• Claudine Thornton

How to use Integrated Reporting to measure your impact and value.

Integrated reporting, or IR, can be an exciting new concept for many business owners to wrap their heads around. It allows companies to communicate information about their business using traditional financial statements alongside information about how it impacts the environmen

t and its workers. However, some business owners are sceptical about the concept of integrated reporting, wondering whether it's worth the effort to learn new accounting methods. To help you decide if integrated reporting is right for your business, here are five reasons why you should try it out.

What is Financial Reporting?

Financial reporting is about communicating with stakeholders and providing them with enough information to make financial decisions. The two main methods of doing so are external reporting (presenting information to those outside of your organisation) and internal reporting (offering information to those within your organisation). Financial statements such as balance sheets, income statements, and cash flow statements are external reports. And the profit and loss reports, activity-based costing reports, and break-even analysis reports are all examples of internal reports.

What is Integrated Reporting?

It is when you report on your business with more than just its financials. It is when you show how each part of your business impacts one another to create value. For example, imagine that an asset manager wanted to invest in companies making positive changes in their communities through social entrepreneurship initiatives.

Why Should I care about Integrated Reporting?

The trend toward integrated reporting is increasing in response to investor demand and due to an increased understanding of its benefits. So why should you care? Suppose you're an investor or stakeholder in a company. In that case, it's in your best interest to ensure that all related information is collected and presented in one place so that you can quickly review it. This way, if something looks out of business, it doesn't take much effort to investigate further.

How Do I Get Started with Integrated Reporting?

The first step to integrated reporting is picking a framework. There are many options available—one of our recommended models, which addresses five key areas: purpose, people, planet, profit and principles.

Businesses can use their criteria as a starting point for defining what matters most to them—and what they stand behind as an organisation. It's not hard to imagine how businesses could incorporate sustainability goals or community involvement into these frameworks.

This criterion is especially helpful if you're looking to create a cultural shift within your business. Still, it also provides a guide for existing organisations looking to engage employees or inspire customers. Once you've picked a system that works best for your company culture, start by creating metrics around those factors; once again, these don't have to be highly technical pieces of data.

What's Next For Integrated Reporting?

Although early adoption is limited, numerous organisations are pushing to implement integrated reporting—and many more will likely follow suit in the years ahead. So if you work in corporate communications, customer relations, or sustainability, now is a good time to familiarise yourself with integrated reporting trends and prepare for widespread adoption. In addition, as corporate executives grow increasingly concerned about their economic future, they'll see increased value in integrating their financial performance with non-financial indicators of social and environmental impact.