Integrated Reporting is fostering a culture of integrated thinking within organizations and both are driving the execution of strategies and frameworks that promote sustainability. As our understanding of what it means to create value shifts, organizations are discovering new ways to create meaningful reports on multiple capitals to thrive in an uncertain future. These are not always as clear-cut as financial reports; this is where integrated thinking comes in.
What is integrated thinking?
The International Integrated Reporting Framework (IIRF) defines integrated thinking as: “The active consideration by an organization of the relationships between its various operating and functional units and the 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 urgency driving integrated thinking – conditions such as social inequalities, climate change, scarce resources, poverty and so on – and the growing need to create resilient businesses is redefining the GRC landscape. “Changes in these factors can and do deeply affect the survival of businesses,” emphasizes Cecilia Jofré, Chief Sales Officer at IsoMetrix. Too often, compliance is treated as a grudge exercise, and one that organizations are loath to allocate valuable resources to. Cecilia explains: “Approaching compliance as a tick-box exercise – something to be done because of an imposed requirement – completely misses the value of integrated thinking within the triple context of financial, social and environmental performance. These are critical for the sustainability of any enterprise.”
Why is it important?
According to the South African Institute of Charted Accountants (SAICA) paper Integrated Thinking: An exploratory survey: “Integrated thinking promotes a more holistic assessment to grow better businesses and better societies.” The study shows that many organizations are on a journey to inculcate integrated thinking into their businesses.
The survival and success of an organization is inextricably linked to the healthy environment in which it operates. “Sustainability is the child of integrated thinking,” says Cecilia, “you cannot aspire to have sustainable performance and value creation without integrated thinking.”
According to Deloitte’s paper, ‘Integrated Reporting as a driver for integrated thinking‘, the number of integrated reports being published is increasing, but companies struggle with the timely collection of non-financial data. Visibility is crucial for integration. Visibility highlights trends and shows value in your organization which you may have been previously unaware of. “Timely visibility of data supports optimal decision making,” explains Cecilia. Being able to make informed decisions faster allows you to respond to challenges better. “Organizations need to make sure they have the necessary disciplines within the organization to enable that transparency in their data,” she says.
Companies need to mindfully apply themselves to the concept of integrated thinking. When the vision is crystalized, the integrated strategy needs to be enabled with a business system that easily produces the necessary information to compile an Integrated Report in an accurate, transparent, dynamic process.