Integrated reporting (IR) represents one of the most recent innovative approaches to corporate reporting. One of the important, sometimes underrated, implications of this idea is that IR is not only about drawing up a management report. An integrated report is the output of a value creation journey that starts with integrated thinking, which is an active consideration by an organization of the relationships between its various operating and functional units and the ‘multiple capitals’ that the organization uses or affects.

Integrated thinking leads to integrated decision making and actions that consider the creation of value over the short, medium, and long term. The underlying corollary is that the implementation of IR can lead to change in the entity’s strategic focus and the identification of material issues impacting the entity’s sustainable success over time. In many parts of the world, enterprises apply IR to satisfy non-financial disclosure requirements (see Trends in Disclosing Non-Financial Information). Others adopted an integrated approach voluntarily.

The International Integrated Reporting Council (IIRC) has developed the International Integrated Reporting Framework which, as of today, constitutes an important but non-authoritative, principles based reference for entities wishing to adopt IR.

This article considers two specific features: (a) the adoption of IR by small- and medium-sized entities (SMEs) and the role played by small- and medium-sized practices (SMPs); and (b) the development of IR and the contribution from the analysis of the various best practices (as a form of benchmarking), again with specific relevance to SMEs and not-for-profit organizations (NPOs).

The benefits of IR for SMEs and not-for-profit organizations (NPOs) IFAC, together with the IIRC, published ‘Creating Value for SMEs through Integrated Thinking – The Benefits of Integrated Thinking’ and also explored some of the many benefits that arise from SMEs’ adoption of IR. However, there remains a perception that IR is more appropriate for public companies with a wide range of stakeholders.

But, what about private companies and, more precisely, SMEs? They can benefit from an integrated approach: combining an understanding of business strategy with a multi-capital lens while promoting long-term perspectives and holistic enterprise story telling. For SMEs, communicating the key factors that affect their ability to create value through an integrated report can help build much needed stakeholder trust around past and future performance.

An SME could benefit from this change of approach, for example, when it desires to re-position itself in the market, aims to obtain financial resources from capital lenders and investors, decides to investigate a new strategic orientation, aspires to reconsider its business model and/or its organizational structure or aims at investing in corporate social responsibility. Another important consideration in the application of IR to SMEs concerns the adaptability of such approach for NPOs. Many NPOs are required to produce social reports or other similar reporting. IR is a model that can be adopted by different entities.

Even mission driven entities can apply the integrated approach as they are required to optimize the use of available resources and to report on operations to their stakeholders. This is a principle of good governance, which can determine a transparent process and, consequently, promote a virtuous process by which a solid relationship is created with the community the NPO operates within.

Life is integrated itself as well as the business operations. New methods of management for the 21st century is refocusing from the digital and monetary towards the real material values and results. At the same time over the last 30 years, intangible assets have moved from 20 percent to over 80 percent of the value of public companies. The decision making within companies has failed to keep pace. Financial reporting has made even less progress in addressing these changes. As they take ESG impacts ever more seriously, investors in the most developed economies like USA and EU are urging management and the board to adopt a reporting method that accounts for both tangible and intangible assets. Integrated reporting” is such a method: it provides a framework that highlights all the ways a company creates and will continue to create value. Various ESG reporting frameworks have a practitioner’s perspective on Integrated Reporting. We shall discuss how companies best respond to the evolving stakeholder need in relation to ESG reporting.” 

“Integrated reporting is viewed by many as the next evolution in the corporate reporting, an antidote to the narrow and siloed focus on the short-term, financial profit at traditional annual reports which is now accepted to have far-reaching destructive consequences for the environment, society, and the economy.“
“Building Momentum: International Integrated Reporting Council - Integrated Report 2018.“

“Integrated reporting is meeting the user’s needs: The use and usefulness of Integrated Reporting.“   
The Association of Chartered Certified Accountants – ACCA Global

Leading institutions:

	United Nations Conference on Trade and Development (UNCTAD)
	International Federation of Accountants (IFAC)
	European Federation of Accountants and Auditors for SMEs (EFAA)
	World Bank Centre for Financial Reporting Reform (CFRR)
	International Integrated Reporting Council (IIRC)
	Global Reporting Initiative (GRI)
	European Green Deal
	The Conference Board