In this context, the contribution of integrated reporting is explored.

Elena Giovannoni, Giacomo Fabietti

3. Annual Reports, Sustainability Reports and Integrated Reports: Trends in Corporate Disclosure

This chapter aims at providing a comprehensive comparison between Annual Reports (ARs), Sustainability Reports (SRs) and Integrated Reports (IRs), focusing on their similarities and differences from an evolutionary perspective. In particular, it provides an argument for the main limitations AR has faced during recent years and of the main characteristics of SR, focusing in particular on the recent G4 guidelines from the Global Reporting Initiative. The IR, as framed in the Consultation Draft proposed by the International Integrated Reporting Council, can be considered the cutting-edge and probably the future of corporate disclosure. It is fundamental to compare it with previous forms of corporate disclosure in order to properly understand the current debate and to forecast its future development. IR presents some similarities with AR and SR, while at the same time introducing some relevant innovations, aimed at overcoming the limitations of the two traditional forms of reporting. Nevertheless, it still needs to undergo some scrutiny in order to become a widespread disclosure pattern.

Marco Fasan

4. The Connectivity of Information for the Integrated Reporting

The purpose of this chapter is to shed light on the guiding principle of connectivity of information which the Integrated Reporting Framework presents as a way of translating the integrated thinking into action. In doing so, the chapter moves from the analysis of the main reports that are a source of information for Integrated Reporting, defining them as “partial” reports because they represent only a part of the comprehensive value creation story. The ways in which these reports are aggregated and/or integrated during the process of construction of an Integrated Report have the potential to affect the level of connectivity of information. In addressing these issues, the chapter proposes three different approaches to the construction of an Integrated Report, also providing examples to illustrate the main features of each approach. Then, the chapter suggests the need to further explore the role of connectivity for a global and integrated reporting system.

Sergio Paternostro

5. Materiality and Assurance: Building the Link

This chapter provides a comprehensive discussion of materiality and assurance in the context of Integrated Reporting (IR). On the one hand, materiality has gained much importance following the introduction of IR, since one of the main objectives of this innovative form of reporting is to reach conciseness. On the other hand, assurance may play a crucial role in conferring reliability to the materiality determination process proposed by the International Integrated Reporting Council (IIRC) and to the whole process of IR. This chapter provides a discussion of the state of the art of materiality and assurance in the context of non-financial information and, more specifically, IR. It also points out some of the main challenges the IIRC materiality determination process will have to face in order for companies to implement it correctly. Finally, drawing on the peculiarities of IR, the chapter points out some issues that will have to be discussed regarding assurance and its effectiveness. Some insights for future development of the debate are also proposed.

Chiara Mio

6. Stakeholder Engagement

One of the main purposes claimed for reporting is the provision of an account to a range of stakeholders regarding how managers have acted in relation to the social, environmental, economic and ethical responsibilities these managers and their corporation feel they have towards stakeholders. Engagement and dialogue initiatives, therefore, are increasingly recognised as crucial elements of this accountability process. Only through stakeholder engagement companies can develop knowledge of what stakeholders believe should be their economic, environmental, ethical and social responsibilities to discharge. This chapter addresses this important aspect of corporate life investigating the role of stakeholder engagement within the reporting process in general, and the Integrated Reporting in particular. After describing the main traits of stakeholder engagement as of the most recent development in the academic literature, this process is placed within the context of Integrated Reporting and various theoretical perspectives that have the potential to prove useful in the interpretation of stakeholder engagement and dialogue practices are introduced.

Leonardo Rinaldi

7. “Integrating” Business Model and Strategy

This chapter explores the potential role of Integrated Reporting in supporting the relationships between a company’s strategy and the development (i.e. design and implementation) of its business model. To this aim, we draw on the relevant literature on strategy and on business models, as well as on the recent guidelines provided by the International Integrated Reporting Council framework, to suggest a three step process for linking the company’s strategy to the development of the related business model. An example of such process is presented in the context of low-cost airline companies.

Federico Barnabè, Maria Cleofe Giorgino

8. Performance Measurement and Capitals

This chapter focuses on the most important characteristics that Key Performance Indicators (KPIs) should have in order to reinforce their informative effectiveness in stakeholders’ decision processes. To this aim, we discuss the role that KPIs can potentially play within Integrated Reporting (IR)—i.e. measuring the ability of the company to create value, by increasing or transforming its tangible and intangible capital. Moreover, given the lack of a generally accepted model for measuring and communicating the integrated performance of a company, this chapter introduces a theoretical framework in accordance with IR guidelines and principles. It provides an innovative perspective that contributes to integrate internal- and external-oriented performance measurement systems.

Monica Bartolini, Fabio Santini, Riccardo Silvi

9. Integrated Reporting and Value-Based Cost Management: A Natural Union

Integrated reporting systems are the wave of the future from two points of view: for their support to management decision making processes, and as strategic information source for annual Integrated Reporting (IR). This chapter describes Value-based Cost Management (VCMS) as one tool available to the financial and marketing communities that can be used in the integration effort because it naturally joins data streams from across the organization to provide a unified picture of the firm’s performance. Furthermore this chapter shows the twofold potential contribution of VCMS to IR. First, it supports the management and monitoring of the company performance with specific regard to customers and internal processes as fundamental dimensions of an integrated performance measurement system. Second, the role played by waste in VCMS is argued to support the sustainability movement and reporting.

Carol J. McNair-Connolly, Riccardo Silvi, Monica Bartolini

10. Approaching Risk Management from a New Integrated Perspective

In recent years, risk management has acquired increasing relevance within the organizational realm. Although the Integrated Reporting Framework includes ‘risk’ as one of the content elements of the Integrated Report, its main purpose does not specifically relate to risk management. Drawing on the evolving academic debate, this chapter aims to provide an overview of the different approaches to risk management and to highlight the need for a broader and integrated perspective. The chapter ends by highlighting the potential contribution of this perspective to the Integrated Reporting Framework.

Sonia Quarchioni, Francesca Trovarelli

11. The Relationship Between Multinational Enterprises and Territory in the Integrated Reporting

Multinational enterprises (MNEs) have long used both financial and sustainability reports to inform stakeholders of the different aspects of their business. Integrated Reporting, which has been developed as a result of shareholders’ increasing demands for information, is an innovative tool that communicates the social and financial aspects of business operations as well as reporting companies’ value creation processes over time. Integrated reporting is affected by the nature of a MNE’s stakeholders and influenced by their territorial origin, which raises aspects of business analysis that must be investigated in an Integrated Report. This chapter, which begins with a review of the existing literature on the aforementioned topics, explores the relationships that exist between business activities and the territory in which it operates, proposing that MNEs consider analysing specific points when formulating their Integrated Reports. The link between MNEs and the territory is analysed with a dual perspective: the local value added, and the MNEs’ relationships with the economic systems and governments of the country in which they operate. The authors believe that these two strongly interconnected factors underlie the social role that MNEs play also to the benefit of the territories in which they operate. In doing so, they qualify the contents and the use of the Integrated Report.

Christian Cavazzoni, Francesco Orlandi

12. Towards Integrated Reporting in the Public Sector

During the last 20 years, social, political and economic changes have impacted on the accountability concept in the public sector. In this context, public organizations are requested to improve their reporting processes, and disclose more accurate and complete information about their activities and results. In April 2013 the International Integrated Reporting Council issued the Consultation Draft of the International Integrated Reporting Framework, with the aim of contributing—among other things—to the initial integration of information regarding different forms of “capital” involved in the value creation processes of an organization. While primarily designed for private companies, the Consultation Draft can also be extended to the public sector. For this reason, in order to discuss the possibility to improve the level of accountability of public sector, this chapter intends to provide an introductory analysis on the applicability of the International Integrated Reporting Framework to public institutions.

Luca Bartocci, Francesca Picciaia

Towards Integrated Reporting: Cases and Best Practices


13. The Case of Eni

This chapter focuses on Eni, the sixth largest integrated energy company by market value in the world, characterised by a strong position on the oil and gas value chain from the upstream phase of hydrocarbon exploration to the downstream phase of product marketing. The purpose is to shed light on Eni’s recent advances in corporate reporting. Therefore, after having briefly illustrated Eni’s distinctive approach to sustainable value creation, the chapter focuses on the structure and the contents of Eni’s 2012 Annual Report. Issued in May 2013, Eni’s 2012 Annual Report is an Integrated Report, prepared in accordance with the principles included in the prototype Framework developed by the International Integrated Reporting Council. The analysis presented in the chapter highlights the most innovative contents and elements of the report, and focuses on the connections between issues such as the company’s business model, the competitive environment and strategy, the integrated risk management model, and the corporate governance system. The review of the report continues with a brief illustration of the section regarding the Consolidated Sustainability Statement. In particular, sustainability represents one of the fundamental drivers of Eni’s business model, to the point that sustainability has always been conceived as part of the company’s strategy, rather than a separate and distinctive element. The illustration of Eni’s 2012 Annual Report continues with a discussion of the ways in which Eni has interpreted and then operationalized the principle of connectivity of information. Some concluding comments are offered at the end of the chapter.

Domenica Di Donato, Raffaella Bordogna, Cristiano Busco

14. The Case of Enel

The aim of this chapter is to provide a discussion of the business case of Enel, which is an International Integrated Reporting Council (IIRC) pilot program company currently evolving its corporate disclosure towards Integrated Reporting (IR). The relevance of pilot company business cases has been recognized by the IIRC, which defined their experience as “invaluable”. On the one hand, Enel did modify its corporate reporting system coherently with the IIRC guiding principles by including considerable non-financial information in its annual report, reducing the length of its sustainability report and improving its materiality determination process and business model analysis. On the other hand, it will be interesting to see how the company applies other aspects of the IIRC framework, such as the six-capital structure and the way in which reporting boundaries are defined. The analysis done in this chapter may be of interest to companies, standard setters and scholars wishing to enhance their knowledge on how companies are currently evolving their corporate disclosure systems towards IR.

Chiara Mio, Marco Fasan

15. The Case of Vodacom Group

In 2009, the King Report on Corporate Governance in South Africa provided local companies with guidelines on how to develop an Integrated Report. Since 2010, Integrated Reporting has become compulsory for all companies listed on the Johannesburg Stock Exchange Limited. Given the diffusion of Integrated Reporting in South Africa, this chapter aims to illustrate the structure of the 2013 Integrated Report of Vodacom Group, a South African private telecommunications company. The analysis is based on the content elements and guiding principles proposed by the Consultation Draft released by the International Integrated Reporting Council in April 2013. In doing so, this chapter compares the Integrated Report of Vodacom with the international recommendations on Integrated Reporting in order to explore their adaptability to a private company in the telecommunications industry.

Fabrizio Granà, Libero Mario Mari

16. The Case of Smithfield Foods

This chapter analyses the Integrated Report of Smithfield Foods, a North American company operating in the food industry. The purpose is to examine the content elements and principles of this company’s Integrated Report in light of the guidelines provided by the Consultation Draft issued by the International Integrated Reporting Council. The aim is to compare the structure of this report with the guidelines of the Consultation Draft, in order to discuss their applicability and adaptability to companies operating in the food industry.

Loredana G. Smaldore, Christian Cavazzoni

17. The Case of Monnalisa

This chapter focuses on Monnalisa, a medium-sized Italian company that operates in the fashion industry. The purpose is to illustrate the way in which Monnalisa has gradually redesigned its Annual Report. To do this, after having introduced the company’s background information, the evolution of corporate reporting in Monnalisa is briefly reviewed. During the last decade Monnalisa has progressively engaged with its key stakeholders in order to develop an Integrated Report that now combines the European Union format of an Annual Report with the triple bottom line reporting that characterises sustainability reports. In particular, since 2009 the information and the key performance indicators presented within Monnalisa’s annual Integrated Report reflect a combination of the requirements of the key stakeholders together with the main strategic objectives of the company. The current structure and some insights into Monnalisa’s Integrated Report are illustrated and discussed in the chapter.

Cristiano Busco, Maria Pia Maraghini, Sara Tommasiello

18. The Case of Eskom

From 2010, South African companies listed on the Johannesburg Stock Exchange Limited have been required to prepare and present the Integrated Report (IR). Given the increasing relevance of integrated reporting in the South African context, in which the preparation of the IR is compulsory for many companies, this chapter examines the experience of Eskom, a South African electricity supply company. The aim is to analyse the IR of the company during the period 2011–2012 in light of the content elements and guiding principles presented in the Consultation Draft published by the International Integrated Reporting Council. Therefore, this chapter sheds light on the applicability and/or adaptability of international recommendations on IR within a public company in the electric power industry.

Fabrizio Granà, Francesca Ceccacci

19. The Case of HERA

In the raising complexity of the environment within which companies have to currently operate, the drawing up of integrated reporting seems to be one of the most challenging and demanding tasks for any company, which have to deal both with an increasing number of powerful stakeholders and provide its managers with increasingly complex and useful information. The present chapter analyses the approach and the experience of the HERA Group. We will outline the business features, its evolution since operations began and the similarities and differences of the HERA Sustainability Report with the Integrated Reporting framework. This case study is an important and informative example of how integrated reporting is a useful tool for governing particular kind of firm such as HERA. It is owned by both private investors and public administrations whilst operating in the public services sector.

Pasquale Ruggiero, Patrizio Monfardini

20. The Case of the Auditor-General of South Africa

Recent social, political and economic changes have led to an evolution of the concept of public sector accountability. Greater awareness among citizens and the demand for greater transparency among public officers have led to new forms of reporting. Practices in use among private companies have been adapted to public organizations, leading to the spread of social, environmental, sustainability, intellectual capital reports, and more recently integrated reports. In this context, whereas the Consultation Draft of the International Integrated Reporting Framework (2013) was designed to provide guidelines on integrated reporting mainly to for-profit enterprises, it is also extendable to the public sector. This chapter examines the case of the Auditor-General of South Africa (AGSA), a public institution which published its first integrated report in 2012. The aim is to explore the integrated report of AGSA in light of the guiding principles and content elements provided by the Consultation Draft.

Luca Bartocci, Francesca Picciaia


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