It’s about the whole movie, not just how it ends

Integrated Reporting is arguably the current frontier of corporate reporting. The demands on corporate reports are growing rapidly in parallel with stakeholder expectations of a greater in-depth understanding of the companies they have an interest in. In this context, the recent establishment of the International Integrated Reporting Council (IIRC) by a number of leading organisations represented an additional, perhaps decisive, move towards the definition of a globally accepted reporting framework. Such a framework aims to bring together financial, environmental, social and governance information to enable stakeholders understand the true ability of a company to deliver sustainable value and to educate investors to overcome short-termism in their investment decisions. This, in turn, would further enhance a company’s ability to make sustainable choices.

The definition of such a framework is everything but easy, though. This is because corporate numbers and information are quite meaningless without a proper and full understanding of the complex context which generates them. Let me draw a comparison with the act of watching a movie. If you watch the last ten minutes of a movie you most likely know how the movie ends, you are aware of its final outcomes. If this is a romantic movie, you know if the two are still together or not; while, in the case of an action movie, you most likely end up discovering who the killer was. But, unfortunately, although you do get to see the final outcomes of the movie, you still miss a lot to make sense of it. You miss a full appreciation of the themes of the movie, its significant passage points, the unique and possibly complex story that has led to this specific final outcome. When you approach most contemporary corporate reports, the feeling is similar to the one described above: it is difficult to fully understand how a number of different, and often stand alone, indicators have contributed to value creation; it is difficult to appreciate the complexity hidden behind the numbers. Ultimately, in most of the cases it is difficult to infer how sustainable value creation can be maintained and further developed in the future. Integrated Reporting aims to do that!

The new book, Integrated Reporting, Concepts and Cases that Redefine Corporate Accountability, aims to address what the building blocks and best practices of Integrated Reporting look like to date. Because the efforts around Integrated Reporting are still in their early stages, I really do welcome this edited collection on the topic. Reading this book has brought me back to my early days at Eni where, although my background is molecular biology, I was leading a project tailored to develop an early form of environmental accounting, as well as to identify a control system for evaluating the impact of business operations on the environment. I was working with an interdisciplinary team in search of metrics, solutions and data that would have eventually allowed the company to perform more efficiently in environmental protection, make savings and better understand its business. This experience has been extremely important for us at Eni. It allowed us to practice collaboration across disciplines and integrated thinking. This first step was mainly an internal effort, though. When, later on, we succeeded in incorporating the results of the dialogue with our external stakeholders, environmental and social reporting at Eni moved to the next level.

Stakeholder engagement has been of paramount importance in the evolution of corporate reporting. Systematic engagement with key stakeholders has enabled corporations to question, and then challenge, a number of things that possibly had been taken for granted before that. At Eni, after having issued a series of Environmental and then Sustainability Reports we realised that, although the numbers were allowing a true and fair review of the company’s performance, operations and management, they were not necessarily relevant to the stakeholders or able to hint the sustainability of the business. Neither was the simple act of reporting data relevant per se. What was missing was a broader process of analysis and communication able to put performance in context, able to represent the strategic leverages the company was using to build and maintain its ability to produce value in the long term. Stakeholders’ demands for greater transparency have, in time, been coupled with an internal reflection on what the company considered its strategic drivers: nowadays, our Integrated Reporting aims to respond to this challenge.

A cultural shift is, though, required to support such a process. A shift of paradigm rooted on the reorganization of systems, processes and practices in search of Sustainable Value creation and representation. In this respect, joining the Pilot Programme of the IIRC back in 2011 was very useful to us. Integrated Reporting offers an opportunity to combine Sustainability and profitability in a single process, in a single document and, ultimately, in a single story. It is a promising powerful tool to increase the internal and external awareness, especially among investors, on the way in which the integrated management of the business is currently practiced.

Significantly, Integrated Reporting aims at offering a long term view. It is a dynamic observatory designed and implemented to offer a space where organisational strategies, objectives, results and outcomes can be illustrated and interpreted in a combined fashion. The objective is not so much to unpack complexity, rather to make the users appreciate how the constitutive elements of a complex organisation in a complex environment contribute to Sustainable Value creation over the short, medium and long term. In doing so, the numbers and information provided in the Integrated Report aim at representing the way in which Sustainability’s objectives and multiple perspectives are fully embedded within the Company’s business model and decision making processes.

For the above mentioned reasons, I do welcome the publication of the aforementioned book. Integrated Reporting is in its early stages, and any effort to illustrate, discuss and eventually question its contents, elements and principles is a much needed and useful exercise. Integrated Reporting is currently a lively and engaging theme, worthwhile to be further explored both theoretically and practically around the globe. Along this line, the usefulness of the book is twofold. First, it provides a number of insightful chapters attempting to deepen our understanding on specific concepts and principles. Second, it offers a collection of best practices attempting to describe and, in some cases, discuss how a number of Companies, large and small, private or public, are approaching Integrated Reporting in practice.

The trajectory of Integrated Reporting has just marked an important milestone. In December 2013, the II RC released the first version of The International <IR> Framework. The journey has just begun, but Integrated Reporting is about to enter in a critical phase where its rationale as well as its concept will be tested, challenged and advanced.

The book can be found at:

Integrated Reporting
Concepts and Cases that Redefine Corporate Accountability
C. Busco, M. L. Frigo, A. Riccaboni and P. Quattrone (Eds.)

Springer International Publishing – December 2013, XIV, 350 p.

What is Integrated Reporting? Who is driving the agenda? What are the building blocks and best practices to date? This book aims to address these questions by illustrating and debating the rise of, and the challenges ahead for this new form of reporting. The purpose is to participate in the current and ongoing debate on Integrated Reporting by reflecting both on the key concepts, elements, and principles that underpin its adoption, and on a collection of cases that describe how a number of Companies, large and small, private and public, are approaching IR in practice.