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A NEW ERA IN REPORTING: INTEGRATED REPORTING

A NEW ERA IN REPORTING: INTEGRATED REPORTING

02.11.2016

Corporate reporting is a process that started with financial reporting back in 1930s and was further diversified when the type of reporting called sustainability report/corporate social responsibility report/corporate responsibility report involving the reporting of environmental and social issues is also covered. However, we recently face a new reporting understanding beyond these reports. This reporting practice is called integrated reporting and has a different style which includes previous reporting practices but is still different in comparison.

In brief, integrated reporting emerged after the South African companies listed in the stock exchange were obliged to report their environmental and social impacts in addition to their financial information and, if they failed to report, to explain the reasons for such failure (report or explain). Becoming a part of this integrated reporting process, companies assess and report all their operations and their effects within a process of creating value. All resources a company has are assessed under six different capital categories, namely financial, human, intellectual, social, manufactured and natural capitals. Specifically for each capital category, the association between inputs and their outputs are studied, and the interaction of this association with the company’s business model is reported. 

Although an integrated report (IR) is considered to be similar to a sustainability report in terms of its subject matter, it is essentially different from a sustainability report. An annual report and a sustainability report focus on the past and report the performance in the relevant reporting period while an integrated report also includes building an association between this performance and the future strategy and goals of the company. It also involves the company’s short, medium and long term goals and strategies, an assessment of risks and opportunities within the scope of these goals as well as operations, and an analysis of performance within the scope of such risks and opportunities. In short, an integrated report is an analytical thinking tool that aims to create added value for the company.

Although integrated reporting is much less common around the world than other types of reporting, it is getting more and more common on the basis of the mandatory and voluntary requirements of various legal practices. International Integrated Reporting Council (IIRC) is an organization that aims to develop and improve global integrated reporting principles. The International Integrated Reporting Framework developed by the IIRC in 2013 is the most comprehensive set of guidelines providing information on the contents and basic principles of an integrated report. 

A pilot project developed by the IIRC contributes to the development of integrated reporting for voluntary companies. The work and analyses by members of the pilot working group aim to improve integrated reporting practices and tailor them in a way to make them applicable in various sectors. 

owing exponentially around the world, integrated reporting is expected to be the new reporting system that covers the financial and sustainability reports of the future. A review of global examples shows that some international companies publish their annual reports as integrated reports. 

Although we do not have an example of integrated reporting in our country yet, I predict we will have integrated reports in Turkey in the future once the obligations for companies listed in the stock exchange or various legal reporting obligations we see in other countries are replicated in our country.