Reporting today is

galleyarcherySoftware and s/w Development

Oct 29, 2013 (3 years and 7 months ago)

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Reporting today is
not yet integrated
We have just assessed some of the world’s largest companies to see how fit
their reporting is for today’s business environment.
www.pwc.com/corporatereporting
94%
21%
Strategy and resource allocation
report strategic priorities
of those base reporting on
strategic themes
67%
40%
Business model
make reference to their
business model
of those integrate it into
other areas of reporting
71%
17%
Performance
identify their key
performance measures
of those align KPIs and
strategic priorities
Rapidly developing mega trends in technology, population
and resources make it essential for companies to re-think
reporting to ensure they have the right information to
inform decisions and explain the performance and prospects
of the business.
We assessed 50 companies against the draft Integrated
Reporting Framework, which aims to help business
communicate clearly how they create value. Our research
focused on the quality of information that companies
presented in key reporting documents and how well that
information was integrated and linked together.
We have some interesting preliminary findings to share in
advance of more detailed research later this year.
What’s clear
What’s not
PwC
What’s integrated reporting all about?
There is already an initial framework available that companies can use
to start the journey towards integrated reporting. The aim is to enhance
business accountability and stewardship, and support integrated thinking and
decision making.
Integrated Reporting brings together material information about an
organisation’s strategy, governance, performance and prospects in a way that
reflects the commercial, social and environmental context that it operates in.
It’s a process that results in clear communication of how an organisation creates
value over time.
The Integrated International
Reporting Council (IIRC) has
bought together 100 businesses
across the globe, including Deutsche
Bank, The Coca Cola Company,
Natura, Unilever and Tata Steel
to help it develop and test a draft
framework for more open and
useful business reporting and to
show what integrated reporting
looks like in practice.
These pilot programme companies are
supported by a network of investors
who help to shape and challenge the
usefulness of disclosures made.
Companies involved in the IIRC’s pilot
programme say that they can now
better judge the risks and opportunities
of their businesses because integrated
reporting facilitates a more holistic way
of thinking and managing.
What do leading
companies say about
integrated reporting?
Companies in the IIRC’s pilot
programme are very clear about the
benefits they see from integrated
reporting, according to a report by the
IIRC and Black Sun last year.
But our survey of leading companies’
current reporting has found that there
is still a long way to go before the
reality of company reporting catches up
with the ambition.
98%
agree that IR will lead to a better
understanding of how the organisation
creates value.
95%
say it contributes to a better understanding
of their business model and gives them
the opportunity to focus on the right Key
Performance Indicators (KPIs).
93%
say it helps them to overcome silos between
departments, such as those dealing with
strategy, controls, IT, investor relations,
finance, sustainability and communications.
Integrated reporting framework
Three fundamental concepts of the
draft framework:
• The relationship between the
organisation and the resources
and relationships that underpin
its success, described within the
framework by reference to six
‘capitals’ (financial, manufactured,
intellectual, human, social and
relationship, and natural)
• Providing an explanation of the
organisation’s business model
• The creation of value in the short,
medium and long term
Six guiding principles to help
preparers determine what to report
and how to structure it:
• Strategic focus and
future orientation
• Connectivity of information
• Stakeholder responsiveness
• Materiality and conciseness
• Reliability and completeness
• Consistency and comparability
Reporting today is not yet integrated
Our preliminary research focused
on companies involved in the IIRC’s
pilot programme. We considered
120 aspects of reporting based
on 10 years of PwC research with
companies and investors. The
questions asked were structured
around the IIRC’s draft integrated
reporting framework.
Content elements What’s clear What’s not joined up
Organisational
overview
and external
environment
83%
discuss future market trends
40%
of those link market discussion to strategic choices
84%

identify one or more non-financial ‘capitals’
material to their business operations
15%
of those comprehensively report on all
material capitals relevant to their industry and
circumstances
Governance
77%
refer to culture, values and “tone from the top”
driving governance
8%
of those clearly align KPI outcomes and
remuneration outcomes
Opportunities
and risks
96%
report their principal risks
23%
of those integrate their risks into other areas of
reporting
Strategy and
resource allocation
94%
include strategic priorities
21%
of those base reporting on strategic themes
Business model
67%
make reference to their business model, with 50%
talking about the resources and relationships (or
‘capitals’) their business model relies on
40%
of those integrate the business model into other
areas of reporting
Performance
71%
identify their key performance measures
17%
of those align KPIs and strategic priorities
Future outlook Of the 71% reporting KPIs,
47%

have some targets for these indicators
31%
of those make some link between financial and
non-financial performance
48%
discuss the constraints and
availability of the inputs it relies on to create value
(such as intellectual, natural and social capitals)
35%
of those make some reference to future
timeframes over which issues are considered
• Some important aspects of leading
companies’ reporting is already in
line with some of the key elements
the draft integrated reporting
framework, such as reporting on
what their strategic priorities, risks
and key performance indicators are.
• But many of the guiding principles
(see below) are missing eg,
connectivity, which makes it
difficult for stakeholders to
understand and trust companies
and have confidence in their
performance and prospects.
• Around half of the companies
testing IR appear more focused
internally on integrated thinking
and the relevant scope and quality
of information. But others are
either more developed internally,
or confident to present their
journey externally.
How integrated is reporting today?
Key findings
Snapshot of progress towards the draft framework
Of further interest
Click the links for further information
Why is business information and reporting changing – 3 minute animation
www.pwc.co.uk/reporting-assurance/where-is-business-information-reporting-assurance-going.jhtml
12 reporting tips
Actions to help you communicate more effectively with stakeholders
www.pwc.com/gx/en/corporate-reporting/corporate-reporting-guidelines/12-reporting-tips.jhtml
Insights investigating issues for the board
www.pwc.co.uk/reporting-assurance/building-trust-in-your-business.jhtml
Why is the integrated reporting framework important? – filmed interviews with business leaders
www.pwc.com/gx/en/corporate-reporting/integrated-reporting/what-is-the-ir-framework-and-why-is-it-
important.jhtml
Views, news and case studies on reporting and governance – World Watch magazine
www.pwc.com/gx/en/ifrs-reporting/world-watch/index.jhtml
International Integrated Reporting Council and the framework
www.theiirc.org
How can we help?
© 2013 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for
further details.
HK-20130710-3-C1
Where are you now?
• Benchmark your
reporting against peers
based on our integrated
reporting tool
• Identify examples of
good practice from
around the world
to inspire
• Engage with internal and
external stakeholders to
highlight what they want
and identify current gaps
Where do you want
to be?
• Develop a blueprint for
the future, reflecting
risks and opportunities
across the value chain
• Identify material
issues reflecting
market drivers and
changing expectations
• Get buy-in from all of
your key internal and
external stakeholders
How do you get there?
• Identify ‘quick wins’ that
can be implemented in
the current year
• Develop an integrated
strategy and embed
across the organisation
including governance
structure, remuneration
and training
• Adapt systems and
controls to provide
timely, reliable and
relevant information for
internal decision making
and external reporting
Implement IR
• Design your internal
and external
integrated reporting
• Measure your total
impact along your
value chain to identify
risks and demonstrate
contribution across
economic, social and
environmental
dimensions
• Provide assurance
over the integrated
information set
1 2 3 4
Contacts
For more information about the research and how we can help you, speak to your usual PwC contact or get in touch with:
Gayle Donohue
Integrated Reporting
+852 2289 2305
gayle.donohue@hk.pwc.com
John Barnes
Sustainability
+852 2289 1919
john.barnes@hk.pwc.com
Hannah Routh
Sustainability
+852 2289 2968
hannah.routh@hk.pwc.com
Our specialists can help you at each step on the way to integrated reporting