INTEGRATED REPORTING () WHATIS ? ‘

demonstrates the linkage between an ong.’ statgy, governance & financial perfomance & the socal, cavirnmeatl & esoomie eontext within whi t operates, By reinforcing these connostons, can help busineses to take more sussimble decisions & enable investors {oer stakeholér to understand how an or, i realy pefoming. An shold bea single report which is ‘the ons primary report equivalent to AnnualReport. ‘Central 10 isthe challenge orgnistions face to ereste and sustain value in the short, medium & longer tem, ‘ach clement of an sould provide insights nto an organisation's curen! and future performance, “ is a concise ‘communication about how an orgs sraegy, goverance, performance & prospects, inthe coatex of ts extol ‘enviroment, [edt the eraton of value ia the sho, medium & long ter. is required both by businesses & investors. Busineses require a reporting envionment that i eomucve to ‘undestnding and artclating ther sustegy, which helps o drive performance interoaly & atractSancial capital ‘rnvestnat.lavestrs need uaderstnd how the srategy being purssed crete value overtime “Te features ofa wl erst spice change lo cent patio: + Holistic peirmance regres reporting 1 move beyond traionalfsncal mee, reoognting other saeasues of pefonaance + Ti toger em & far ooking nace wil provides beter saersaning f how cunt & te events fet ase + Io inopration of infomation with the busincer model will provide preter caneerecy, by linking performance aes oj. ‘TYPES OF CAPITAL “Capital” generaly refers to finan resources avilable for use, tn societies & companies with more capital are ‘etter of! Financial Capital plas 2 importat role in eu economy inthe preduction of goods or provision of| serves dis obtained through financing deb, equity or rams, or generated ough operations er avestents ‘Types of Sustainable Capital tis fom these tat we derive the goods & services we ned to improve the quality of our lives. These are: ‘Manufactured Capital 1 comprises of material good, o fxd assets which contibute tothe production process rater than being the utpet itself tool, machines & buléings elect Capita “This is the valve of « company or orgs employee knowdge, business tlning & any proprietary inf, (patents, opyeihts, softwar, rights & lceaces) that may provide eco. wih «compaive advantage. I considered an ‘asset, & can brody be defined asthe collection ofl informational rsourees ao, has a ie dspocal than can be ‘used to dive profs, gun new estomers, create new produs,o otherwise improve he business. (Thi cnegory also ochides human capita, afammation capital, brand avazenes& nstrctonal ep. ‘Human Capital 1 consists of people's healt, knowledge, skill & motivation. All here things are needed for prouctive work, nbencing iumas esptal dough education & taining i central Dourshing economy.Social & Relationship Capital . 1s concemed withthe insttatons that help us maintsin & develop human capital in peertip with others iamiis, communities, businesses, tade unions, schools & volunay ores. ‘Natural Capital {ts any stock o low of energy & material within te environment that produoes goods & services, Th vale that ‘nature provides for ws, th mtual ass that society has & is therefore nt only te basis of production but of fe self. It inclades resources ofa renewable & non-renewable materials 9. and, water, energy & those factors hat bron, neatralise ce eoyele wastes & processes ~ eg, climate reyalation, climate change, CO2 emissions. ‘PURPOSE & OBJECTIVE OF ‘nteratonal IR Cone (IRC) views as the bass fra fandamenal change in the way in whic ents are managed & report to sakeholers, A sited aim of R> iso suppor: integted thinking & decision making. INTEGRATED THINKING ~ application of the collecive mind of those charged with governance (BOD of ‘euivales), & the ability of Mgnt, to monitor, manage & communicate the fill complexity ofthe value-ereation roots, d how this contest sucess over ties. It wil increasingly be through tis process of “Integrated “Thinking” tat orgs. are able to create & sustain valu, The ffeive communication of this press ea help investors, & other stakeholders, to understand an org's past & eurent performance 2¢ well sits future reslene. ‘The primary purpose of is to exp to providers of financial capital how an ent creates value overtime. lo bevefits all stakeholder interested in an entity's ability to cratovalue over tine, inlading employees ‘customer, soppliers, busines parnes, local communities, legihtrs, regultors& policymaker. “Tho objectives ae: ‘+ To improve the qualiy of info. availble to providers of financial capital to eneble a more efficent & reactive allocation of sapitat + To provide a more cohesive & efficient appcsch to corporate reposting that draws on diferent reporting sands & conamunicses the fll ange of fctors that mately affect the ability of en org. create vane ‘overtime + Toeahance sccountabiiy& stewardship fo the broad bate of capital (ancl maxfchred,itlecu, ‘human, social & restionship,& natal) & promote understanding ofthis ntrdependencies + To support integrated thinking, decision makiag & ations thet focus on the creation of vale over sho, ‘medium & log em. ‘In ordrto help users and preparers understand how dif from edison corporate repoting; the TRC also contrasts eight differenes between curent and Intepated Repoting. A key aspect of is tht it addresses ‘hose resouoes (Fefered to 28 Capitals) which the business consumes and eretes ~ finncial, manufactired, ‘human, intellects, social & naturalUNDERSTANDING AN ‘Many poopie discussing Integrated Reporting forthe fst time want to “ee” an example ofan . However, there is no standard fonnat fran & no specific dzelonure requirements Instead, the Discusion Pape issued bythe IIRC sets out ive Guiding Piniples and six Content Bement for an : (GUIDING PRINCIPLES: Strategie Focus provides insight ino the organization's strategie obfectves, and how those objectives relate its ably ‘to orate and sustain value over tine and the resources & relationships on which the org. depends, Teommunicates whit is imporantto the org. fram asategie perspective. It eutine: + the organization's ssatopie objectives; ‘+ thestretegie it has in place, or plans to implement, a order to achieve then end + how they relate o ther components ofits business adel Future Orientation “nate rp ny anwar any ‘An shows the connections between the diferent conponants ofthe org's business mode, externa fectors ‘that aft the ong, & the various resources & relationships on viich the org, & ts performance depends. Connectivity is ental to ensuing that sn ‘+ lminates the changing ntore of business decision-making, & the cial Lskages in busiess thinking & setiviy: ‘+ helps to break down established slo inthe way info. is reported, th radon focus on faneil matters. Connectivity ofTaformation comectr= beh vit ft of capt Report provides night mo the or.’ relationships with ts hy statsholders& how & to what extent the ong. understands, kes nto account & responds to ther needs. exphasiss the importance of relationships with he orgs stakeholders. Stakeolders provide useftl insights about matters hat are important to them, aslung economic, enviroamestal & socal sues. This asst theo. 0 + Seatify material ess; 1+ develop & evaluste sateies; and ‘+ sage actives, ichuding static and accounsble response to mati issues. ‘Conciseness, Relabty and Materaicy ‘An , & other info. Uat ‘aay be elatvely stati or only relevant some report wets, + Deciding whether info. is suticeutyreliabieto be ineuded in an <> Wiile reine inf. sede to be complete, neta & fee fom eor it is rcopsed that isis seldom, if eve, Schievabe i every respect, so the abjectve isto maximize these qualities tothe exteatpracicable, far eg, by [Regulation ~ Many components of are the subject of existing local regulations which vary between jurisdictions. Proges towards Integrated Reporting is, therefor, ey to evolve at different speeds in difcet ‘counties Interatoal consensus onthe dein taken wil be important — for org. operating across jurisdictions. Directors" Duties ~ The fiduciary & other dts of those charged with governance are not consistent aerss al Jusitions. Thus, te fous of an may diffe, in relation tothe users to whom tbe is addressed. Directors’ Liability ~The scope of IR> will ever new evolving subjects, with greater focus en te uu, ‘oacems about the lability of those charged with governance shoulé be addessed. This might be through the adoption of lobally accepted & harmonized “safe harbours” ora broad business judgemeat re. ‘Commercial Confidentiality ~ Orgs, will eed o provide & more sateple focus &, in some ease, info is curently not subject to mandatory islosure requirements in thir , Thay will need to balance the benefits mentioned above with he desire to wid disosing competitive formation.‘Capacity Bulldng ~ Building knowledge & expecience across the reporting system wil be ete to longtem sucess The IRC Pit Programme will build this capacity with an enline forum to excourage knowledge sbiing nfo. Systems ~ Orgs. wil need to exsbish o strengthen info. sptems for capturing & greeting inf. FAQs ‘Whatie IR? “<> brings togetier material info about an orgs strategy, goverance, peformance & prospects in way that reflects the commercial, soci and envionment coutex: win which it operas. It provides cles & conse repretetation of how an or, demonsustes stewardship & how i ereates & susain value, An shoulé bea orgs primary reporing vehi ‘Why do we need ? Since the current business repaing mode! was designed, there have boon majo changes in the way business is conducted, now buszes creates value & the context in which busines operates. These changes ae interdependeat and reflect reads suchas globalization growing policy activity around the world in response to financial, governance and oe rises, heightened expecations of corporate transparency and accountability, cual and prospective resource scarcity, population grow, and covironmental concerns Who js the itended user ofan ? ‘An will be relevant to anybody interested in he strategy and peformance ofthe relevant company. Interested ‘Stakcholders igh wish fr sigoiicnt amounts of dota a relation wo their own sea of tere “The answer, thea is thet investors should be seen ss the intended primary diene, but thatthe noods of other stakcholdes should also be considered. However, information which satisfies the reasonable need of invesore ‘should satisfy many, int all, of the noes of other stakeholder grovps. ‘Wi replace existing reporting? Ihwould be logial to assume that as long as an meets te aed of investors, then the infomation tate nat incinded in the may become ieevant iowever, while many preparers and wer of coporterepnts would welcome a reduction inthe volume of info that is provided, in the short term itis wliely that there willbe any relaxation of repulstions which lessen the reporting burden. ow long isan ? ks slong as it eds tobe and no longer Factors such as diversity of operons (n both gegrepty and oare) andthe complet ofthe busines wll cel inluece its leah san a single document? ‘A singe document isnot a pre-equst, but eo, seeking to use tir to meet regulatory obignsions is ikely to produce a single doesent ‘An

should fcide information that e consistent with the undecying principles ofthe Integrated Reporting Framework, and this should be scprate fom ther information Which s co. may with to provide. Presenting ‘information ina single document (printed or web-based is aneaty way of making tis dstnction.‘Willan Integrated Reporting Framework provide larity on measurement isues? 5 ‘The Integrated Reporting Framework will provide a set of principle for identifying matters which should be * ‘communiated within an bt it wil not ~ atleast the outset — address how individual items should be ‘measured, This wil remain the domsin of exising standard sting bodies, Inthe ong tem, it might be seen as inicent to have diferent standard-seting dies for diffrent components of 8 single report. One pssile future senaro is that a single body will have overall responsibilty for defining the rnciples for content of an , ¢ well asthe appropriate measurement bass, Fundamentally, an is about improving the basis of eapital allocation. The im ofthe gre is business ‘communiaton for capital reward, IR> will enable he eapitel markets to beter understand a eos seateay, lign ‘ier models wit busines perfomance & make ecient & forward-looking investment & other key decisions ‘Clients & the capital markets have besome frustrated with corporate reporting fora variety of reasons: ‘+ Thetey eaues of financia performance are often buried in voluminos finencal tatemerts. ‘+ Aumual reports containing audited financial statements have become divorced from the time horizoa an inf requirement of capita markets ‘+ Stssiabily reports seldom demonstrate the part that Corporate Responsibility perfomance plays in the ‘sie strategy and value eestion, dare often nt designed wi the capital markets in mind ‘+ The aaatve reporting lacks a common framewark & so there i tle eonsstency between businesses. The ‘itl markets must compeasse fo this lack of consistency ag best they ean, bat in doing so the risk remains {hat he el story of basines perfomance & prospets may not be filly understood. ‘+ Directors ar concerned by the neod 19 make continuous disclosures suchas profit guidacce outside oftheir “vormal” reporting & assurance processes ‘CONCLUSION: “The development of is designe to enhance & consolldste existing reporting practioes..10 move towards a ‘epotng framework that provides th information needed to asses organisa value inthe Jia een, Reports ae already long & are geting lnger. Reese reporting has evolved in separte, discoanected ses critica interdependenies between susegy, goverane, operstions & financial & non-inascial perfomance sre ‘ot made clear, To provide forthe growing demand fra broad information se from markets eglatr sd evi society, a famework is needed tht an support the future development of reporting, reflecting this growing complet. Such a framework nods to bring together the diverse but curently disconnected een of reporting into coherent, integrate whole, & demonstrate n rs ability to cost value now & inte fate, ‘Companies Recognise the Benefits of Integrated Reporting a spit ofthe pocticalimplemetation challenges oa esearch highlight, the benefits of integrate reprtng are clear tothe IRC’s plot programme companies, uch as Microso, Unilever and National Ansralia Bank, These benefits were noted: 98% agro that IR wil lead to a beter understanding ofhow the organisation ects value. 95% say it contbutes toa beter understanding oftheir business model & gives them the opparimity to foots on tberight KPIS, 95% say it helps them to overcome silos between departments sock as Strategy, I, Investor Relations, Fine, Sustainability, Conoate Communications & ater,